<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
      For the quarterly period ended September 30, 2004

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

For the transition period from__________________ to ____________________________

                         Commission file number: 0-31641

                        SUPERCONDUCTIVE COMPONENTS, INC.
        (Exact name of small business issuer as specified in its charter)

           OHIO                                                31-1210318
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                            Identification No.)

                    2839 CHARTER STREET, COLUMBUS, OHIO 43228
          (Address of principal executive offices, including zip code)

                                 (614) 486-0261
                (Issuer's telephone number, including area code)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)

      Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for at least the past 90 days. YES
[X] NO [ ]

      State the number of shares outstanding of each of the registrant's classes
of common equity, as of the latest practicable date: 2,439,360 shares of Common
Stock, without par value, were outstanding at October 31, 2004.

<PAGE>

                                   FORM 10-QSB

                        SUPERCONDUCTIVE COMPONENTS, INC.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 PAGE NO.
                                                                                                 --------
<S>                                                                                              <C>
PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements.                                                                 3

                  Balance Sheets as of September 30, 2004 (unaudited)
                       and December 31, 2003                                                       3 - 4

                  Statements of Operations For the Three Months and Nine Months
                       Ended September 30, 2004 and 2003  (unaudited)                               5

                  Statements of Cash Flows For the Nine Months
                       Ended September 30, 2004 and 2003 (unaudited)                               6 - 7

                  Notes to Financial Statements (unaudited)                                       8 - 12

     Item 2.  Management's Discussion and Analysis or Plan of Operation.                           13-22

     Item 3.  Controls and Procedures                                                               22

PART II. OTHER INFORMATION

     Item 1.  Legal Proceedings.                                                                   N/A

     Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.                          23

     Item 3.  Defaults Upon Senior Securities.                                                     N/A

     Item 4.  Submission of Matters to a Vote of Security Holders.                                 N/A

     Item 5.  Other Information.                                                                   N/A

     Item 6.  Exhibits.                                                                             23

     Signatures.                                                                                    23
</TABLE>

                                       2

<PAGE>

                         PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                          SUPERCONDUCTIVE COMPONENTS, INC.

                                   BALANCE SHEETS

<TABLE>
<CAPTION>
                                       ASSETS                                             SEPTEMBER 30,          DECEMBER 31,
                                       ------                                                 2004                   2003
                                                                                        ----------------        --------------
                                                                                           (UNAUDITED)
<S>                                                                                     <C>                     <C>
CURRENT ASSETS
  Cash                                                                                  $        133,439        $      266,940
  Cash, restricted for equipment                                                                 150,469                     -
  Accounts and notes receivable
    Trade, less allowance for doubtful accounts of $7,000 and
                 $25,000 respectively                                                            130,011               119,566
    Employees                                                                                          -                 6,995
    Other                                                                                              -                   119
  Inventories                                                                                    564,117               500,533
  Prepaid expenses                                                                                11,569                30,198
                                                                                        ----------------        --------------
       Total current assets                                                                      989,605               924,351
                                                                                        ----------------        --------------

PROPERTY AND EQUIPMENT,
 AT COST
  Machinery and equipment                                                                      2,140,618             2,031,437
  Furniture and fixtures                                                                          22,586                22,124
  Leasehold improvements                                                                         280,791               347,349
  Construction In Process                                                                         41,948                     -
                                                                                        ----------------        --------------
                                                                                               2,485,943             2,400,910
  Less accumulated depreciation                                                               (1,596,167)           (1,827,076)
                                                                                        ----------------        --------------
                                                                                                 889,776               573,834
                                                                                        ----------------        --------------

OTHER ASSETS
  Deposits                                                                                         8,754                 7,863
  Intangibles                                                                                     37,842                40,159
                                                                                        ----------------        --------------
                                                                                                  46,596                48,022
                                                                                        ----------------        --------------

TOTAL ASSETS                                                                            $      1,925,977        $    1,546,207
                                                                                        ================        ==============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                     - 3 -
<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                                 BALANCE SHEETS

                  LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                                          SEPTEMBER 30,          DECEMBER 31,
                                                                                              2004                   2003
                                                                                        ----------------        --------------
                                                                                           (UNAUDITED)
<S>                                                                                     <C>                     <C>
CURRENT LIABILITIES
  Capital lease obligation, current portion                                             $         33,081        $       31,994
  Capital lease obligation, shareholder, current portion                                          68,428                68,428
  Note payable shareholders, current portion                                                     166,000               130,000
  Accounts payable                                                                               258,436               222,117
  Accounts payable, shareholders                                                                   7,920                 7,920
  Accrued contract expenses                                                                      313,004                86,049
  Accrued personal property taxes                                                                 36,009                43,263
  Accrued interest, shareholders                                                                  28,561                39,760
  Deferred contract revenue                                                                       92,474                50,742
  Accrued expenses                                                                                94,470                72,195
                                                                                        ----------------        --------------
        Total current liabilities                                                              1,098,383               752,468
                                                                                        ----------------        --------------

CAPITAL LEASE OBLIGATION, NET OF  CURRENT PORTION                                                 47,484                31,727
                                                                                        ----------------        --------------

NOTE PAYABLE SHAREHOLDERS, NET OF CURRENT PORTION                                                  2,270               767,625
                                                                                        ----------------        --------------

COMMITMENTS AND CONTINGENCIES                                                                          -                     -
                                                                                        ----------------        --------------

SHAREHOLDERS' EQUITY (DEFICIT)
  Convertible preferred stock, Series B, 10% cumulative,
     nonvoting, no par value, $10 stated value, optional
      redemption at 103%                                                                         303,480               284,591
  Common stock, no par value, authorized 15,000,000
     shares; 2,439,360 shares issued and outstanding                                           7,541,653             6,378,216
  Additional paid-in capital                                                                     553,976                59,893
  Accumulated deficit                                                                         (7,621,269)           (6,728,313)
                                                                                        ----------------        --------------
                                                                                                 777,840                (5,613)
                                                                                        ----------------        --------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                    $      1,925,977        $    1,546,207
                                                                                        ================        ==============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                     - 4 -
<PAGE>


                      SUPERCONDUCTIVE COMPONENTS, INC.

                          STATEMENTS OF OPERATIONS

             THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND
                NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                   2004             2003             2004             2003
                                                -----------      -----------      -----------      -----------
<S>                                             <C>              <C>              <C>              <C>
SALES REVENUE                                   $   366,072      $   489,710      $ 1,422,716      $ 1,676,863
CONTRACT RESEARCH REVENUE                            84,766          119,020          199,061          217,511
                                                -----------      -----------      -----------      -----------
                                                    450,838          608,730        1,621,777        1,894,374
                                                -----------      -----------      -----------      -----------

COST OF SALES REVENUE                               387,197          387,168        1,250,228        1,300,768
COST OF CONTRACT RESEARCH                            91,607          107,259          214,738          124,928
                                                -----------      -----------      -----------      -----------
                                                    478,804          494,427        1,464,966        1,425,696
                                                -----------      -----------      -----------      -----------

GROSS MARGIN                                        (27,966)         114,303          156,811          468,678

GENERAL AND ADMINISTRATIVE EXPENSES                 174,601          156,871          667,601          573,186

SALES AND PROMOTIONAL EXPENSES                       51,942           58,210          185,112          155,784
                                                -----------      -----------      -----------      -----------

LOSS FROM OPERATIONS                               (254,509)        (100,778)        (695,902)        (260,292)
                                                -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSE)
  Interest income                                       849              752            1,599            1,958
  Interest expense                                   (2,132)         (10,984)         (19,778)         (23,472)
  Debt conversion expense                                 -                -         (175,362)               -
  Gain/(loss) on disposal of equipment                   40              125           (2,141)           5,425
  Miscellaneous, net                                   (457)             403           (1,372)          (1,373)
                                                -----------      -----------      -----------      -----------
                                                     (1,700)          (9,704)        (197,054)         (17,462)
                                                -----------      -----------      -----------      -----------

LOSS BEFORE INCOME TAX                             (256,209)        (110,482)        (892,956)        (277,754)

INCOME TAX EXPENSE                                        -                -                -                -
                                                -----------      -----------      -----------      -----------

NET LOSS BEFORE CUMULATIVE EFFECT OF A
 CHANGE IN ACCOUNTING                              (256,209)        (110,482)        (892,956)        (277,754)

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING               -                -                -          (15,886)
                                                -----------      -----------      -----------      -----------

NET LOSS                                           (256,209)        (110,482)        (892,956)        (293,640)

DIVIDENDS ON PREFERRED STOCK                         (6,296)            (405)         (18,888)         (14,175)
                                                -----------      -----------      -----------      -----------


LOSS APPLICABLE TO COMMON SHARES                $  (262,505)     $  (110,887)     $  (911,844)     $  (307,815)
                                                ===========      ===========      ===========      ===========

EARNINGS PER SHARE - BASIC AND DILUTIVE
 (Note 2)

NET LOSS PER COMMON SHARE BEFORE CUMULATIVE
 EFFECT OF A CHANGE IN ACCOUNTING
  Basic                                         $     (0.11)     $     (0.06)     $     (0.42)     $     (0.15)
                                                ===========      ===========      ===========      ===========
  Dilutive                                      $     (0.11)     $     (0.06)     $     (0.42)     $     (0.15)
                                                ===========      ===========      ===========      ===========

NET LOSS PER COMMON SHARE AFTER CUMULATIVE
 EFFECT OF A CHANGE IN ACCOUNTING
  Basic                                         $     (0.11)     $     (0.06)     $     (0.43)     $     (0.17)
                                                ===========      ===========      ===========      ===========
  Dilutive                                      $     (0.11)     $     (0.06)     $     (0.43)     $     (0.17)
                                                ===========      ===========      ===========      ===========

WEIGHTED AVERAGE SHARES OUTSTANDING
  Basic                                           2,434,947        1,823,256        2,137,667        1,823,256
                                                ===========      ===========      ===========      ===========
  Dilutive                                        2,434,947        1,823,256        2,137,667        1,823,256
                                                ===========      ===========      ===========      ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                     - 5 -
<PAGE>


                        SUPERCONDUCTIVE COMPONENTS, INC.

                            STATEMENTS OF CASH FLOWS

                 NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   2004           2003
                                                                 ---------      ---------
<S>                                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                       $(892,956)     $(293,640)
                                                                 ---------      ---------
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation                                                   153,265        165,627
    Amortization and accretion                                       2,316          2,316
    Warrants issued for consulting                                  35,586              -
    Debt conversion expense                                        175,362              -
    Cumulative effect of a change in accounting                          -         15,886
    (Gain) Loss on sale of equipment                                 2,141         (5,425)
    Inventory reserve                                               (6,057)       (30,608)
    Provision for doubtful accounts                                 18,000         (4,000)
    Changes in operating assets and liabilities:
      (Increase) decrease in assets:
        Accounts receivable                                        (21,331)        46,922
        Inventories                                                (57,527)        43,275
        Prepaid expenses                                            18,629         28,439
        Other assets                                                  (891)        (7,864)
      Increase (decrease) in liabilities:
        Accounts payable                                            36,319        (93,175)
        Accrued expenses                                           295,577         50,189
                                                                 ---------      ---------
          Total adjustments                                        651,389        211,582
                                                                 ---------      ---------
              Net cash used in operating activities               (241,567)       (82,058)
                                                                 ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds on sale of equipment                                      1,602          5,425
  Purchases of property and equipment                             (424,546)      (147,160)
                                                                 ---------      ---------
              Net cash used in investing activities               (422,944)      (141,735)
                                                                 ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from note payable, shareholders                         150,000        600,000
  Principal payments on notes payable, shareholders               (150,000)             -
  Proceeds from exercise of common stock options                     3,500              -
  Proceeds from sale of common stock (net)                         707,115              -
  Principal payments on capital lease obligations                  (29,136)       (31,616)
                                                                 ---------      ---------
              Net cash provided by financing activities            681,479        568,384
                                                                 ---------      ---------
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                     - 6 -
<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                  NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              2004          2003
                                                            --------     ---------
<S>                                                         <C>          <C>
NET INCREASE  (DECREASE) IN CASH                              16,968       (74,429)

CASH - Beginning of period                                   266,940       118,083
                                                            --------     ---------

CASH - End of period                                        $283,908     $  43,654
                                                            ========     =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the years for:
    Interest, net                                           $  4,055     $   8,699
    Income taxes                                            $      -     $       -

SUPPLEMENTAL DISCLOSURES OF NONCASH
 FINANCING ACTIVITIES

  Property and equipment was purchased by capital lease     $ 46,494     $       -

  Note payable converted to equity                          $729,700     $       -

  Accrued interest converted to equity                      $ 25,491     $       -
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                     - 7 -
<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1. BUSINESS ORGANIZATION AND PURPOSE

      Superconductive Components, Inc. (the "Company") is an Ohio corporation
      that was incorporated in May 1987. The Company was formed to develop,
      manufacture and sell materials using superconductive principles.
      Operations have since been expanded to include the manufacture and sale of
      non-superconductive materials. The Company's domestic and international
      customer base is primarily in the thin film battery, high temperature
      superconductor, lens and optical coatings, electronics, functional
      coatings industries and research.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited financial statements have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America for interim financial information and with instructions
      to Form 10-QSB and Article 10 of Regulation S-X. Accordingly they do not
      include all of the information and footnotes required by accounting
      principles generally accepted in the United States of America for complete
      financial statements. In the opinion of management, all adjustments
      considered necessary for fair presentation of the results of operations
      for the periods presented have been included. The financial statements
      should be read in conjunction with the audited financial statements and
      the notes thereto for the fiscal year ended December 31, 2003. Interim
      results are not necessarily indicative of results for the full year.

      The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities at the date of the financial statements
      and the reported amounts of revenues and expenses during the reporting
      period. Actual results could differ from those estimates.

      EQUIPMENT PURCHASED WITH GRANT/CONTRACT FUNDING

      The Company has received a grant of $517,935 from the Ohio Department of
      Development's Third Frontier Action Fund (TFAF) for the purchase of
      equipment related to the grant's purpose. Additionally, the Company
      received $27,500 as part of its contract with the Department of Energy for
      the purchase of equipment related to the contract's purpose. The Company
      has elected to record the funds disbursed as a contra asset; therefore,
      the assets are not reflected in the Company's financial statements. As
      assets are purchased, the liability initially created when the cash was
      received is reduced with no revenue being recognized or fixed asset
      recorded on the balance sheet. At September 30, 2004, the Company has
      disbursed $367,466. Funds received and not disbursed totaling $150,469 are
      included in accrued contract expenses at September 30, 2004. The grant and
      contract both provide that as long as the Company performs in compliance
      with the grant/contract, the Company retains the rights to the equipment.
      Management states that the Company will be in compliance with the
      requirements and, therefore, will retain the equipment at the end of the
      contract/grant.

                                       8
<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

      STOCK BASED COMPENSATION

      The Company's pro forma information for the nine months ended September
      30, 2004 and 2003 in accordance with the provisions of SFAS No. 123,
      "Accounting for Stock-Based Compensation" is provided below. For purposes
      of pro forma disclosures, stock-based compensation is amortized to expense
      on a straight-line basis over the vesting period. The following table
      compares the 2004 and 2003 results as reported to the results had the
      Company adopted the expense recognition provisions of SFAS #123.

<TABLE>
<CAPTION>
                                        September 30,    September 30,
                                            2004             2003
                                        -------------    -------------
<S>                                     <C>              <C>
Net loss applicable to common shares:
As reported                               $(911,844)       $(307,815)
Stock-based compensation, net of tax         (4,678)          (4,828)
                                          ---------        ---------
Pro forma net loss under SFAS #123        $(916,522)       $(312,643)

Basic and diluted loss per share:
As reported                               $   (0.43)       $   (0.17)
Pro forma under SFAS #123                 $   (0.43)       $   (0.17)
</TABLE>

      For the periods ended September 30, 2004 and 2003, there was no
      stock-based employee compensation cost included in the determination of
      net loss as reported.

NOTE 3. INVENTORY

      Inventory is comprised of the following:

<TABLE>
<CAPTION>
                    SEPTEMBER 30,   DECEMBER 31,
                        2004           2003
                    -------------   ------------
                     (unaudited)
<S>                 <C>             <C>
Raw materials         $ 372,368      $ 361,238
Work-in-progress        159,164        101,274
Finished goods          170,981        182,474
Inventory reserve      (138,396)      (144,453)
                      ---------      ---------
                      $ 564,117      $ 500,533
                      =========      =========
</TABLE>

                                        9
<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 4. COMMON STOCK, STOCK OPTIONS AND WARRANTS

      The following options were granted under the 1995 Stock Option Plan during
      the nine months ended September 30, 2004:

<TABLE>
<CAPTION>
   GRANT DATE                # OPTIONS GRANTED                  OPTION PRICE
   ----------                -----------------                  ------------
<S>                          <C>                                <C>
January 21, 2004                  50,000                            $2.60
April 27, 2004                    45,000                            $2.85
</TABLE>

      The following warrants were granted during the nine months ended September
      30, 2004:

<TABLE>
<CAPTION>
  GRANT DATE           # WARRANTS GRANTED            WARRANT PRICE
  ----------           ------------------            -------------
<S>                    <C>                           <C>
  May 13, 2004               118,818                     $2.88
  June 1, 2004                17,500                     $2.88
 July 13, 2004                 2,500                     $2.88
August 2, 2004                 1,600                     $2.88
</TABLE>

NOTE 5. EARNINGS PER SHARE

      Basic income (loss) per share is calculated as income available to common
      shareholders divided by the weighted average of common shares outstanding.
      Diluted earnings per share is calculated as diluted income (loss)
      available to common shareholders divided by the diluted weighted average
      number of common shares. Diluted weighted average number of common shares
      has been calculated using the treasury stock method for Common Stock
      equivalents, which includes Common Stock issuable pursuant to stock
      options and Common Stock warrants. At September 30, 2004 and 2003, all
      Common Stock options and warrants are anti-dilutive due to the net loss.
      The following is provided to reconcile the earnings per share
      calculations:

<TABLE>
<CAPTION>
                          Three months ended Sept. 30,      Nine months ended Sept. 30,
                              2004            2003             2004             2003
                          -----------      -----------      -----------      -----------
<S>                       <C>              <C>              <C>              <C>
Loss applicable
 to common shares         $  (262,505)     $  (110,887)     $  (911,844)     $  (307,815)
                          ===========      ===========      ===========      ===========
Weighted average
 common shares
 outstanding - basic        2,434,947        1,823,256        2,137,667        1,823,256

Effect of dilutions -
 stock options                      -                -                -                -
                          -----------      -----------      -----------      -----------
Weighted average
 shares outstanding -
 diluted                    2,434,947        1,823,256        2,137,667        1,823,256
                          ===========      ===========      ===========      ===========
</TABLE>

                                       10

<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 6. CAPITAL REQUIREMENTS; RISK OF CURTAILMENT OF BUSINESS OPERATIONS

      The Company's accumulated deficit since inception was $7,621,269
      (unaudited) at September 30, 2004. The losses have been financed primarily
      from: (i) several private offerings of debt and equity securities; (ii)
      additional investments and loans by major shareholders; and (iii) a
      private offering of common stock and warrants to purchase common stock in
      October 2000. The Company cannot assure that it will be able to raise
      additional capital in the future to fund its operations. The Company
      expects to continue to incur significant operating and net losses in 2004,
      and it is possible that it will never be able to sustain or develop the
      revenue levels necessary to attain profitability.

      As of September 30, 2004, cash on-hand was $283,908 with $150,469
      restricted for equipment purchases in accordance with the TFAF grant. Cash
      available for operations at September 30, 2004 was $133,439. Management
      believes, based on currently available financing and forecasted sales and
      expenses, that funding will be adequate to sustain operations through
      December 2004. During the first quarter of 2004 the Company began to raise
      additional funds through further offerings of debt and equity. The Company
      received additional debt financing of $150,000. This debt was repaid in
      the second quarter. During the first nine months of 2004 the Company
      received $517,935 from the State of Ohio's Third Frontier Action Fund to
      begin purchasing capital equipment required to commercialize the Company's
      Lithium Thin Film Battery sputtering target manufacturing process. At
      September 30, 2004, $150,469 of these funds have not been expended and are
      included on the balance sheet as accrued contract expenses. In March 2004
      the Company was approved by the Ohio Department of Development's
      Industrial Technology Enterprise Advisory Council Committee as an eligible
      entity for the Technology Investment Tax Credit program. The program is
      intended to benefit small Ohio-based research and development and
      technology-oriented companies. This approval permits individuals and
      businesses to receive state tax incentives for up to twenty-five percent
      of their qualified investments in the Company through March 2005. Through
      September 30, 2004, the Company, in a private placement to eight
      accredited investors sold 300,084 shares of its common stock without par
      value at a purchase price of $2.40 per share. The total offering price
      paid in cash was $720,200. As part of the private placement, the
      accredited investors also received warrants to purchase 60,017 shares of
      the Company's common stock, without par value, at a purchase price of
      $2.88 per share. Because the Company completed equity financing of at
      least $500,000 prior to June 30, 2004, the principal and accrued interest
      totaling $754,845.86 due on convertible promissory notes issued on June
      30, 2003, converted to 314,519 shares of common stock without par value at
      a conversion rate of $2.40 per share. As part of the conversion, the
      holders of the convertible promissory notes also received warrants to
      purchase an aggregate of 62,901 shares of the Company's common stock,
      without par value, at a purchase price of $2.88 per share. In November of
      2004 a director agreed to loan the Company up to $200,000 for working
      capital, which may be drawn by the Company in increments of $50,000. The
      loan is repayable on November 1, 2005, and may be repaid earlier without
      prepayment penalty upon 15 days prior written notice. The interest rate is
      Huntington National Bank's prime rate plus 2%, and interest will accrue
      and compound monthly. The loan is secured by the Company's assets and is
      perfected by the filing of a UCC-1 financing statement. For each $50,000
      increment drawn on the loan the director will receive 5,000 warrants to
      purchase the Company's

                                       11
<PAGE>
                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

      common stock, without par value, at a purchase price of $2.50 per share
      and exercisable until November 1, 2009. The director has the option to
      convert the loan balance (principal and accrued and unpaid interest) to
      equity at any time before repayment at the same price and terms as any
      equity financing of the Company equal to or in excess of $200,000. On
      November 3, 2004, $100,000 was drawn on the loan.

      The Company has incurred substantial operating losses through September
      30, 2004, and numerous factors make it necessary for the Company to seek
      additional capital. In order to support the initiatives envisioned in its
      business plan, it will need to raise additional funds through the sale of
      assets, public or private financing, collaborative relationships or other
      arrangements. Its ability to raise additional financing depends on many
      factors beyond its control, including the state of capital markets, the
      market price of its common stock and the development or prospects for
      development of competitive products by others. Because the common stock is
      not listed on a major stock exchange, many investors may not be willing or
      allowed to purchase it or may demand steep discounts. The necessary
      additional financing may not be available or may be available only on
      terms that would result in further dilution to the current owners of the
      common stock.

NOTE 7. CONVERSION OF CONVERTIBLE DEBT

      During second quarter 2004, the Company completed equity financing of at
      least $500,000 prior to June 30, 2004, thereby requiring the principal and
      accrued interest on the convertible promissory notes totaling $754,846 to
      convert to equity. Pursuant to the terms of the promissory notes the
      promissory notes converted to common stock, without par value, at a rate
      of $2.40 per share and entitled the holders of the promissory notes to
      receive warrants under the same terms as provided in the 2004 private
      equity financing. Therefore, the Company has recorded the debt conversion
      in accordance with SFAS #84 - "Induced Conversions of Convertible Debt"
      which requires recognition of an expense equal to the fair value of the
      additional securities issued with conversion. The Company expensed
      $175,362 of debt conversion expense in the second quarter 2004.

                                       12
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      The following discussion should be read in conjunction with the Financial
      Statements and Notes contained herein.

      The following section contains forward-looking statements within the
      meaning of the Private Securities Litigation Reform Act of 1995. Any
      statements that express, or involve discussions as to expectations,
      beliefs, plans, objectives, assumptions or future events or performance
      (often, but not always, through the use of words or phrases such as will
      likely result, are expected to, will continue, is anticipated, estimated,
      projection, outlook) are not statements of historical fact and may be
      forward looking. Forward-looking statements involve estimates, assumptions
      and uncertainties that could cause actual results to differ materially
      from those expressed in the forward-looking statements. These
      forward-looking statements are based largely on the Company's expectations
      and are subject to a number of risks and uncertainties, including but not
      limited to economic, competitive, regulatory, growth strategies, available
      financing and other factors discussed elsewhere in this report and in
      other documents filed by the Company with the Securities and Exchange
      Commission. Many of these factors are beyond the Company's control. Actual
      results could differ materially from the forward-looking statements made.
      In light of these risks and uncertainties, there can be no assurance that
      the results anticipated in the forward-looking information contained in
      this report will, in fact, occur.

      Any forward-looking statement speaks only as of the date on which such
      statement is made, and the Company undertakes no obligation to update any
      forward-looking statement or statements to reflect events or circumstances
      after the date on which such statements are made or reflect the occurrence
      of unanticipated events, unless necessary to prevent such statements from
      becoming misleading. New factors emerge from time to time and it is not
      possible for management to predict all factors, nor can it assess the
      impact of each such factor on the business or the extent to which any
      factor, or combination of factors, may cause actual results to differ
      materially from those contained in any forward-looking statements.

      RESULTS OF OPERATIONS

      CRITICAL ACCOUNTING POLICIES

      The preparation of financial statements and related disclosures in
      conformity with accounting principles generally accepted in the United
      States of America requires management to make judgments, assumptions and
      estimates that affect the amounts reported in the Financial Statements and
      accompanying notes. Note 2 to the Financial Statements in the Annual
      Report on Form 10-KSB for the year ended December 31, 2003 describes the
      significant accounting policies and methods used in the preparation of the
      Financial Statements. Estimates are used for, but not limited to,
      accounting for doubtful accounts, inventory allowances, property and
      equipment depreciable lives, patents and licenses useful lives, asset
      retirement obligations, assessing changes in which impairment of certain
      long-lived assets may occur and for Black-Scholes models for valuing
      warrants. Actual results could differ from these estimates. The following
      critical accounting policies are impacted significantly by judgments,
      assumptions and estimates used in the preparation of the Financial
      Statements. The allowance for doubtful accounts is based on our assessment
      of the collectibility of specific customer accounts and the aging of the
      accounts receivable.

      If there is a deterioration of a major customer's credit worthiness or
      actual defaults are higher than our historical experience, our estimates
      of the recoverability of amounts due us could be adversely affected.
      Inventory purchases and commitments are based upon future demand
      forecasts.

                                       13
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      If there is a sudden and significant decrease in demand for our products
      or there is a higher risk of inventory obsolescence because of rapidly
      changing technology and customer requirements, we may be required to
      increase our inventory allowances and our gross margin could be adversely
      affected. Depreciable and useful lives estimated for property and
      equipment, licenses and patents are based on initial expectations of the
      period of time these assets and intangibles will provide benefit to our
      Company. Cost estimates for removal and repair of the current leased
      building or a change in timing of the relocation could impact the
      estimate. Changes in circumstances related to a change in our business,
      change in technology or other factors could result in these assets
      becoming impaired, which could adversely affect the value of these assets.

      The Company utilizes the Black-Scholes model to value warrants granted
      with the issuance of stock and debt or consulting services, which requires
      management to make estimates of dividend yield, interest rates and market
      volatility. Changes in the financial market place could impact these
      estimates.

      To date, the Company has received revenue predominantly from commercial
      sales, government research contracts and non-government research
      contracts. The Company has incurred cumulative losses of $7,621,269 from
      inception to September 30, 2004.

      NINE MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED) COMPARED TO NINE MONTHS
      ENDED SEPTEMBER 30, 2003 (UNAUDITED):

      REVENUES

      Revenues for the nine months ended September 30, 2004 were $1,621,777
      compared to $1,894,374, a decrease of $272,597 or 14.4% from the nine
      months ended September 30, 2003.

      Product revenues decreased to $1,422,716 in 2004 from $1,676,863 in 2003
      or a decrease of 15.2%. The decline in revenues for the first nine months
      is due to lower product shipments as a result of the weak U.S. economy and
      the relocation of the Company's facilities. The Company intends to
      intensify its marketing efforts by increasing the number of manufacturers
      representatives representing the Company.

      The Company became a member of a team led by Oxford Instruments
      Superconducting Technology, which was awarded a grant from the Department
      of Energy Superconductivity Partnership Initiative (SPI) Program. Revenues
      of $17,684 were generated in the first nine months of 2004. The focus of
      this program is being changed and, thus, caused the decrease in contract
      research revenues. A member of the team has determined that the technology
      is not as suitable for the future MRI market segment as originally
      projected in 2001. As a result, this member has decided to withdraw from
      the program. Due to the unexpected change in market potential the Company
      has also removed itself from this Department of Energy SPI.

      The Company has a Phase II Small Business Innovation Research grant for
      $523,612 from the Department of Energy that was awarded in 2003. This
      award was to develop an advanced method to manufacture continuous reacted
      lengths of High Tc Superconductor: Bismuth Strontium Calcium Copper Oxide
      - 2212 Wire. Revenues of $181,377 from this grant are included in revenues
      for the first nine months of 2004.

                                       14
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      GROSS MARGIN

      Total gross margin in 2004 was $156,811 or 9.7% of total revenue compared
      to $468,678 or 24.7% in 2003. Gross margin on product revenue was 12.1% in
      2004 versus 22.4% in 2003. The decrease was due to lower sales as well as
      the product mix. Gross margin on contract research revenue was (7.9)% for
      2004 and 42.6% for 2003. The decrease in gross margin is due to the
      Company's share of costs expended for the SPI program. The Company was
      responsible for 50% of the expenses attributable to this program.

      SELLING EXPENSE

      Selling expense in 2004 increased to $185,112 from $155,784 in 2003, an
      increase of 18.8%. The increase was due to the addition of a sales manager
      at January 1, 2004. This was partially offset by a reduction in commission
      costs and decreased trade show attendance.

      GENERAL AND ADMINISTRATIVE EXPENSE

      General and administrative expense in 2004 increased to $667,601 from
      $573,186 in 2003, or 16.5%. The increase was due to the relocation of the
      Company's facility in the first quarter of 2004. $73,508 was expensed for
      this purpose. Rent expense increased from $49,946 to $99,975, or 100.2%
      due to the relocation. Also, non-employee stock warrants were granted as
      compensation for consulting services. This value of $35,586 was expensed
      in 2004.

      RESEARCH AND DEVELOPMENT EXPENSE

      Internal research and development costs are expensed as incurred. Research
      and development costs for 2004 were $5,382 compared to $63,764 in 2003.
      Internal research and development costs decreased due to a reduction in
      staff and also have been absorbed by the Department of Energy grant.

      INTEREST EXPENSE

      Interest expense was $19,778 for the nine months ended September 30, 2004
      compared to $23,472 for the nine months ended September 30, 2003. Interest
      expense to related parties was $14,291 and $17,636 for the nine months
      ended September 30, 2004, and September 30, 2003, respectively. The
      decrease was due to the fact that the accrued interest and related notes
      from the financing completed in June and July of 2003 were converted to
      equity during the second quarter of 2004 and no further related party
      interest expense was incurred beginning in June 2004.

      LOSS APPLICABLE TO COMMON SHARES

      BASIC

      Net loss per common share based on the loss applicable to common shares
      for the nine months ended September 30, 2004 and 2003 was $0.43 and $0.17,
      respectively. The loss applicable to common shares includes the net loss
      from operations, Series B preferred stock dividends and the cumulative
      effect of the change in accounting. The net loss per common share from
      operations was $0.42 and $0.15 for the nine months ended September 30,
      2004 and 2003, respectively.

                                       15
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      The difference between the net loss from operations and the loss
      applicable to common shares of $0.01 and $0.02 for the nine months ended
      September 30, 2004 and 2003, respectively, was a result of the preferred
      position that the preferred shareholders have in comparison to the common
      shareholders and the cumulative effect of the change in accounting.

      Dividends on the Series B preferred stock accrue at 10% annually on the
      outstanding shares. Dividends on the Series B preferred stock totaled
      $18,888 for the nine months ended September 30, 2004 and $14,175 for the
      nine months ended September 30, 2003.

      Basic loss per common share for the nine months ended September 30, 2004,
      was $0.43 per share with 2,137,667 weighted average common shares
      outstanding as compared to $0.17 per share and 1,823,256 weighted average
      common shares outstanding for the nine months ended September 30, 2003.

      DILUTED

      Diluted loss per common share for the nine months ended September 30, 2004
      was $0.43 per share with 2,137,667 average common shares outstanding as
      compared to $0.17 per share and 1,823,256 weighted average common shares
      outstanding for the nine months ended September 30, 2003. For the nine
      months ended September 30, 2004 and 2003, all outstanding common stock
      equivalents are anti-dilutive due to the net loss.

      LIQUIDITY AND WORKING CAPITAL

      At September 30, 2004, working capital was $(108,778) compared to $581,728
      at September 30, 2003. The decrease was due to a reduction in inventory
      and accounts receivable, and an increase in accrued contract expenses,
      deferred contract revenue and notes payable. Accrued contract expenses
      increased as a result of the monies received from the Third Frontier
      Action Fund that had not been disbursed as of September 30, 2004. The
      Company used cash from operations of approximately $242,000 and $82,000
      for the nine months ended September 30, 2004 and September 30, 2003,
      respectively. Significant non-cash items including depreciation, inventory
      reserve on excess and obsolete inventory, warrants issued for consulting,
      debt conversion expense, allowance for doubtful accounts and the
      cumulative effect of the change in accounting were approximately $376,000
      and $147,000, respectively, for the nine months ended September 30, 2004
      and 2003. Accounts payable and accrued expenses increased in excess of
      increases in accounts receivable, inventory, prepaids and other assets by
      approximately $271,000 for the nine months ended September 30, 2004.
      Accounts receivable, inventory, prepaids and other assets decreased in
      excess of decreases in accounts payable and accrued expenses by
      approximately $68,000 for the nine months ended September 30, 2003.

      For investing activities, the Company used cash of approximately $423,000
      and $142,000, for the nine months ended September 30, 2004 and September
      30, 2003, respectively. The amounts invested were used to purchase
      machinery and equipment for increased production capacity, new product
      lines and for leasehold improvements for the new facility. Proceeds on
      sale of equipment totaled $1,602 and $5,425 for the nine months ended
      September 30, 2004 and September 30, 2003, respectively.

      For financing activity for the nine months ended September 30, 2004, the
      Company provided cash of approximately $681,000. Cash payments to third
      parties for capital lease obligations

                                       16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      approximated $29,000; proceeds from notes payable totaled $150,000. Net
      proceeds from sale of common stock was $707,000 and proceeds from the
      exercise of stock options totaled $3,500. Cash payments for note payable
      were $150,000.

      For financing activity for the nine months ended September 30, 2003, the
      Company provided cash of approximately $568,000. Cash payments to third
      parties for capital lease obligations approximated $32,000. Proceeds from
      notes payable to shareholders were $600,000.

      While certain major shareholders of the Company have advanced funds in the
      form of subordinated debt, accounts payable and guaranteeing bank debt in
      the past, there is no commitment by these individuals to continue funding
      the Company or guaranteeing bank debt in the future. The Company will
      continue to seek new financing or equity financing arrangements. However,
      the Company cannot be certain that it will be successful in efforts to
      raise additional new funds.

      In November of 2004 a director agreed to loan the Company up to $200,000
      for working capital, which may be drawn by the Company in increments of
      $50,000. The loan is repayable on November 1, 2005, and may be repaid
      earlier without prepayment penalty upon 15 days prior written notice. The
      interest rate is Huntington National Bank's prime rate plus 2% and
      interest will accrue and compound monthly. The loan is secured by the
      Company's assets and is perfected by the filing of a UCC-1 financing
      statement. For each $50,000 increment drawn on the loan the director will
      receive 5,000 warrants to purchase the Company's common stock, without par
      value, at a purchase price of $2.50 per share and exercisable until
      November 1, 2009. The director has the option to convert the loan balance
      (principal and accrued and unpaid interest) to equity at any time before
      repayment at the same price and terms as any equity financing of the
      Company equal to or in excess of $200,000. On November 3, 2004, $100,000
      was drawn on the loan.

      The Company completed two private financing transactions in 2003 including
      (i) the issuance of convertible promissory notes in the aggregate amount
      of $600,000 and 122,000 warrants to purchase shares of common stock in
      exchange for $600,000 in cash and (ii) the redemption of the Company's
      entire $129,770 obligation on its Series A redeemable convertible
      preferred stock in exchange for convertible promissory notes in the
      aggregate amount of $129,770, which represented the face amount of the
      preferred stock plus accrued and unpaid dividends and interest, and 26,302
      warrants to purchase shares of common stock. Four present shareholders
      invested the $600,000 of new money in the Company. $500,000 in cash and
      the redemption of the Series A redeemable preferred stock was received and
      recorded on June 30, 2003. $100,000 in cash was received and recorded on
      July 1, 2003. During second quarter 2004, the Company completed equity
      financing of at least $500,000 prior to June 30, 2004, thereby requiring
      the principal and accrued interest totaling $754,846 on the convertible
      promissory notes to convert to equity. Pursuant to the terms of the
      promissory notes, the promissory notes converted to common stock at a rate
      of $2.40 per share and entitled the holders of the promissory notes to
      receive warrants under the same terms as the private placement. Therefore,
      the Company has recorded the debt conversion in accordance with SFAS #84 -
      "Induced Conversions of Convertible Debt" which requires recognition of an
      expense equal to the fair value of the additional securities issued with
      conversion. The Company has expensed $175,362 of debt conversion expense.

                                       17
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      RISK FACTORS

      The Company desires to take advantage of the "safe harbor" provisions of
      the Private Securities Litigation Reform Act of 1995. The following
      factors have affected or could affect the Company's actual results and
      could cause such results to differ materially from those expressed in any
      forward-looking statements made by the Company. Investors should consider
      carefully the following risks and speculative factors inherent in and
      affecting the business of the Company and an investment in the Company's
      common stock.

      WE HAVE EXPERIENCED SIGNIFICANT OPERATING LOSSES IN THE PAST AND MAY
      CONTINUE TO DO SO IN THE FUTURE.

      We commenced business in May of 1987. Our accumulated deficit since
      inception was $7,621,269 (unaudited) at September 30, 2004. We have
      financed the losses primarily from: (i) several private offerings of debt
      and equity securities; (ii) additional investments and loans by our major
      shareholders. We cannot assure you, however, that we will be able to raise
      additional capital in the future to fund our operations. We expect to
      continue to incur significant operating and net losses in 2004, and it is
      possible that we will never be able to sustain or develop the revenue
      levels necessary to attain profitability.

      IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDS WE MAY HAVE TO SIGNIFICANTLY
      CURTAIL THE SCOPE OF OUR OPERATIONS OR LIQUIDATE THE COMPANY.

      As of September 30, 2004, cash on-hand was $283,908 with $150,469
      restricted for equipment purchases in accordance with the TFAF grant. Cash
      available for operations at September 30, 2004 was $133,439. In November
      of 2004 a director agreed to loan the Company up to $200,000 for working
      capital, which may be drawn by the Company in increments of $50,000. The
      loan is repayable on November 1, 2005, and may be repaid earlier without
      prepayment penalty upon 15 days prior written notice. The interest rate is
      Huntington National Bank's prime rate plus 2% and interest will accrue and
      compound monthly. The loan is secured by the Company's assets and is
      perfected by the filing of a UCC-1 financing statement. For each $50,000
      increment drawn on the loan the director will receive 5,000 warrants to
      purchase the Company's common stock, without par value, at a purchase
      price of $2.50 per share and exercisable until November 1, 2009. The
      director has the option to convert the loan balance (principal and accrued
      and unpaid interest) to equity at any time before repayment at the same
      price and terms as any equity financing of the Company equal to or in
      excess of $200,000. On November 3, 2004, $100,000 was drawn on the loan.
      Management believes, based on currently available financing and forecasted
      sales and expenses, that funding will be adequate to sustain operations
      through December 2004.

      WE HAVE LIMITED MARKETING AND SALES CAPABILITIES.

      To successfully market our products, we must continue to develop
      appropriate marketing, sales, technical, customer service and distribution
      capabilities, or enter into agreements with third parties to provide these
      services. Our failure to develop these capabilities or obtain third-party
      agreements could adversely affect us.

      OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN KEY MANAGEMENT PERSONNEL.

      Our success depends in large part on our ability to attract and retain
      highly qualified management, administrative, manufacturing, sales, and
      research and development personnel. Due to the specialized nature of our
      business, it may be difficult to locate and hire qualified personnel. The
      loss of services of one of our executive officers or other key personnel,
      or our failure to attract and retain other executive officers or key
      personnel, could have a material adverse effect on our business, operating
      results and financial condition. Although the Company has been successful
      in planning for and retaining highly capable and qualified successor
      management in the past, there can be no assurance that it will be able to
      do so in the future.

                                       18
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      WE NEED ADDITIONAL CAPITAL, WHICH MAY REDUCE THE VALUE OF OUR COMMON
      STOCK.

      Although the Company was successful in raising $701,000 through the first
      ten months of 2004, numerous factors make it necessary for the Company to
      seek additional capital. In order to support the initiatives envisioned in
      our business plan, we will need to raise additional funds through the sale
      of assets, public or private financing, collaborative relationships or
      other arrangements. Our ability to raise additional financing depends on
      many factors beyond our control, including the state of capital markets,
      the market price of our common stock and the development or prospects for
      development of competitive products by others. Because our common stock is
      not listed on a major stock exchange, many investors may not be willing or
      allowed to purchase it or may demand steep discounts. The necessary
      additional financing may not be available to us or may be available only
      on terms that would result in further dilution to the current owners of
      our common stock.

      OUR COMPETITORS HAVE FAR GREATER FINANCIAL AND OTHER RESOURCES THAN WE
      HAVE.

      The market for Thin Film Materials is a substantial market with
      significant competition in both ceramic and metal materials. While we
      believe that our products enjoy certain competitive advantages in design,
      function, quality, and availability, considerable competition exists from
      well-established firms such as a division of Praxair's Surface Science
      Technology group as well as MCR, Johnson Matthey, Pure Tech and CERAC, all
      of which have more resources than the Company.

      In addition, a significant portion of our business is in the very
      competitive market for sputtering targets made of ceramics, metals and
      alloys. We face substantial competition in this area from companies with
      far greater financial and other resources than the Company. We cannot
      assure you that developments by others will not render our products or
      technologies obsolete or less competitive.

      GOVERNMENT CONTRACTS MAY BE TERMINATED OR SUSPENDED FOR NONCOMPLIANCE OR
      OTHER EVENTS BEYOND OUR CONTROL.

      The government may cancel virtually all of our government contracts, which
      are terminable at the option of the government. While we have complied
      with applicable government rules and regulations and contract provisions
      in the past, we could fail to comply in the future. Noncompliance with
      government procurement regulations or contract provisions could result in
      the termination of government contracts. The termination of our
      significant government contracts or the adoption of new or modified
      procurement regulations or practices could adversely affect us.

      Inventions conceived or actually reduced to practice under a government
      contract generally result in the government obtaining a royalty-free,
      non-exclusive license to practice the invention. Similarly, technologies
      developed in whole or in part at government expense generally result in
      the government obtaining unlimited rights to use, duplicate or disclose
      technical data produced under the contract. These licenses and rights may
      result in a loss of potential revenues or the disclosure of our
      proprietary information, either of which could adversely affect us.

      OUR REVENUES DEPEND ON PATENTS AND PROPRIETARY RIGHTS THAT MAY NOT BE
      ENFORCEABLE.

      We rely on a combination of patent and trademark law, license agreements,
      internal procedures and nondisclosure agreements to protect our
      intellectual property. These may be invalidated, circumvented or
      challenged. In addition, the laws of some foreign countries in which our
      products may be produced or sold do not protect our intellectual property
      rights to the same extent as the laws of the United States. Our failure to
      protect our proprietary information could adversely affect us.

                                       19
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      RIGHTS WE HAVE TO PATENTS AND PENDING PATENT APPLICATIONS MAY BE
      CHALLENGED.

      We have received from the United States Patent and Trademark Office a
      patent for Fine-Particle Bi-Sr-Ca-Cu-O Having High Phase Purity made by a
      Chemical Precipitation and Low-Pressure Calcination method, and have also
      received a patent for a new process to join two individual strongly linked
      super-conductors utilizing a melt processing technique. In addition, in
      the future we may submit additional patent applications covering various
      applications. The patent application we filed and patent applications that
      we may file in the future may not result in patents being issued, and any
      patents issued may not afford meaningful protection against competitors
      with similar technology, and may be challenged by third parties. Because
      U.S. patent applications are maintained in secret until patents are
      issued, and because publications of discoveries in the scientific or
      patent literature tend to lag behind actual discoveries by several months,
      we may not be the first creator of inventions covered by issued patents or
      pending patent applications or the first to file patent applications for
      such inventions. Moreover, other parties may independently develop similar
      technologies, duplicate our technologies or, if patents are issued to us
      or rights licensed by us, design around the patented aspects of any
      technologies we developed or licensed. We may have to participate in
      interference proceedings declared by the U.S. Patent and Trademark Office
      to determine the priority of inventions, which could result in substantial
      costs. Litigation may also be necessary to enforce any patents held by or
      issued to us or to determine the scope and validity of others' proprietary
      rights, which could result in substantial costs.

      THE RAPID RATE OF INVENTIONS AND DISCOVERIES IN THE SUPERCONDUCTIVITY
      FIELD HAS RAISED MANY UNRESOLVED PATENT ISSUES THAT MAY NEGATIVELY AFFECT
      OUR BUSINESS.

      The claims in granted patents often overlap and there are disputes
      involving rights to inventions claimed in pending patent applications. As
      a result, the patent situation in the high temperature superconductor
      field is unusually complex. It is possible that there will be patents held
      by third parties relating to our products or technology. We may need to
      acquire licenses to design around or successfully contest the validity or
      enforceability of those patents. It is also possible that because of the
      number and scope of patents pending or issued, we may be required to
      obtain multiple licenses in order to use a single material. If we are
      required to obtain multiple licenses, our costs will increase.
      Furthermore, licenses may not be available on commercially reasonable
      terms or at all. The likelihood of successfully contesting the validity or
      enforceability of those patents is also uncertain; and, in any event, we
      could incur substantial costs in defending the validity or scope of our
      patents or challenging the patents of others.

      THE RAPID TECHNOLOGICAL CHANGES OF OUR INDUSTRY MAY ADVERSELY AFFECT US IF
      WE DO NOT KEEP PACE WITH ADVANCING TECHNOLOGY.

      The Thin Film Market is characterized by rapidly advancing technology. Our
      success depends on our ability to keep pace with advancing technology,
      processes and industry standards. To date, we have focused our development
      efforts on powders and targets. We intend to continue to develop and
      integrate advances in the thin film coatings industry. However, our
      development efforts may be rendered obsolete by research efforts and
      technological advances made by others, and materials other than those we
      currently use may prove more advantageous.

      DEVELOPMENT STAGE OF THE COMPANY'S PRODUCTS AND UNCERTAINTY REGARDING
      DEVELOPMENT OF MARKETS.

      Some of the Company's products are in the early stages of
      commercialization and the Company believes that it will be several years
      before products will have significant commercial end-use applications, and
      that significant additional development work may be necessary to improve
      the commercial feasibility and acceptance of its products. There can be no
      assurance that the Company will be able to commercialize any of the
      products currently under development.

      To date, there has been no widespread commercial use of High Temperature
      Superconductive (HTS) products. Additionally, the market for the Thin Film
      Battery materials is still in its nascent stages.

                                       20
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      THE MARKET FOR OUR COMMON STOCK IS LIMITED, AND AS SUCH OUR SHAREHOLDERS
      MAY HAVE DIFFICULTY RESELLING THEIR SHARES WHEN DESIRED OR AT ATTRACTIVE
      MARKET PRICES.

      Our stock price and our listing may make it more difficult for our
      shareholders to resell shares when desired or at attractive prices. From
      April 2000 until September 2001, our common stock traded on the National
      Quotation Bureau (the "pink sheets"). In September 2001, our stock once
      again began trading on The Over the Counter Bulletin Board ("OTC Bulletin
      Board"). Nevertheless, our common stock has continued to trade in low
      volumes and at low prices. Some investors view low-priced stocks as unduly
      speculative and therefore not appropriate candidates for investment. Many
      institutional investors have internal policies prohibiting the purchase or
      maintenance of positions in low-priced stocks. This has the effect of
      limiting the pool of potential purchasers of our common stock at present
      price levels. Shareholders may find greater percentage spreads between bid
      and asked prices, and more difficulty in completing transactions and
      higher transaction costs when buying or selling our common stock than they
      would if our stock were listed on a major stock exchange, such as The New
      York Stock Exchange or The NASDAQ National Market.

      Additionally, the market prices for securities of superconductive material
      companies have been volatile throughout the Company's existence. Most of
      the companies are traded over the counter through the National Quotation
      Bureau or National Association of Securities Dealers Automated Quotation
      System. Historical trading characteristics for public companies in this
      industry include limited market support, low trading volume, and wide
      spreads (on a percentage basis) between the bid and ask prices.
      Announcements regarding product developments, technological advances,
      significant customer orders, and financial results significantly influence
      per share prices.

      OUR COMMON STOCK IS SUBJECT TO THE SECURITIES AND EXCHANGE COMMISSION'S
      "PENNY STOCK" REGULATIONS, WHICH LIMITS THE LIQUIDITY OF COMMON STOCK HELD
      BY OUR SHAREHOLDERS.

      Based on its trading price, our common stock is considered a "penny stock"
      for purposes of federal securities laws, and therefore is subject to
      regulations, which affect the ability of broker-dealers to sell the
      Company's securities. Broker-dealers who recommend a "penny stock" to
      persons (other than established customers and accredited investors) must
      make a special written suitability determination and receive the
      purchaser's written agreement to a transaction prior to sale.

      As long as the penny stock regulations apply to our common stock, it may
      be difficult to trade such stock because compliance with the regulations
      can delay and/or preclude certain trading transactions. Broker-dealers may
      be discouraged from effecting transactions in our common stock because of
      the sales practice and disclosure requirements for penny stock. This could
      adversely affect the liquidity and/or price of our common stock, and
      impede the sale of our common stock in the secondary market.

      OUR ARTICLES OF INCORPORATION AUTHORIZES US TO ISSUE ADDITIONAL SHARES OF
      STOCK.

      We are authorized to issue up to 15,000,000 shares of common stock, which
      may be issued by our board of directors for such consideration, as they
      may consider sufficient without seeking shareholders approval. The
      issuance of additional shares of common stock in the future will reduce
      the proportionate ownership and voting power of current shareholders.

      Our Articles of Incorporation also authorizes us to issue up to 260,000
      shares of preferred stock. The issuance of preferred stock in the future
      could create additional securities which would have dividend and
      liquidation preferences prior in right to the outstanding shares of common
      stock. These provisions could also impede a non-negotiated change in
      control.

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<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

      WE HAVE NOT PAID DIVIDENDS ON OUR COMMON STOCK IN THE PAST AND DO NOT
      EXPECT TO DO SO IN THE FUTURE.

      We cannot assure you that our operations will result in sufficient
      revenues to enable us to operate at profitable levels or to generate
      positive cash flow sufficient to pay dividends. We have never paid
      dividends on our common shares in the past and do not expect to do so in
      the foreseeable future.

      WE MAY HAVE DIFFICULTY RAISING ADDITIONAL CAPITAL, WHICH COULD DEPRIVE US
      OF NECESSARY RESOURCES.

      We require substantial capital resources to maintain existing operations.

      OFF BALANCE SHEET ARRANGEMENTS

      The Company has no off balance sheet arrangements including special
      purpose entities.

ITEM 3. CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, the Company's Chief
      Executive Officer and Chief Financial Officer evaluated the effectiveness
      of the design and operation of the Company's disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under
      the Securities Exchange Act of 1934). Based upon this evaluation, the
      Chief Executive Officer and Chief Financial Officer concluded that the
      disclosure controls and procedures were effective as of the period covered
      by this report in ensuring that information required to be disclosed by
      the Company in the reports that it files or submits under the Securities
      and Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time period specified by the Securities and
      Exchange Commission's rules and forms.

      Additionally, there were no changes in the Company's internal controls
      that could materially affect the Company's disclosure controls and
      procedures subsequent to the date of their evaluation, nor were there any
      material deficiencies or material weaknesses in the Company's internal
      controls. As a result, no corrective actions were required or undertaken.

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<PAGE>

                           PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

      During the third quarter ended September 30, 2004, the Company, in a
      private placement to three accredited investors sold units consisting of
      1,000 shares of the Company's common stock without par value and warrants
      to purchase 200 shares of common stock. The total offering price paid in
      cash by accredited investors was $49,200 for an aggregate of 20,500 shares
      of the Company's common stock and warrants to purchase an aggregate of
      4,100 of the Company's common stock, without par value, at a purchase
      price of $2.88 per share.

      On June 1, 2004, the Company issued warrants to purchase 17,500 shares of
      the Company's common stock, without par value, at a purchase price of
      $2.88 per share to a consultant in consideration for business development
      and strategic planning services provided to the Company.

      In our opinion, the issuance of these shares was exempt from registration
      pursuant to Section 4(2) of the Securities Act and Rule 506 promulgated
      thereunder due to the fact the shares were sold to less than 35 purchasers
      all of whom were accredited investors. The Company did not use a placement
      agent or underwriter for the transaction.

ITEM 6. EXHIBITS.

      (a)  EXHIBIT NO.                  DESCRIPTION

              10.1     Revolving Promissory Note dated as of November 3, 2004
                       by and between the Company and Mr. Robert H. Peitz.

              31.1     Rule 13a-14(a) Certification of Principal Executive
                       Officer.

              31.2     Rule 13a-14(a) Certification of Principal Financial
                       Officer.

              32.1     Section 1350 Certification of Principal Executive
                       Officer.

              32.2     Section 1350 Certification of Principal Financial
                       Officer.

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        SUPERCONDUCTIVE COMPONENTS, INC.

Date:  November 12, 2004                /s/ Daniel Rooney
                                        ----------------------------------------
                                        Daniel Rooney, President and
                                        Chief Executive Officer
                                        (Principal Executive Officer)

                                        /s/ Gerald S. Blaskie
                                        ----------------------------------------
                                        Gerald S. Blaskie,
                                        Chief Financial Officer
                                        (Principal Financial Officer)

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