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 June 30, 2003

[ ]    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 registrant as specified in its charter)

                    OHIO                                       31-0121318
      (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                      Identification No.)

                  1145 CHESAPEAKE AVENUE, COLUMBUS, OHIO 43212
          (Address of principal executive offices, including zip code)

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

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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
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: 1,823,256 shares of
Common Stock, without par value, were outstanding at July 31, 2003.


<PAGE>

                                   FORM 10-QSB

                        SUPERCONDUCTIVE COMPONENTS, INC.

                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>

                                                                                                  PAGE NO.
                                                                                                  --------

<S>                                                                                               <C>
PART I. FINANCIAL INFORMATION

        Item 1.  Financial Statements.

                      Balance Sheets as of June 30, 2003  (unaudited)
                           and December 31, 2002                                                   3 - 4

                      Statements of Operations For the Three Months and Six Months
                           Ended June 30, 2003 and 2002  (unaudited)                                 5

                      Statements of Cash Flows For the Three Months and Six Months
                           Ended June 30, 2003 and 2002 (unaudited)                                6 - 7

                      Notes to Financial Statements (unaudited)                                   8 - 11


         Item 2.  Management's Discussion and Analysis of Financial
                      Condition and Results of Operations.                                         12-20

         Item 3.  Disclosure Controls and Procedures                                                21

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings.                                                                N/A

         Item 2.  Changes in Securities and Use of Proceeds.                                        N/A

         Item 3.  Defaults Upon Senior Securities.                                                  N/A

         Item 4.  Submission of Matters to a Vote of Security Holders.                              22

         Item 5.  Other Information.                                                                N/A

         Item 6.  Exhibits and Reports on Form 8-K.                                                 22

         Signatures.                                                                               22-23
</TABLE>

<PAGE>
                         SUPERCONDUCTIVE COMPONENTS, INC.

                                   BALANCE SHEETS

                                      ASSETS
                                      ------

<TABLE>
<CAPTION>
                                                                       JUNE 30,         DECEMBER 31,
                                                                        2003                2002
                                                                        ----                ----
                                                                     (UNAUDITED)
<S>                                                                  <C>                <C>
CURRENT ASSETS
  Cash                                                               $   403,016        $    48,908
  Accounts and notes receivable
    Trade, less allowance for doubtful accounts of $15,000 and
                 $18,000 respectively                                    244,421            170,038
    Contract receivable                                                       --             71,087
    Related party receivables                                              3,489              4,368
    Employees                                                              8,252             11,985
    Other                                                                     23                733
 Inventories                                                             696,680            655,432
 Prepaid expenses                                                         25,291             33,934
                                                                     -----------        -----------
       Total current assets                                            1,381,172            996,485
                                                                     -----------        -----------
PROPERTY AND EQUIPMENT,
 AT COSTery and equipment                                              2,023,850          2,312,869
  Furniture and fixtures                                                  22,124             22,124
  Leasehold improvements                                                 347,349            347,349
                                                                     -----------        -----------
                                                                       2,393,323          2,682,342
  Less accumulated depreciation                                       (1,767,393)        (2,068,246)
                                                                     -----------        -----------
                                                                         625,930            614,096
                                                                     -----------        -----------
OTHER ASSETS
  Intangibles                                                             41,703             43,247
                                                                     -----------        -----------
TOTAL ASSETS                                                         $ 2,048,805        $ 1,653,828
                                                                     ===========        ===========

</TABLE>

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

                                        3

<PAGE>
                        SUPERCONDUCTIVE COMPONENTS, INC.

                                 BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

<TABLE>
<CAPTION>
                                                                                          JUNE 30,        DECEMBER 31,
                                                                                           2003               2002
                                                                                           ----               ----
                                                                                        (UNAUDITED)
<S>                                                                                   <C>                <C>
CURRENT LIABILITIES
  Capital lease obligation, current portion                                           $    35,538        $    40,144
  Capital lease obligation, shareholder, current portion                                   62,004             48,171
  Note payable shareholders, current portion                                              106,000             82,000
  Accounts payable                                                                        401,254            329,693
  Accounts payable, shareholders                                                            7,920              7,920
  Accrued contract expenses                                                                30,000             21,143
  Accrued personal property taxes                                                          55,844             54,002
  Accrued interest, shareholders                                                           21,358             20,638
  Accrued expenses                                                                         52,637             42,836
                                                                                      -----------        -----------
        Total current liabilities                                                         772,555            646,547
                                                                                      -----------        -----------
CAPITAL LEASE OBLIGATION, NET OF
 CURRENT PORTION                                                                           46,096             63,721
                                                                                      -----------        -----------
CAPITAL LEASE OBLIGATION, SHAREHOLDER, NET OF
 CURRENT PORTION                                                                            6,424             20,257
                                                                                      -----------        -----------
NOTE PAYABLE SHAREHOLDERS, NET OF CURRENT
 PORTION                                                                                  691,625             86,270
                                                                                      -----------        -----------
REDEEMABLE CONVERTIBLE PREFERRED
STOCK (Series A)
 10% cumulative, nonvoting, no par value, $1,000 stated value, liquidation and
     mandatory redemption at stated value per share plus unpaid and accumulated
     dividends of $278.20 per share                                                            --            121,770
                                                                                      -----------        -----------
COMMITMENTS AND CONTINGENCIES                                                                  --                 --
                                                                                      -----------        -----------
SHAREHOLDERS' EQUITY
  Convertible preferred stock, Series B, 10% cumulative, nonvoting, no par
     value, $10 stated value, optional
      redemption at 103%                                                                  349,263            335,492
  Common stock, no par value, authorized 15,000,000
     shares; 1,823,256 shares issued and outstanding                                    6,378,216          6,378,216
  Additional paid-in capital                                                               (4,779)             8,992
  Accumulated deficit                                                                  (6,190,595)        (6,007,437)
                                                                                      -----------        -----------
                                                                                          532,105            715,263
                                                                                      ===========        ===========
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                            $ 2,048,805        $ 1,653,828
                                                                                      ===========        ===========

</TABLE>


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

                                        4
<PAGE>
                        SUPERCONDUCTIVE COMPONENTS, INC.

                            STATEMENTS OF OPERATIONS

                  THREE MONTHS ENDED JUNE 30, 2003 AND 2002 AND
                     SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                     ---------------------------------------
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED           SIX MONTHS ENDED
                                                  2003            2002          2003           2002
                                                  ----            ----          ----           ----

<S>                                           <C>            <C>            <C>            <C>
SALES REVENUE                                 $   562,607    $   642,445    $ 1,187,153    $ 1,356,593
CONTRACT RESEARCH REVENUE                          65,158         74,302         98,491        143,533
                                              -----------    -----------    -----------    -----------
                                                  627,765        716,747      1,285,644      1,500,126
                                              -----------    -----------    -----------    -----------
COST OF SALES REVENUE                             438,272        424,225        913,600        952,003
COST OF CONTRACT RESEARCH                         (15,664)        69,230         17,669        138,461
                                              -----------    -----------    -----------    -----------
                                                  422,608        493,455        931,269      1,090,464
                                              -----------    -----------    -----------    -----------
GROSS MARGIN                                      205,157        223,292        354,375        409,662

GENERAL AND ADMINISTRATIVE EXPENSES               237,245        230,475        416,315        443,082

SALES AND PROMOTIONAL EXPENSES                     49,318         52,975         97,574         94,488
                                              -----------    -----------    -----------    -----------
LOSS FROM OPERATIONS                              (81,406)       (60,158)      (159,514)      (127,908)
                                              -----------    -----------    -----------    -----------
OTHER INCOME (EXPENSE)
  Interest, net                                    (5,436)        (4,854)       (11,282)        (9,010)
  Insurance proceeds                                   --         39,083             --         39,083
  Miscellaneous, net                                  782           (428)         3,524           (856)
                                              -----------    -----------    -----------    -----------
                                                   (4,654)        33,801         (7,758)        29,217
                                              -----------    -----------    -----------    -----------
LOSS BEFORE INCOME TAX                            (86,060)       (26,357)      (167,272)       (98,691)
INCOME TAX EXPENSE                                     --             --             --             --
                                              -----------    -----------    -----------    -----------
NET LOSS BEFORE CUMULATIVE EFFECT OF A
 CHANGE IN ACCOUNTING                             (86,060)       (26,357)      (167,272)       (98,691)

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING            --             --        (15,886)            --
                                              -----------    -----------    -----------    -----------
NET LOSS                                          (86,060)       (26,357)      (183,158)       (98,691)

DIVIDENDS ON PREFERRED STOCK                       (6,885)        (9,361)       (13,770)       (18,721)

ACCRETION OF REDEEMABLE CONVERTIBLE
PREFERRED (SERIES A)                                   --         (2,587)            --         (6,468)
                                              -----------    -----------    -----------    -----------
LOSS APPLICABLE TO COMMON SHARES              $   (92,945)   $   (38,305)   $  (196,928)   $  (123,880)
                                              ===========    ===========    ===========    ===========
EARNINGS PER SHARE - BASIC AND DILUTIVE
 (Note 2)

NET LOSS PER COMMON SHARE BEFORE CUMULATIVE
 EFFECT OF A CHANGE IN ACCOUNTING

  Basic                                       $     (0.05)   $     (0.01)   $     (0.09)   $     (0.05)
                                              ===========    ===========    ===========    ===========
  Dilutive                                    $     (0.05)   $     (0.01)   $     (0.09)   $     (0.05)
                                              ===========    ===========    ===========    ===========
NET LOSS PER COMMON SHARE AFTER CUMULATIVE
 EFFECT OF A CHANGE IN ACCOUNTING

  Basic                                       $     (0.05)   $     (0.02)   $     (0.11)   $     (0.07)
                                              ===========    ===========    ===========    ===========
  Dilutive                                    $     (0.05)   $     (0.02)   $     (0.11)   $     (0.07)
                                              ===========    ===========    ===========    ===========
WEIGHTED AVERAGE SHARES OUTSTANDING

  Basic                                         1,823,256      1,823,256      1,823,256      1,823,256
                                              ===========    ===========    ===========    ===========
  Dilutive                                      1,823,256      1,823,256      1,823,256      1,823,256
                                              ===========    ===========    ===========    ===========
</TABLE>


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

                                        5

<PAGE>
                        SUPERCONDUCTIVE COMPONENTS, INC.

                            STATEMENTS OF CASH FLOWS

                     SIX MONTHS ENDED JUNE 30, 2003 AND 2002

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                 2003             2002
                                                                 ----             ----
<S>                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                    $(183,158)       $ (98,691)
                                                              ---------        ---------
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation                                                118,848          121,714
    Amortization and accretion                                    1,544            1,485
    Cumulative effect of a change in accounting                  15,886               --
    Gain on sale of equipment                                    (5,300)              --
    Inventory reserve                                           (21,695)              --
    Provision for doubtful accounts                               3,000            2,000
    Changes in operating assets and liabilities:
      (Increase) decrease in assets:
        Accounts receivable                                        (974)          (7,003)
        Inventories                                             (19,552)          23,989
        Prepaid expenses                                          8,643          (54,847)
        Other assets                                                 --             (935)
      Increase (decrease) in liabilities:
        Accounts payable                                         71,562           10,867
        Accrued expenses                                          1,247          (91,080)
                                                              ---------        ---------
          Total adjustments                                     173,208            6,190
                                                              ---------        ---------
              Net cash used in operating activities              (9,950)         (92,501)
                                                              ---------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds on sale of equipment                                   5,300               --
  Purchases of property and equipment                          (119,011)         (35,054)
                                                              ---------        ---------
              Net cash used in investing activities            (113,711)         (35,054)
                                                              ---------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from note payable, shareholders                      500,000           50,000
  Principal payments on capital lease obligations               (22,232)         (20,341)
                                                              ---------        ---------
              Net cash provided by financing activities         477,769           29,659
                                                              ---------        ---------


</TABLE>

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

                                        6

<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                     SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                     ---------------------------------------

                                   (UNAUDITED)

                                                            2003       2002
                                                            ----       ----
NET INCREASE (DECREASE) IN CASH                           354,108     (97,896)

CASH - Beginning of period                                 48,908     118,083
                                                        ---------   ---------

CASH - End of period                                    $ 403,016   $  20,187
                                                        =========   =========

SUPPLEMENTAL DISCLOSURES OF CASH
 FLOW INFORMATION

  Cash paid during the years for:

    Interest, net                                       $   4,184      11,696
    Income taxes                                        $      --          --

SUPPLEMENTAL DISCLOSURES OF NONCASH
 FINANCING ACTIVITIES
   In second quarter 2003, $121,770 of Redeemable
    Convertible Preferred stock, Series A, was
    converted to Notes Payable, Shareholders

   In second quarter 2003, $7,585 of accrued interest
    was transferred to Notes Payable Shareholders












   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, research, electronics and functional coatings
                  industries.

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,
                  2002. 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.

                  Effective January 1, 2003, the Company implemented SFAS 143 -
                  "Accounting for Asset Retirement Obligations". This statement
                  addresses financial accounting and reporting for obligations
                  associated with the retirement of tangible long-lived assets
                  and the associated asset retirement costs.

NOTE 3.           INVENTORY

                  Inventory is comprised of the following:

                                           JUNE 30,         DECEMBER 31,
                                             2003              2002
                                        ---------------   ---------------
                                          (unaudited)
                   Raw materials           $ 472,874        $ 459,784
                   Work-in-progress          123,468          145,838
                   Finished goods            204,766          175,933
                   Inventory reserve        (104,428)        (126,123)
                                           ---------        ---------
                                           $ 696,680        $ 655,432
                                           =========        =========

                                       8

<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 4.           COMMON STOCK AND STOCK OPTIONS

                  The following options were granted under the 1995 Stock Option
                  Plan during the six months ended June 30, 2003:

                       GRANT DATE         # OPTIONS GRANTED    OPTION PRICE
                       ----------         -----------------    ------------

                       January 16, 2003         35,000             $1.00


NOTE 5.           EARNINGS PER SHARE

                  Basic income (loss) per share is calculated as income
                  available to common stockholders divided by the weighted
                  average of common shares outstanding. Diluted earnings per
                  share is calculated as diluted income (loss) available to
                  common stockholders 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 June 30, 2003 and 2002, all Common Stock options
                  and warrants had an exercise price above the fair market value
                  of the Company's Common Stock, and accordingly, no effect of
                  dilution is recorded for such Common Stock equivalents. The
                  following is provided to reconcile the earnings per share
                  calculations:

<TABLE>
<CAPTION>

                              Three months ended June 30,   Six months ended June 30,

                              2003             2002          2003             2002
                              ----             ----          ----             ----

<S>                        <C>            <C>            <C>            <C>
Income (loss) applicable
 to common shares          $   (92,945)   $   (38,305)   $  (196,928)   $  (123,880)
                           ===========    ===========    ===========    ===========

Weighted average
 common shares
 outstanding - basic         1,823,256      1,823,256      1,823,256      1,823,256

Effect of dilutions -
 stock options                      --             --             --             --
                           ===========    ===========    ===========    ===========

Weighted average
 shares outstanding -
 diluted                     1,823,256      1,823,256      1,823,256      1,823,256
                           ===========    ===========    ===========    ===========

</TABLE>

NOTE 6.           REDEEMABLE CONVERTIBLE PREFERRED STOCK (SERIES A)

                  Effective June 30, 2003, all 99 shares of the Series A
                  redeemable convertible preferred stock ($99,000), accrued
                  dividends ($22,770) and accrued interest ($7,585) were
                  converted to notes payable. The principal sum and any accrued
                  and unpaid interest on the notes shall be payable in full on
                  June 30, 2006. The holders of the notes may convert all or a
                  portion of the principal sum and any accrued and unpaid
                  interest owing on the

                                        9
<PAGE>


                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

                  notes into shares of common stock at any time after the first
                  anniversary of the issuance of the notes. Interest will be
                  based upon the Prime Commercial Rate on the date of the Notes
                  and subsequently on the last business day of the preceding
                  calendar year. If, within one year of the date of the issuance
                  of the notes, the Company obtains non-bank equity financing in
                  the amount of at least $500,000, then the unpaid portion of
                  the principal sum and any accrued and unpaid interest
                  automatically shall convert into shares of common stock. The
                  Company also issued 26,302 warrants to the holders of the
                  notes to purchase shares of common stock for the price of
                  $1.00 per Warrant Share.

NOTE 7.           ASSET RETIREMENT OBLIGATION

                  Property and equipment are stated at cost including the
                  expected present value of future obligations to provide for
                  their retirement. Depreciation and amortization are provided
                  using the straight-line method over the estimated useful lives
                  of the assets.

                  Included in machinery and equipment is various production
                  equipment which, per the Company's building lease, is required
                  to be removed upon termination of the lease. Included in
                  current liabilities in the accompanying balance sheet is the
                  asset retirement obligation that represents the expected
                  present value of the liability to remove this equipment. There
                  are no assets that are legally restricted for purposes of
                  settling this asset retirement obligation.

                  Changes in asset retirement for the six months ended June 30,
                  2003:

                           Liability, beginning of year               $       0
                             Liabilities incurred prior to 2003
                               recorded in first quarter                 27,158
                             Liabilities incurred through June 30         1,643
                               Liabilities settled                            0
                               Accretion expense                              0
                               Revisions in cash flow estimates               0
                                                                      ----------
                           Liability, end of quarter                  $  28,801
                                                                      ==========

                  Pro forma income statement effect for the six months ended
                  June 30, 2002:

                           Net loss as reported                       $(123,880)
                           Additional depreciation expense                   90
                           Additional accretion expense                       0
                           Net loss restated retroactive for
                            change in accounting                      $(123,970)
                                                                      ==========

                           Net loss per common share
                            as reported                               $   (0.05)

                           Net loss per common share
                            restated retroactive for
                            change in accounting                      $   (0.07)

                                       10

<PAGE>

                        SUPERCONDUCTIVE COMPONENTS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 8.         NOTES PAYABLE SHAREHOLDERS AND COMMON STOCK WARRANTS

                The Company recently completed two private financing
                transactions 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 on July 1, 2003.

                The principal and interest on the $729,770 of new convertible
                promissory notes are payable June 30, 2006. Interest shall be
                based upon the prime commercial rate on the date of the notes
                and subsequently on the last business day of the preceding
                calendar year. If the Company completes an equity financing
                for at least $500,000 prior to June 30, 2004, the notes shall
                automatically convert to common stock at the same per share
                price as the equity financing and thereafter the notes shall
                convert to common stock at the option of the holders at $2.00
                per share. The Company used $100,000 of the note proceeds to
                pay off its bank line of credit which terminated on June 30,
                2003, plans to use approximately $300,000 to finance its move
                to a new facility and approximately $200,000 for general
                corporate purposes.

NOTE 9.         CAPITAL REQUIREMENT; RISK OF CURTAILMENT OF BUSINESS OPERATIONS

                Our accumulated deficit since inception was $6,190,595
                (unaudited) at June 30, 2003. The Company has financed the
                losses primarily from: (i) several private offerings of debt
                and equity securities; (ii) additional investments and loans
                by our major shareholders; and (iii) a private offering of
                common stock and warrants to purchase common stock in October
                2000. The Company expects to continue to incur significant
                operating and net losses in 2003, and it is possible that the
                Company will never be able to sustain or develop the revenue
                levels necessary to attain profitability.

                As of June 30, 2003, cash on-hand was $403,016. During the
                first six months of 2003 the Company used $10,000 in cash from
                operations. The Company believes, based on currently available
                financing and forecasted sales and expenses, that funding will
                be adequate to sustain operations through December 2003. The
                Company recently completed two private financing transactions
                as detailed in Note 8.

                                       11



<PAGE>

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

         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,
         2002 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 and assessing
         changes in which impairment of certain long-lived assets may occur.
         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.

                                       12
<PAGE>


ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         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. 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 from 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.

         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 $6,190,595
         from inception to June 30, 2003.

         SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) COMPARED TO SIX MONTHS ENDED
         JUNE 30, 2002 (UNAUDITED):

         REVENUES

         Revenues for the six months ended June 30, 2003 were $1,285,644
         compared to $1,500,126, a decrease of $214,482 or 14.3% from the six
         months ended June 30, 2002.

         Product revenues decreased to $1,187,153 in 2003 from $1,356,593 in
         2002 or a decrease of 12.5%. The decline in revenues for the first six
         months is due to lower product shipments as a result of the weak U.S.
         economy. The Company intends to intensify its marketing efforts by
         increasing the number of manufacturers representatives representing the
         Company. A sales consultant was added to the organization in June 2003.

         Contract research revenues were $98,491 in 2003 as compared to $143,533
         in 2002. The decrease is due to a Phase II SBIR grant from the National
         Science Foundation that expired in 2002. Revenues of $138,462 from this
         grant are included in 2002 revenues.

         The Company was awarded a $100,000 Phase I SBIR from the Department of
         Energy in May 2002. This grant expired in April 2003 and $44,445 of
         revenue was recognized in the first six months of 2003. The Company was
         awarded an interim contract for $105,592 for Phase II of this SBIR
         program. The complete Phase II SBIR program is valued at approximately
         $600,000 and the amount to be awarded, if any, is to be determined by
         the U.S. Department of Energy before the end of September 2003.

         The Company is 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 $54,046 were recognized in the first six months of
         2003.

                                       13
<PAGE>

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         GROSS MARGIN

         Total gross margin in 2003 was $354,375 or 27.6% of total revenue
         compared to $409,662 or 27.3% in 2002. Gross margin on product revenue
         was 23.0% in 2003 versus 29.8% in 2002. The decrease was due to lower
         sales as well as the product mix. Gross margin on contract research
         revenue was 82.1% for 2003 and 3.5% for 2002. The increase is due to
         the completion of the SBIR Phase I and the addition of the Oxford SPI
         program. Included in the revenues of the Oxford SPI program is
         approximately $44,000 that was received for the purchase of machinery
         and equipment. This contributed directly to the gross margin.

         SELLING EXPENSE

         Selling expense in 2003 increased to $97,574 from $94,488 in 2002, an
         increase of 3.3%. The increase was due to increased commission costs
         and the addition of a sales consultant.

         GENERAL AND ADMINISTRATIVE EXPENSE

         General and administrative expense in 2003 decreased to $416,315 from
         $443,082 or a 6.0% decrease. The decrease in these costs was due to a
         reduction in administrative staff.

         RESEARCH AND DEVELOPMENT EXPENSE

         Internal research and development costs are expensed as incurred.
         Research and development costs for 2003 were $74,765 compared to $5,241
         in 2002. Internal research and development costs increased due to a
         decrease in contract research revenues, which are used to offset these
         expenses.

         INTEREST EXPENSE

         Interest expense was $12,488 for the six months ended June 30, 2003
         compared to $11,696 for the six months ended June 30, 2002. Interest
         expense to related parties was $8,304 and $5,791 for the six months
         ended June 30, 2003, and June 30, 2002, respectively. The increase is
         due to the accrued interest incurred as a result of the Series A
         preferred stock.

         INCOME (LOSS) APPLICABLE TO COMMON SHARES

         BASIC

         Net loss per common share based on the loss applicable to common shares
         for the six months ended June 30, 2003 and 2002 was $0.11 and $0.07,
         respectively. The loss applicable to common shares includes the net
         loss from operations, Series A and B preferred stock dividends, the
         accretion of Series A preferred stock and the cumulative effect of the
         change in accounting. The net loss per common share from operations was
         $0.09 and $0.07 for the six months ended June 30, 2003 and 2002,
         respectively. The difference between the net loss from operations and

                                       14
<PAGE>



ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         the loss applicable to common shares of $0.02 and $0.00 for the six
         months ended June 30, 2003 and 2002, respectively, is 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 A and B preferred stock accrue at 10% annually
         on the outstanding shares. Dividends on the Series A preferred stock
         totaled $0 for the six months ended June 30, 2003 and $4,951 for the
         six months ended June 30, 2002. The 99 shares of Series A were
         redeemable at May 31, 2002 and the Company began accruing interest
         expense June 1, 2002 until the stock was redeemed on June 30, 2003.
         Dividends on the Series B preferred stock totaled $13,770 for each
         period.

         The accretion of Series A preferred stock represents issue costs of
         $70,277 that were netted against the proceeds of Series A preferred
         stock. The issue costs were amortized over the payout period of seven
         years of income (loss) applicable to common shares and additional
         paid-in capital. The accretion totaled $0 for the first six months of
         2003 and $6,468 for the first six months of 2002.

         Basic loss per common share for the six months ended June 30, 2003, was
         $0.11 per share with 1,823,256 average common shares outstanding as
         compared to $0.07 per share and 1,823,256 weighted average common
         shares outstanding for the six months ended June 30, 2002.

         DILUTED

         Diluted loss per common share for the six months ended June 30, 2003
         was $0.11 per share with 1,823,256 average common shares outstanding as
         compared to $0.07 per share and 1,823,256 weighted average common
         shares outstanding for the six months ended June 30, 2002. For the six
         months ended June 30, 2003 and 2002, all outstanding common stock
         equivalents are anti-dilutive due to the net loss.

         LIQUIDITY AND WORKING CAPITAL

         At June 30, 2003, working capital was $608,617 compared to $675,618 at
         June 30, 2002. The Company utilized cash from operations for the six
         months ended June 30, 2003, of approximately $10,000. The Company
         utilized cash from operations for the six months ended June 30, 2002,
         of approximately $93,000. Significant non-cash items including
         depreciation, inventory reserve on excess and obsolete inventory,
         allowance for doubtful accounts and the cumulative effect of the change
         in accounting were approximately $118,000 and $125,000, respectively,
         for the six months ended June 30, 2003 and 2002. Overall, accounts
         payable and accrued expenses increased in excess of increases in
         accounts receivable, inventory and prepaids by approximately $61,000
         for the six months ended June 30, 2003. Accounts receivable, inventory,
         and prepaids increased in excess of increases in accounts payable and
         accrued expenses by approximately $119,000 for the six months ended
         June 30, 2002, as a result of timing of receipt of inventory versus
         required scheduled payments on this inventory and increased prepaid
         expenses.

                                       15

<PAGE>


ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         For investing activities, the Company used cash of approximately
         $114,000 and $35,000, for the six months ended June 30, 2003 and June
         30, 2002, respectively. The amounts invested were used to purchase
         machinery and equipment for increased production capacity. Proceeds on
         sale of equipment totaled $5,300 and $0 for the six months ended June
         31, 2003 and June 30, 2002, respectively.

         For financing activity for the six months ended June 30, 2003, the
         Company provided cash of approximately $478,000. Cash payments to third
         parties for capital lease obligations approximated $22,000. Proceeds
         from notes payables from shareholders were approximately $500,000.

         For financing activity for the six months ended June 30, 2002, the
         Company provided cash of approximately $30,000. Cash payments to third
         parties for capital lease obligations approximated $20,000; proceeds
         from notes payable from shareholders totaled $50,000.

         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.

         The Company recently completed two private financing transactions
         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 on July 1, 2003.

         The principal and interest on the $729,770 of new convertible
         promissory notes are payable June 30, 2006. If the Company completes an
         equity financing for at least $500,000 prior to June 30, 2004, the
         notes shall automatically convert to common stock at the same per share
         price as the equity financing and thereafter the notes shall convert to
         common stock at the option of the holders at $2.00 per share.

         The Company used $100,000 of the note proceeds to pay off its bank line
         of credit which terminated on June 30, 2003, and plans to use
         approximately $300,000 to finance its move to a new facility and
         approximately $200,000 for general corporate purposes.

         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

                                       16
<PAGE>

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         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 $6,190,595 (unaudited) at June 30, 2003.

         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; and (iii) a private offering of
         common stock and warrants to purchase common stock in October 2000. 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 2003, and it is possible
         that we will never be able to sustain or develop the revenue levels
         necessary to attain profitability.

         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.

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

         Although the Company was successful in completing financings in the
         aggregate amount of $729,770 in June 2003 and July 2003, numerous
         factors remain which 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.

                                       17


<PAGE>

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         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 we have.

         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 we have. 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.

         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


                                       18
<PAGE>

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         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.

         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.

                                       19
<PAGE>

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS (CONTINUED)

         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 effect 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 AUTHORIZE 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 authorize 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.

         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 and to secure new manufacturing facilities.

         OFF BALANCE SHEET ARRANGEMENTS

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

                                       20
<PAGE>

ITEM 3.           DISCLOSURE CONTROLS AND PROCEDURES

         As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of our
principal executive officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our principal executive officer and
principal financial officer concluded that our disclosure controls and
procedures are effective to provide reasonable assurance that our disclosure
controls and procedures will timely alert them to material information required
to be included in our periodic SEC reports.

         As of the end of the period covered by this report, there has been no
change in our internal control over financial reporting (as defined in Rules
13a-15d-15(f) of the Securities Exchange Act of 1934, as amended) during the
quarter to which this report relates that has materially affected or is
reasonably likely to materially affect, our internal control over financing
reporting.


                                       21

<PAGE>


                           PART II. OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         (a) ) The Company held its annual meeting of shareholders on May 22,
2003, for the purpose of electing three directors to the board of directors of
the Company.

         (b) At the annual meeting of shareholders all directors nominated were
elected.

         (c) The following table shows the voting tabulation for the election of
three directors, each to serve for terms expiring at the next annual meeting of
shareholders.

                                                    Number of Shares

         Nominee                          For      Withhold Authority
         -------                          ---      ------------------

         Daniel Rooney                  1,461,440           31,150
         Robert J. Baker, Jr.           1,491,440            1,150
         Edward W. Ungar                1,438,210           54,380

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (A)      EXHIBITS.

                  31.1     Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.

                  31.2     Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.

                  32.1 Certification of Chief Executive Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. Section 1350.

                  32.2 Certification of Chief Financial Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. Section 1350.

         (B)      REPORTS ON FORM 8-K.

                  Report on Form 8-K, dated July 7, 2003, regarding the
completion of the June 2003 financings (Items 5 and 7).

                  Report on Form 8-K, dated May 19, 2003, regarding the first
quarter 2003 financial results (Items 7 and 9).

                                   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:  August 13, 2003           /s/ Daniel Rooney
                                ---------------------------------------------
                                 Daniel Rooney, President and
                                 Chief Executive Officer
                                 (Principal Executive Officer)

                                       22
<PAGE>


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

                                       23