##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 WASHINGTON, D.C.
    20549
  FORM 10-K
  ANNUAL REPORT
    PURSUANT TO SECTIONS 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.For the fiscal
    year ended December 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number 0-21074
 SUPERCONDUCTOR TECHNOLOGIES
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware


77-0158076(State or other jurisdiction
    of


(IRS Employerincorporation or
    organization)


Identification No.
)   460 Ward
    Drive, Santa Barbara, California
    93111-2310
  (Address of principal executive
    offices) (Zip Code)
  (805) 690-4500
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon stock, $0.001 par value

The NASDAQ Stock Market, LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





SUPERCONDUCTOR
    TECHNOLOGIES INC.
  FORM 10-K
   Unless
    otherwise noted, the terms we, us,
    our refer to the combined and ongoing business
    operations of Superconductor Technologies Inc. and its
    subsidiaries
   
 PageSPECIAL NOTE REGARDING FORWARD LOOKING
    STATEMENTS


1WHERE YOU CAN FIND MORE INFORMATIONPART IItem 1.


Business


2Item 1A.


Risk Factors


7Item 1B.


Unresolved Staff Comments


17Item 2.


Properties


17Item 3.


Legal Proceedings


17Item 4.


(Removed and Reserved)


17PART IIItem 5.


Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


18Item 6.


Selected Financial Data


21Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


22Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


29Item 8.


Financial Statements and Supplementary Data


29Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


29Item 9A


Controls and Procedures


29Item 9B


Other Information


30PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


30Item 11.


Executive Compensation


30Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


30Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


30Item 14.


Principal Accounting Fees and Services


30PART IVItem 15.


Exhibits and Financial Statement Schedules


31EX-10.31EX-21EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2




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SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  This Report contains forward-looking statements within the
    meaning of Section 27A of the Securities Act of 1933, as
    amended, and Section 21E of the Securities Exchange Act of
    1934, as amended. We claim the protection of the safe harbor
    contained in the Private Securities Litigation Reform Act of
    1995 for these forward looking statements. Our forward-looking
    statements relate to future events or our future performance and
    include, but are not limited to, statements concerning our
    business strategy, future commercial revenues, market growth,
    capital requirements, new product introductions, expansion plans
    and the adequacy of our funding. Other statements contained in
    this Report that are not historical facts are also
    forward-looking statements. We have tried, wherever possible, to
    identify forward-looking statements by terminology such as
    may, will, could,
    should, expects,
    anticipates, intends, plans,
    believes, seeks, estimates
    and other comparable terminology.
  We caution investors that any forward-looking statements
    presented in this Report, or that we may make orally or in
    writing from time to time, are based on the beliefs of,
    assumptions made by, and information currently available to, us.
    Such statements are based on assumptions and the actual outcome
    will be affected by known and unknown risks, trends,
    uncertainties and factors that are beyond our control or ability
    to predict. Although we believe that our assumptions are
    reasonable, they are not guarantees of future performance and
    some will inevitably prove to be incorrect. As a result, our
    actual future results can be expected to differ from our
    expectations, and those differences may be material.
    Accordingly, investors should use caution in relying on past
    forward-looking statements, which are based on known results and
    trends at the time they are made, to anticipate future results
    or trends.
  Some of the risks and uncertainties that may cause our actual
    results, performance or achievements to differ materially from
    those expressed or implied by forward-looking statements include
    the following:
  
    limited cash and a history of losses;
    the current worldwide recession;
    our need to raise additional capital for our business;
    limited number of potential customers;
    rapidly advancing technology in our target markets;
    our need to overcome additional technical challenges
    necessary to develop and commercialize HTS wire;
    the impact of competitive products, technologies and
    pricing;
    limited number of suppliers for some of our components;
    no significant backlog from quarter to quarter;
    fluctuations in sales, product demand from quarter to quarter
    can be significant;
    our proprietary rights, while important to our business, are
    difficult and costly to protect;
    manufacturing capacity constraints and difficulties; and
    cost and uncertainty from compliance with environmental
    regulations.  For further discussion of these and other factors see,
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations and Risk
    Factors in this Report.
  This Report and all subsequent written and oral
    forward-looking statements attributable to us or any person
    acting on our behalf are expressly qualified in their entirety
    by the cautionary statements contained or referred to in this
    section. We do not undertake any obligation to release publicly
    any revisions to our forward-looking statements to reflect
    events or circumstances after the date of this Report.
 1




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PART I  ITEM 1.
    BUSINESS  General
    Strategic
    Initiatives
    
    Wire Platform.  Following a review of our
    technical capabilities and core competencies, we determined that
    extending our HTS materials production into a new wire platform
    for power applications offers an attractive strategic business
    opportunity. Our second generation (2G) HTS wire product
    development is focused on large markets where the advantages of
    HTS wire are recognized by the industry. Our initial product
    roadmap targets three important applications:  
    Superconducting High Power Transmission
    Cables:  HTS advanced power transmission cable
    transmits five to twenty times the electrical power of
    traditional copper or aluminum cables with much improved
    efficiency.
    Superconducting Fault Current Limiters
    (SFCL):  SFCLs act like powerful surge protectors,
    preventing harmful faults from taking down costly substation
    equipment. SFCLs enable the energy efficient connections of
    distributed power sources to the grid, fast reliable grid
    protection, and utilize smart grid design criteria.
    Superconducting Wind Turbine
    Generators:  Superconducting wind turbines allow
    utilities to add more power per tower by
    significantly reducing turbine size and weight and improving
    power generation efficiency.    
    RF Filters.Conventional RF filters are
    fabricated primarily from aluminum blocks with hollow cavities,
    resonators, and tuning elements incorporated to make a frequency
    specific filter. Our filter structures 2




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resemble a circuit on a semiconductor using a circuit that is
    etched into HTS materials that are deposited on a wafer. Our
    unique and innovative circuits allow us to utilize the
    characteristics of the HTS materials for this application. We
    have also developed unique tuning methods that allow us to
    produce a frequency specific filter.  
    Cryocoolers.  HTS circuits need to be
    cooled to the critical temperature that enables the
    superconducting properties of the materials to be utilized. To
    meet this need, we developed a unique cryocooler that can
    efficiently and reliably cool the circuit to the critical
    temperature (77 degrees Kelvin). As a result, our wireless
    products are maintenance free and reliable enough to be deployed
    for many years.  Our HTS
    Manufacturing System
    Our
    Proprietary Technology
      
    Wireless Networks.  Our current commercial
    products help maximize the performance of wireless
    telecommunications networks by improving the quality of uplink
    signals from mobile wireless devices. Our products increase
    capacity utilization, lower dropped and blocked calls, extend
    coverage, and enable higher wireless data throughput 
    all while reducing capital and operating costs. We are
    leveraging our unique filtering technology to pursue wireless
    business on multiple fronts: capturing wireless business with
    tier one U.S. wireless carriers for the LTE network build
    out, and developing our advanced reconfigurable filtering
    technology, which has the potential to drastically reduce the
    size and cost of mobile devices.
    Superconducting Power Applications.  As
    discussed above, we are adapting our unique HTS materials
    deposition techniques to deliver energy efficient,
    cost-effective and high performance 2G HTS wire technology for
    next generation power applications. We have identified several
    large initial target markets for our 2G HTS wire including
    energy (wind turbines, smart grid) and industrial (motors,
    generators) applications. To accelerate development and
    manufacturing processes for our 2G HTS wire, we are partnering
    with HTS industry leaders such as the United States National
    Labs and the U.S. Department of Energy (DOE).
    In August 2009, we renewed our two year Cooperative Research and
    Development Agreement with Los Alamos National Laboratory
    (LANL). These technological interchanges will help
    us meet the technical challenges and performance metrics for
    both high performance and cost effective 2G HTS wire. 3




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Company
    History
        Our
    Wireless Business
    
    SuperLink®,

    a highly compact and reliable receiver front-end HTS wireless
    filter system to eliminate
    out-of-band
    interference for wireless base stations, combining filters with
    a proprietary cryogenic cooler and a cooled low-noise amplifier.
    AmpLink®,

    a ground-mounted unit for wireless base stations that includes a
    high-performance amplifier and up to six dual duplexers.
    SuperPlex, a high-performance multiplexer that provides
    extremely low insertion loss and excellent cross-band isolation
    designed to eliminate the need for additional base station
    antennas and reduce infrastructure costs.  T-Mobile
 4




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Other
    Investments
    Licenses
    Government
    Contracts
    
    terminate existing contracts for convenience, which affords the
    U.S. government the right to terminate the contract in
    whole or in part any time it wants for any reason or no reason,
    as well as for default;
    reduce or modify contracts or subcontracts, if its requirements
    or budgetary constraints change;
    cancel or reduce multi-year contracts and related orders, if
    funds for contract performance for any subsequent year become
    unavailable;
    adjust reimbursable contract costs and fees on the basis of
    audits completed by its agencies through exercise of its
    oversight rights; and
    control or prohibit the export of products.    Manufacturing
   5




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Marketing
    and Sales
    Competition
    Research
    and Development
   6




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##### Table of Contents



Environmental
    Issues
    Corporate
    Information
  (805) 690-4500.
  Employees
    Backlog
    ITEM 1A.
    RISK
    FACTORS    Risks
    Related to Our Business
  We
    have a history of losses and may never become
    profitable.
   7




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The
    current worldwide recession may adversely affect our business,
    operating results and financial condition.
    We may
    need to raise additional capital, and if we are unable to raise
    capital our ability to implement our current business plan and
    ultimately our viability as a company could be adversely
    affected
      We
    rely on a small number of customers for the majority of our
    commercial revenues, and the loss of any one of these customers,
    or a significant loss, reduction or rescheduling of orders from
    any of these customers, could have a material adverse effect on
    our business, results of operations and financial
    condition.
      
    a slowdown or delay in the deployment, upgrading or improvement
    of wireless networks by any one customer could significantly
    reduce demand for our products;
    reductions in a single customers forecasts and demand
    could result in excess inventories;
    each of our customers has significant purchasing leverage over
    us to require changes in sales terms including pricing, payment
    terms and product delivery schedules; and
    concentration of accounts receivable credit risk, which could
    have a material adverse effect on our liquidity and financial
    condition if one of our major customers declared bankruptcy or
    delayed payment of their receivables. 8




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We
    face competition with respect to various aspects of our
    technology and product development.
    We may
    not be able to compete effectively against alternative
    technologies.
    We
    currently rely on specific technologies and may not successfully
    adapt to the rapidly changing wireless telecommunications
    equipment market.
        Our
    failure to anticipate and respond to developments in the
    wireless telecommunications market could substantially harm our
    business.
   9




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The
    wireless communication industry is highly concentrated, which
    limits the number of potential customers, and further industry
    consolidation could result in the loss of key
    customers.
    We
    experience significant fluctuations in sales and operating
    results from quarter to quarter.
    
    the lack of any contractual obligation by our customers to
    purchase their forecasted demand for our products;
    variations in the timing, cancellation, or rescheduling of
    customer orders and shipments; and
    high fixed expenses that may disproportionately impact operating
    expenses, especially during a quarter with a sales shortfall.    work-in-progress
    Our
    sales cycles are unpredictable, making future performance
    uncertain.
    We
    depend on the capital spending patterns of wireless network
    operators, and if capital spending is decreased or delayed, our
    business may be harmed.
   10




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Our
    reliance on a limited number of suppliers and the long lead time
    of components for our products could impair our ability to
    manufacture and deliver our systems on a timely
    basis.
      Our
    reliance on a limited number of suppliers exposes us to quality
    control issues.
    We
    expect decreases in average selling prices, requiring us to
    reduce product costs in order to achieve and maintain
    profitability.
    Our
    ability to protect our patents and other proprietary rights is
    uncertain, exposing us to possible losses of competitive
    advantage.
   11




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We
    depend on specific patents and licenses to technologies, and we
    will likely need additional technologies in the future that we
    may not be able to obtain.
    Intellectual
    property infringement claims against us could materially harm
    results of operations.
      Other
    parties may have the right to utilize technology important to
    our business.
    We
    depend upon government contracts for a substantial amount of
    revenue and our business may suffer if significant contracts are
    terminated, adversely modified, or we are unable to win new
    contracts.
      
    termination by the government;
    reduction, modification or cancellation in the event of changes
    in the governments requirements or budgetary constraints;
    increased or unexpected costs causing losses or reduced profits
    under contracts where prices are fixed or unallowable costs
    under contracts where the government reimburses for costs and
    pays an additional premium;
    risks of potential disclosure of confidential information to
    third parties; 12




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
    the failure or inability of the main contractor to perform its
    contract in circumstances where we are a subcontractor;
    the failure of the government to exercise options for additional
    work provided for in the contracts;
    the governments right in certain circumstances to freely
    use technology developed under these contracts; and
    control or prohibition of the export of products.      Because
    competition for target employees is intense, we may be subject
    to claims of unfair hiring practices, trade secret
    misappropriation or other related claims.
    If we
    are unable to forecast our inventory needs accurately, we may be
    unable to obtain sufficient manufacturing capacity or may incur
    unnecessary costs and produce excess inventory.
    Our
    success depends on the attraction and retention of senior
    management and technical personnel with relevant
    expertise.
   13




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Regulatory
    changes negatively affecting wireless communications companies
    could substantially harm our business.
    We may
    acquire or make investments in companies or technologies that
    could cause loss of value to stockholders and disruption of
    business.
    
    failure to integrate operations, services and personnel;
    the price paid may exceed the value eventually realized;
    loss of share value to existing stockholders as a result of
    issuing equity securities to finance an acquisition;
    potential loss of key employees from either our then current
    business or any acquired business;
    entering into markets in which we have little or no prior
    experience;
    diversion of financial resources and managements attention
    from other business concerns;
    assumption of unanticipated liabilities related to the acquired
    assets; and
    the business or technologies acquired or invested in may have
    limited operating histories and may be subjected to many of the
    same risks to which we are exposed.    If we
    are unable to implement appropriate controls and procedures to
    manage our potential growth, we may not be able to successfully
    offer our products and implement our business
    plan.
   14




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Compliance
    with environmental regulations could be especially costly due to
    the hazardous materials used in the manufacturing process. In
    addition, we could incur expenditures related to hazardous
    material accidents.
      The
    reliability of market data included in our public filings is
    uncertain.
    Our
    international operations expose us to certain
    risks.
    
    changes in exchange rates;
    international political and economic conditions;
    changes in government regulation in various countries;
    trade barriers; 15




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##### Table of Contents




    adverse tax consequences; and
    costs associated with expansion into new territories.  Risks
    Related to Our Common Stock
  Our
    stock price is volatile.
    
    our perceived prospects;
    variations in our operating results and whether we have achieved
    key business targets;
    changes in, or our failure to meet, earnings estimates;
    changes in securities analysts buy/sell recommendations;
    differences between our reported results and those expected by
    investors and securities analysts;
    announcements of new contracts by us or our competitors;
    market reaction to any acquisitions, joint ventures or strategic
    investments announced by us or our competitors; and
    general economic, political or stock market conditions.    We
    have a significant number of outstanding warrants and options,
    and future sales of these shares could adversely affect the
    market price of our common stock.
    Our
    corporate governance structure may prevent our acquisition by
    another company at a premium over the public trading price of
    our shares.
     16




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We do
    not anticipate declaring any cash dividends on our common
    stock.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    REMOVED
    AND RESERVED 17




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    for Common Stock
    High

Low2010Quarter ended December 31, 2010

$
1.80


$
1.30Quarter ended October 2, 2010

$
2.75


$
1.50Quarter ended July 3, 2010

$
3.00


$
2.26Quarter ended April 3, 2010

$
3.85


$
2.352009Quarter ended December 31, 2009

$
3.35


$
2.08Quarter ended September 26, 2009

$
3.99


$
2.22Quarter ended June 27, 2009

$
5.45


$
0.93Quarter ended March 28, 2009

$
1.45


$
0.82   Holders
    of Record
    Dividends
      Sales of
    Unregistered Securities
    Repurchases
    of Equity Securities
   18




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##### Table of Contents



Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Equity
    Compensation Plan Information
  Number ofSecuritiesNumber of





Remaining AvailableSecurities to Be





for Future IssuanceIssued Upon


Weighted-Average


Under EquityExercise of


Exercise Price of


Compensation PlansOutstanding


Outstanding


(ExcludingOptions, Warrants


Options, Warrants


SecuritiesPlan Category

and Rights


and Rights


Reflected in Column(a))Equity compensation plans approved by security holders


1,083,366


$
6.43



1,874,526Equity compensation plans not approved by security holders










Total


1,083,366


$
6.43



1,874,526  19




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##### Table of Contents



Stock
    Performance Graph
  stock performance graph and related information presented
    below shall not be deemed soliciting material or
    filed with the Securities and Exchange Commission or
    subject to Regulation 14A or 14C under the Securities
    Exchange Act of 1934, as amended (the Exchange Act),
    or to the liabilities of Section 18 of the Exchange Act,
    and shall not be deemed incorporated by reference into any
    filing under the Securities Act of 1933, as amended (the
    Securities Act), or the Exchange Act, except to the
    extent that we specifically request that such information be
    treated as soliciting material or specifically incorporate it by
    reference into such a filing.
    
  31-Dec-05



31-Dec-06



31-Dec-07



31-Dec-08



31-Dec-09



31-Dec-10Superconductor Technologies


$
100.00



$
41.16



$
129.07



$
23.49



$
56.74



$
35.35Nasdaq Composite



100.00




109.52




120.27




71.51




102.89




120.29Nasdaq-Telecommunications



100.00




127.76




139.48




79.53




117.89




122.52  20




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA    Years Ended December 31,2010


2009


2008


2007


2006(In thousands, except per share data)Statement of Operations Data:Net revenues:Net commercial product revenues

$
6,548


$
7,239


$
6,768


$
12,787


$
17,697Government and other contract revenues


1,999



3,577



4,525



5,115



3,361Sub license royalties


















20Total net revenues


8,547



10,816



11,293



17,902



21,078Costs and expenses:Cost of commercial product revenues


7,732



9,102



8,911



12,944



15,922Cost of government and other contract revenues


1,180



2,552



3,649



2,906



2,407Other research and development


5,067



4,399



3,394



3,172



3,488Selling, general and administrative


6,684



6,925



8,151



8,123



9,086Restructuring expenses and impairment charges










141







38Write off of Goodwill


















20,107Total costs and expenses


20,663



22,978



24,246



27,145



51,048Loss from operations


(12,116
)


(12,162
)


(12,953
)


(9,243
)


(29,970
)Other income (expense), net


148



(817
)


252



117



346Net loss

$
(11,968
)

$
(12,979
)

$
(12,701
)

$
(9,126
)

$
(29,624
)Basic and diluted net loss per common share

$
(0.51
)

$
(0.65
)

$
(0.77
)

$
(0.73
)

$
(2.37
)Weighted average number of shares Outstanding


23,344



19,843



16,403



12,488



12,483   Years Ended December 31,2010

2009

2008

2007

2006Balance Sheet Data:Cash and cash equivalents

$
6,069


$
10,365


$
7,569


$
3,939


$
5,487Working capital


7,655



12,557



12,253



3,293



10,158Total assets


12,569



18,126



19,358



16,625



21,904Long-term debt, including current portion


608



576



521



563



618Total stockholders equity

$
10,896


$
16,241


$
17,552


$
9,190


$
17,951  21




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  This Managements Discussion and Analysis of Financial
    Condition and Results of Operations includes many
    forward-looking statements. For cautions about relying on such
    forward looking statements, please refer to the section entitled
    Forward Looking Statements at the beginning of this
    Report immediately prior to Item 1.
  General
    Results
    of Operations
  2010
    Compared to 2009
           22




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##### Table of Contents



and/or
    Years Ended December 31,2010


2009Dollars in thousandsNet commercial product sales

$
6,548



100.0
%

$
7,239



100.0
%Cost of commercial product sales


7,732



118.1
%


9,102



125.7
%Gross profit

$
(1,184
)


18.1
%

$
(1,863
)


(25.7
)%                    23




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##### Table of Contents



2009
    Compared to 2008
            Years Ended December 31,2009


2008Dollars in thousandsNet commercial product sales

$
7,239



100.0
%

$
6,768



100.0
%Cost of commercial product sales


9,102



125.7
%


8,911



131.7
%Gross loss

$
(1,863
)


25.7
%

$
(2,143
)


(31.7
)%          24




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Liquidity
    and Capital Resources
  Cash
    Flow Analysis
            Financing
    Activities
      Future Liquidity
   25




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##### Table of Contents



Contractual
    Obligations and Commercial Commitments
    Operating Lease Obligations.
  Patents and Licenses.
  Purchase Commitments.
  Tabular Disclosure of Contractual
    Obligations.
  Payments Due by Period2012 and


2014 and


2016 andContractual Obligations

Total


2011


2013


2015


beyondOperating leases


8,231,000



1,307,000



2,704,000



2,856,000



1,364,000Minimum license commitment


1,635,000



175,000



350,000



375,000



735,000Fixed asset and inventory purchase commitments


203,000



203,000











Total contractual cash obligations

$
10,069,000


$
1,685,000


$
3,054,000


$
3,231,000


$
2,099,000   Capital
    Expenditures
    Future
    Liquidity
    (See
    Note 13)
 26




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Net
    Operating Loss Carryforward
  ,
      Market
    Risk
      Inflation
    Critical
    Accounting Policies and Estimates
   27




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##### Table of Contents



and/or
      percentage-of-completion
   28




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Market
    Risk
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures; Changes in Internal Control Over
    Financial Reporting
  Rules 13a-15(e) 15d-15(e) Rule 13a-15
     29




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
  ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND DISCLOSURES   30




---



##### 



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Index to Financial Statements
   
 PageReports of Independent Registered Public
    Accounting Firms


F-1Consolidated Balance Sheets as of
    December 31, 2010 and 2009


F-3Consolidated Statement of Operations for the
    years ended December 31, 2010, 2009 and 2008


F-4Consolidated Statement of Stockholders
    Equity for the years ended December 31, 2010, 2009 and
    2008


F-5Consolidated Statement of Cash Flows for the
    years ended December 31, 2010, 2009 and 2008


F-6Notes to Consolidated Financial Statements


F-7    Financial Statement Schedule Covered by the
    Foregoing Report of Independent Registered Public Accounting
    Firm
  Schedule II  Valuation and Qualifying
    Accounts


F-23     Exhibits
  Number

Description of Document3
.1

Restated Certificate of Incorporation of Registrant as amended
    through March 1, 2006.(22)3
.2

Amended and Restated Bylaws of Registrant.(22)3
.3

Amendment adopted March 29, 2010 to Amended and Restated
    Bylaws of Registrant.(23)4
.1

Form of Common Stock Certificate.(21)4
.2

Certificate of Designations of Registrant of Series A
    Convertible Preferred Stock of Registrant filed
    November 13, 2007.(20)4
.3

Certificate of Designations, Preferences and Rights of
    Series E Convertible Preferred Stock of Registrant.(2)4
.4

Warrant to Purchase Stock issued by Registrant to Silicon Valley
    Bank and Registration Rights Agreement.(8)10
.3

Amended and Restated 1998 Non-Statutory Stock Option Plan,
    including Form of Stock Option Agreement.(3)***10
.4

1999 Stock Plan.(1)***10
.5

Form of 1999 Stock Plan Stock Option Agreement.(1)***10
.6

Form of Change in Control Agreement dated March 28,
    2003.(5)***10
.7

Form of Amendment No. 1 to Change in Control Agreement
    dated as of May 24, 2005. (15)***10
.8

Form of Amendment No. 2 to Change in Control Agreement
    dated as of December 31, 2006. (17)***10
.9

Accounts Receivable Purchase Agreement by and between Registrant
    and Silicon Valley Bank, dated March 28, 2003, effective
    date June 23, 2003.(5)10
.10

Accounts Receivable Purchase Modification Agreement by and
    between Registrant and Silicon Valley Bank dated March 17,
    2004.(7)10
.11

Amendment to Purchase Agreement by and between Registrant and
    Silicon Valley Bank dated as of April 27, 2004.(9) 31




---



##### Table of Contents



Number

Description of Document10
.12

Accounts Receivable Purchase Modification Agreement by and
    between Registrant and Silicon Valley Bank dated March 16,
    2005.(13)10
.13

Third Amendment to Loan and Security Agreement by and between
    Registrant and Silicon Valley Bank dated June 16, 2006.(22)10
.14

Fourth Amendment to Loan and Security Agreement by and between
    Registrant and Silicon Valley Bank dated June 18, 2007.(22)10
.16

Sixth Amendment to Loan and Security Agreement by and between
    Registrant and Silicon Valley Bank dated July 31, 2008.(21)10
.16

Seventh Amendment to Loan and Security Agreement by and between
    Registrant and Silicon Valley Bank dated July 31, 2009.(22)10
.17

Eighth Amendment to Loan and Security Agreement by and between
    Registrant and Silicon Valley Bank dated July 28, 2010.(24)10
.18

Patent License Agreement by and between Registrant and Lucent
    Technologies GRL LLC.(6)**10
.19

License Agreement between Registrant and Sunpower, Inc. dated
    May 2, 2005. (10)**10
.20

Employment Agreement between Registrant and Jeffrey Quiram dated
    as of February 14, 2005. (11)***10
.21

Stock Option Grant and 2003 Equity Incentive Plan Option
    Agreement between Registrant and Jeffrey Quiram dated
    February 14, 2005. (11)***10
.22

Amendment to Employment Agreement between Registrant and Jeffrey
    Quiram dated as of December 31, 2006. (17)***10
.23

2003 Equity Incentive Plan As Amended May 25, 2005. (14)***10
.24

Form of Notice of Grant of Stock Options and Option Agreement
    for 2003 Equity Incentive Plan. (11)***10
.25

Management Incentive Plan (July 24, 2006). (16)***10
.26

Employment Agreement between Registrant and Terry White dated as
    of April 11, 2005. (12)***10
.27

Amendment to Employment Agreement between Registrant and Terry
    White dated as of December 31, 2006. (17)***10
.28

Compensation Policy for Non-Employee Directors dated
    March 18, 2005. (12)***10
.29

Form of Director and Officer Indemnification Agreement. (15)***10
.30

Lease Agreement between the Registrant and 1200 Enterprises LLC
    dated as of June 1, 2001.(4)10
.31

First Amendment to Lease between Registrant and 1200 Enterprises
    LLC dated October 1, 2007.(25)10
.32

Second Amendment to Lease between the Registrant and 1200
    Enterprises LLC dated January 19, 2009.(22)10
.33

Agreement between Registrant and Hunchun BaoLi Communication
    Co., Ltd. (BAOLI) dated August 17, 2007.(18)10
.34

First Amendment to Agreement between Registrant and BAOLI dated
    November 1, 2007(19)10
.35

Second Amendment to Agreement between Registrant and BAOLI dated
    January 7, 2008.(19)10
.36

Framework Agreement between Registrant and BAOLI dated
    November 8, 2007.(19)10
.37

Sino-Foreign Equity Joint Venture Contract between
    Superconductor Investments (Mauritius) Limited and BAOLI dated
    December 8, 2007 (Exhibit A to Framework Agreement
    with BAOLI).(19)10
.38

Form of Technology and Trademark License Agreement between
    Superconductor Investments (Mauritius) Limited, Registrant and
    BAOLI Superconductor Technology Co, Ltd (Exhibit B to
    Framework Agreement).(19)14


Code of Business Conduct and Ethics.(15)21


List of Subsidiaries.(25)23
.1

Consent of Marcum, LLP, Independent Registered Public Accounting
    Firm.(25)23
.2

Consent of Stonefield Josephson Inc, Independent Registered
    Public Accounting Firm.(25)31
.1

Statement of CEO Pursuant to 302 of the Sarbanes-Oxley Act of
    2002.(25)31
.2

Statement of CFO Pursuant to 302 of the Sarbanes-Oxley Act of
    2002.(25)32
.1

Statement of CEO Pursuant to 906 of the Sarbanes-Oxley Act of
    2002.(25)32
.2

Statement of CFO Pursuant to 906 of the Sarbanes-Oxley Act of
    2002.(25)  32




---



##### Table of Contents



(1)
    
    Incorporated by reference from Registrants Registration
    Statement on
    Form S-8
    filed November 4, 1999 (File
    No. 333-90293).(2)
    
    Incorporated by reference from Registrants Current Report
    on
    Form 8-K
    filed October 4, 2000.(3)
    
    Incorporated by reference from Registrants Registration
    Statement on
    Form S-8
    filed March 6, 2001 (File
    No. 333-56606).(4)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 30, 2002, filed May 6,
    2002.(5)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 29, 2003, filed May 13,
    2003.(6)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2003, filed March 11,
    2004.(7)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended April 3, 2004, filed May 12,
    2004.(8)
    
    Incorporated by reference from Registrants Registration
    Statement on
    Form S-3
    (File No.
    333-117107),
    filed July 2, 2004.(9)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended July 3, 2004, filed August 11,
    2004.(10)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended October 2, 2004, filed
    November 10, 2004.(11)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2004, filed March 16,
    2005.(12)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended April 2, 2005, filed May 6, 2005.(13)
    
    Incorporated by reference from Registrants Current Report
    on
    Form 8-K
    filed April 4, 2005.(14)
    
    Incorporated by reference from Registrants Current Report
    on
    Form 8-K
    filed May 27, 2005.(15)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2005, filed March 8,
    2006.(16)
    
    Incorporated by reference from Registrants Current Report
    on
    Form 8-K
    filed July 28, 2006.(17)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2006, filed April 2,
    2007.(18)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 29, 2007, filed
    November 13, 2007.(19)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2007, filed March 27,
    2008.(20)
    
    Incorporated by reference from Registrants Current Report
    on
    Form 8-K/A
    filed February 25, 2008.(21)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2008, filed March 20,
    2009.(22)
    
    Incorporated by reference from Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2009, filed March 17,
    2010.(23)
    
    Incorporated by reference from Registrants Current Report
    on
    Form 8-K
    filed April 2, 2010.(24)
    
    Incorporated by reference from Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended October 2, 2010, filed
    November 10, 2010.(25)
    
    Filed herewith.  Exhibits
 33




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm              Marcum
    llp
    F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
              Stonefield
    Josephson, Inc.
    F-2




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.CONSOLIDATED BALANCE SHEETS
  December 31,


December 31,2010


2009ASSETSCurrent Assets:Cash and cash equivalents

$
6,069,000


$
10,365,000Accounts receivable, net


108,000



462,000Inventory, net


2,230,000



2,644,000Prepaid expenses and other current assets


344,000



445,000Total Current Assets


8,751,000



13,916,000Property and equipment, net of accumulated depreciation of
    $21,948,000 and $21,076,000, respectively


1,334,000



1,832,000Patents, licenses and purchased technology, net of accumulated
    amortization of $2,494,000 and $2,384,000, respectively


2,274,000



2,163,000Other assets


210,000



215,000Total Assets

$
12,569,000


$
18,126,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
548,000


$
467,000Accrued expenses


517,000



671,000Fair value of warrant derivative






171,000Other current liabilities


31,000



50,000Total Current Liabilities


1,096,000



1,359,000Other long term liabilities


577,000



526,000Total Liabilities


1,673,000



1,885,000Commitments and contingencies (Notes 7 and 8)Stockholders Equity:Preferred stock, $.001 par value, 2,000,000 shares
    authorized, 611,523 issued and outstanding


1,000



1,000Common stock, $.001 par value, 250,000,000 shares
    authorized, 27,217,408 and 22,512,033 shares issued and
    outstanding, respectively


28,000



23,000Capital in excess of par value


248,500,000



241,882,000Accumulated deficit


(237,633,000
)


(225,665,000
)Total Stockholders Equity


10,896,000



16,241,000Total Liabilities and Stockholders Equity

$
12,569,000


$
18,126,000    F-3




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  CONSOLIDATED STATEMENT OF
    OPERATIONS
  Years Ending December 312010


2009


2008Net revenues:Net commercial product revenues

$
6,548,000


$
7,239,000


$
6,768,000Government and other contract revenues


1,999,000



3,577,000



4,525,000Total net revenues


8,547,000



10,816,000



11,293,000Costs and expenses:Cost of commercial product revenues


7,732,000



9,102,000



8,911,000Cost of government and other contract revenues


1,180,000



2,552,000



3,649,000Research and development


5,067,000



4,399,000



3,394,000Selling, general and administrative


6,684,000



6,925,000



8,151,000Restructuring expenses and impairment charges










141,000Total costs and expenses


20,663,000



22,978,000



24,246,000Loss from operations


(12,116,000
)


(12,162,000
)


(12,953,000
)Other Income and ExpenseImpairment of asset for, and noncontrolling interest in joint
    venture






(638,000
)


Adjustments to fair value of derivatives


171,000



(171,000
)


Interest income


6,000



24,000



284,000Interest expense


(29,000
)


(32,000
)


(32,000
)Net loss

$
(11,968,000
)

$
(12,979,000
)

$
(12,701,000
)Basic and diluted net loss per common share

$
(0.51
)

$
(0.65
)

$
(0.77
)Basic and diluted weighted average number of common shares
    outstanding


23,344,461



19,842,687



16,402,509    F-4




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  CONSOLIDATED STATEMENT OF STOCKHOLDERS
    EQUITY
  Capital inConvertible Preferred Stock


Common Stock


Excess of


AccumulatedShares


Amount


Shares


Amount


Par Value


Deficit


TotalBalance at December 31, 2007





$




12,511,414


$
12,000


$
209,163,000


$
(199,985,000
)

$
9,190,000Issuance of common stock (net of costs)










5,101,361



5,000



10,563,000







10,568,000Stock  based compensation










256,255



1,000



593,000







594,000Issuance of Series A Preferred


611,523



1,000











9,900,000







9,901,000Net loss






















(12,701,000
)


(12,701,000
)Balance at December 31, 2008


611,523



1,000



17,869,030



18,000



230,219,000



(212,686,000
)


17,552,000Issuance of common stock (net of costs)










3,752,005



4,000



10,452,000







10,456,000Stock  based compensation










890,998



1,000



1,211,000







1,212,000Net loss






















(12,979,000
)


(12,979,000
)Balance at December 31, 2009


611,523



1,000



22,512,033



23,000


$
241,882,000



(225,665,000
)


16,241,000Issuance of common stock (net of costs)










4,600,000



5,000



6,032,000







6,037,000Repurchase of common stock to satisfy withholding obligations










(181,982
)






(573,000
)






(573,000
)Stock  based compensation










287,357







1,159,000







1,159,000Net loss






















(11,968,000
)


(11,968,000
)Balance at December 31, 2010


611,523


$
1,000



27,217,408


$
28,000


$
248,500,000


$
(237,633,000
)

$
10,896,000    F-5




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  CONSOLIDATED STATEMENT OF CASH
    FLOWS
  Years Ended December 31,2010


2009


2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(11,968,000
)

$
(12,979,000
)

$
(12,701,000
)Adjustments to reconcile net loss to net cash used for operating
    activities:Depreciation and amortization


976,000



1,462,000



1,735,000Stock-based compensation expense


1,159,000



1,212,000



587,000Provision for excess and obsolete inventories


360,000



282,000



17,000Noncontrolling interest in joint venture






117,000



Fair value of derivatives


(171,000
)


171,000



Asset impairment






521,000



Changes in assets and liabilities:Accounts receivable


354,000



(107,000
)


2,057,000Inventories


54,000



2,352,000



(1,880,000
)Prepaid expenses and other current assets


101,000



(147,000
)


(26,000
)Patents and licenses


(215,000
)


(240,000
)


(315,000
)Other assets


5,000



14,000



9,000Accounts payable, accrued expenses and other current liabilities


(40,000
)


(92,000
)


(1,603,000
)Net cash used in operating activities


(9,385,000
)


(7,434,000
)


(12,120,000
)CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment


(375,000
)


(226,000
)


(179,000
)Investment in joint venture










(521,000
)Net cash used in investing activities


(375,000
)


(226,000
)


(700,000
)CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase of common shares for withholding obligations


(573,000
)






Net proceeds from sale of common stock


6,037,000



10,456,000



16,450,000Net cash provided by financing activities


5,464,000



10,456,000



16,450,000Net increase (decrease) in cash and cash equivalents


(4,296,000
)


2,796,000



3,630,000Cash and cash equivalents at beginning of year


10,365,000



7,569,000



3,939,000Cash and cash equivalents at end of year

$
6,069,000


$
10,365,000


$
7,569,000    F-6




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    The
    Company        Note 2 
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    See
    Note 13
    Principles
    of Consolidation
    Cash
    and Cash Equivalents
   F-7




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounts
    Receivable
    Revenue
    Recognition
    percentage-of-completion
    Shipping
    and Handling Fees and Costs
    Warranties
    Guarantees
   F-8




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Research
    and Development Costs
    Inventories
  first-in, and/or
  Property
    and Equipment
    Patents,
    Licenses and Purchased Technology
    Long-Lived
    Assets
   F-9




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restructuring
    Expenses
    Loss
    Contingencies
    Income
    Taxes
    Marketing
    Costs
    Net
    Loss Per Share
    Stock-based
    Compensation Expense
   F-10




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2010


2009


2008Cost of revenue

$
22,000


$
32,000


$
22,000Research and development


322,000



287,000



122,000Selling, general and administrative


815,000



893,000



443,000$
1,159,000


$
1,212,000


$
587,000     Use of
    Estimates
    Fair
    Value of Financial Instruments
    Comprehensive
    Income
    Segment
    Information
    Certain
    Risks and Uncertainties
   F-11




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Form 10-K
  Note 3 
    Short
    Term Borrowings      Note 4 
    Income
    Taxes   F-12




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010


2009


2008Tax benefit computed at Federal statutory rate


34.0
%


34.0
%


34.0
%Increase (decrease) in taxes due to:Change in valuation allowance


(39.8
)


(39.8
)


(39.8
)State taxes, net of federal benefit


5.8



5.8



5.8Impairment of Goodwill (not deductible for tax)











%



%



%     2010


2009$
31,059,000


$
112,187,000Loss carryforwardsCapitalized research and development


736,000



1,102,000Depreciation


2,429,000



2,577,000Tax credits


282,000



3,984,000Inventory


437,000



330,000Acquired intellectual property


(90,000
)


(90,000
)Other


247,000



519,000Less: valuation allowance


(35,100,000
)


(120,609,000
)$



$
   ,
     F-13




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 5 
    Stockholders
    Equity  Preferred
    Stock
    Common
    Stock
      Equity
    Awards
       F-14




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010


2009


2008Per share fair value at grant date

$
1.89


$



$
3.57Risk free interest rate


1.84
%






2.47
%Expected volatility


116
%






109
%Dividend yield


0
%






0
%Expected life in years


4.0







4.0       WeightedNumber of


AverageShares


Exercise PriceOutstanding at December 31, 2007


741,858


$
34.24Granted


576,590



4.83Canceled


(84,423
)


9.60Exercised






Outstanding at December 31, 2008


1,234,025



22.18Granted






Canceled


(89,149
)


48.20Exercised






Outstanding at December 31, 2009


1,144,876


$
20.16Granted


225,498



2.47Canceled


(287,008
)


58.08Exercised






Outstanding at December 31, 2010


1,083,366


$
6.43  F-15




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverage





ExercisableRemaining


Weighted





WeightedRange of

Number


Contractual


Average


Number


AverageExercise Prices

Outstanding


Life in Years


Exercise Price


Exercisable


Exercise Price$1.43  $2.62


230,444



9.24


$
2.44



10,875


$
1.812.77   4.90


172,100



6.54



3.79



149,643



3.805.12   5.80


368,675



7.13



5.12



357,887



5.126.70   7.02


232,100



4.40



6.90



232,100



6.908.00   79.38


80,047



2.75



28.28



80,047



28.281,083,366



6.58


$
6.43



830,552


$
7.57            F-16




---



##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Warrants
    Common SharesCurrently

Price perTotal

Exercisable

Share

Expiration DateWarrants related to April 2004 financing


10,000



10,000


$
18.50



April 28, 2011
*     *
    
    The terms of these warrants contain net exercise provisions,
    under which holders can elect to receive common stock equal to
    the difference between the exercise price and the sale price for
    common shares on the exercise date or the date immediately
    preceding the exercise date instead of paying the exercise price
    in cash.      Note 6 
    Employee
    Savings Plan    Note 7 
    Commitments
    and Contingencies  Operating
    Leases
      Patents
    and Licenses
   F-17




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    OperatingYears Ended December 31,

Licenses


Leases2011

$
175,000


$
1,307,0002012


175,000



1,336,0002013


175,000



1,368,0002014


180,000



1,408,0002015


195,000



1,448,000Thereafter


735,000



1,364,000Total payments

$
1,635,000


$
8,231,000   Note 8 
    Contractual
    Guarantees and Indemnities    Warranties
    Intellectual
    Property Indemnities
    Director
    and Officer Indemnities and Contractual Guarantees
     F-18




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  General
    Contractual Indemnities/Products Liability
    Contractual
    Contingency
    Note 9 
    Legal
    Proceedings    Note 10 
    Earnings
    Per Share      2010


2009


2008Outstanding stock options


1,083,366



1,144,876



1,234,025Outstanding stock awards


787,997



910,998



20,000Outstanding warrants


10,000



618,237



352,466Total


1,881,363



2,674,111



1,606,491   Note 11 
    Severance
    Charges   F-19




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 12 
    Details
    of Certain Financial Statement Components and Supplemental
    Disclosures of Cash Flow Information and Non-Cash
    Activities  Balance
    Sheet Data:
  December 31,


December 31,2010


2009Accounts receivable:Accounts receivable-trade

$
36,000


$
204,000U.S. government accounts receivable-billed


74,000



269,000Less: allowance for doubtful accounts


(2,000
)


(11,000
)$
108,000


$
462,000   December 31,


December 31,2010


2009Inventories:Raw materials

$
1,499,000


$
2,010,000Work-in-process


511,000



543,000Finished goods


1,316,000



919,000Less: inventory reserves


(1,096,000
)


(828,000
)$
2,230,000


$
2,644,000   December 31,


December 31,2010


2009Property and Equipment:Equipment

$
16,092,000


$
15,743,000Leasehold improvements


6,786,000



6,761,000Furniture and fixtures


404,000



404,00023,282,000



22,908,000Less: accumulated depreciation and amortization


(21,948,000
)


(21,076,000
)$
1,334,000


$
1,832,000    F-20




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,


December 31,2010


2009Patents and Licenses:Patents pending

$
1,110,000


$
1,118,000Patents issued


1,382,000



1,141,000Less accumulated amortization


(554,000
)


(477,000
)Net patents issued


828,000



664,000Licenses pending


7,000



18,000Licenses


563,000



563,000Less accumulated amortization


(234,000
)


(200,000
)Net licenses Issued


329,000



363,000Purchased technology


1,706,000



1,706,000Less accumulated amortization


(1,706,000
)


(1,706,000
)Net purchased technology






$
2,274,000


$
2,163,000     December 31,


December 31,2010


2009Accrued Expenses and Other Long Term Liabilities:Salaries payable

$
116,000


$
107,000Compensated absences


246,000



397,000Compensation related


27,000



39,000Warranty reserve


289,000



255,000Deferred rent


391,000



384,000Other


56,000



236,000Total


1,125,000



1,418,000Less current portion


(548,000
)


(892,000
)Long term portion

$
577,000


$
526,000   2010


2009


2008Warranty Reserve Activity:Beginning balance

$
255,000


$
261,000


$
380,000Additions


78,000



17,000



41,000Deductions


(44,000
)


(23,000
)


(160,000
)Ending balance

$
289,000


$
255,000


$
261,000  F-21




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Supplemental
    Cash Flow Information:
  2010


2009


2008Cash paid for interest

$
29,000


$
32,000


$
32,000   Note 13 
    Subsequent
    Events    Quarterly
    Financial Data (Unaudited)
  First Quarter


Second Quarter


Third Quarter


Fourth Quarter2010Net revenues(1)

$
3,415,000


$
2,369,000


$
1,974,000


$
789,000Loss from operations(2)


2,538,000



3,248,000



3,351,000



2,979,000Net loss


2,502,000



3,127,000



3,354,000



2,985,000Basic and diluted loss per common share

$
(0.11
)

$
(0.14
)

$
(0.14
)

$
(0.11
)Weighted average number of shares outstanding


21,808,816



21,870,717



23,335,955



26,430,0112009Net revenues(1)

$
1,677,000


$
2,631,000


$
4,292,000


$
2,216,000Loss from operations(2)


3,496,000



3,286,000



2,179,000



3,201,000Net loss


3,542,000



4,108,000



1,819,000



3,510,000Basic and diluted loss per common share

$
(0.20
)

$
(0.23
)

$
(0.08
)

$
(0.16
)Weighted average number of shares outstanding


17,869,030



18,170,470



21,621,035



21,621,035     (1)
    
    Our revenues vary from quarter to quarter as our customers
    provide minimal lead-time prior to the release of their purchase
    orders and have non-binding commitments to purchase from us.(2)
    
    Includes increased reserve for inventory obsolescence of
    $90,000, $90,000, $90,000 and $90,000, respectively, in the 2010
    quarters and $12,000, $90,000, $90,000 and $90,000,
    respectively, in the 2009 quarters. F-22




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##### Table of Contents



SUPERCONDUCTOR
    TECHNOLOGIES INC.
  Schedule II 
    Valuation and Qualifying Accounts
  AdditionsCharged to

Charged toBeginning

Costs &

Other



EndingBalance

Expenses

Accounts

Deductions

Balance2010Allowance for Uncollectible Accounts

$
11,000


$



$



$
(9,000
)

$
2,000Reserve for Inventory Obsolescence


828,000



413,000







(145,000
)


1,096,000Reserve for Warranty


255,000



78,000







(44,000
)


289,000Deferred Tax Asset Valuation Allowance(1)


120,609,000



(85,509,000
)










35,100,0002009Allowance for Uncollectible Accounts


75,000











(64,000
)


11,000Reserve for Inventory Obsolescence


861,000



611,000







(644,000
)


828,000Reserve for Warranty


261,000



43,000







(49,000
)


255,000Deferred Tax Asset Valuation Allowance


117,658,000



2,951,000











120,609,0002008Allowance for Uncollectible Accounts


75,000















75,000Reserve for Inventory Obsolescence


1,015,000



17,000







(171,000
)


861,000Reserve for Warranty


380,000



41,000







(160,000
)


261,000Deferred Tax Asset Valuation Allowance

$
115,282,000


$
2,376,000


$



$



$
117,658,000     (1)
    
    The deferred tax asset valuation allowance decreased by $85.5
    million in 2010 due to the revaluation of the deferred tax asset
    from loss carryforwards under the change in control provisions
    in the Internal Revenue Code. F-23




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##### Table of Contents



SIGNATURES
      By:
    /s/  Jeffrey
    A. Quiram     POWER OF
    ATTORNEY
  Form 10-K,
  Form 10-K
  Signature

Title

Date/s/  Jeffrey
    A. QuiramJeffrey
    A. Quiram

President, Chief Executive Officer and Director (Principal
    Executive Officer)

March 21, 2011/s/  William
    J. BuchananWilliam
    J. Buchanan

Chief Financial Officer (Principal Financial and Accounting
    Officer)

March 21, 2011/s/  David
    W. VellequetteDavid
    W. Vellequette

Director

March 21, 2011/s/  Lynn
    J. DavisLynn
    J. Davis

Director

March 21, 2011/s/  Dennis
    J. HorowitzDennis
    J. Horowitz

Director

March 21, 2011/s/  Martin
    A. KaplanMartin
    A. Kaplan

Chairman of the Board

March 21, 2011/s/  John
    D. LocktonJohn
    D. Lockton

Director

March 21, 2011  F-24