Superconductor Technologies Inc – ‘424B1’ on 2/11/00

On:  Friday, 2/11/00   ·   Accession #:  1045447-0-54   ·   File #:  333-94053

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus Filed Pursuant to Rule 424                 21    119K 

Document Table of Contents

424B1
1st Page of 21
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                                Filed pursuant to Rule 424(b)(1)

                                                      Registration No. 333-94053

                                                                      PROSPECTUS

2,473,701 SHARES

LOGO

COMMON STOCK

     This prospectus relates to 2,473,701 shares of Superconductor  Technologies
Inc.  common  stock that we are  offering to The State of  Wisconsin  Investment
Board and a limited number of other purchasers. The offering price will be $3.25
per share. Superconductor will receive all of the proceeds from this offering.  

     Our  common  stock is traded in the Nasdaq  Stock  Market  National  Market
System under the symbol  "SCON." On February 8, 2000,  the last  reported  sales
price of our common stock on Nasdaq was $12.00 per share.                       

     Investing in our common stock involves  risk. See "Risk Factors"  beginning
on page 7.                                                                      

                                               Proceeds to
                       Price to Purchasers      Superconductor
                         --------------------    -------------------
Per share..........    $ 3.25                  $  3.25      
Total..............    $ 8,039,529             $  8,039,529 

     Neither the  Securities and Exchange  Commission  nor any state  securities
commission has approved of or  disapproved  these  securities,  or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.                                                               

     We expect to deliver  the shares of common  stock to the  purchasers  on or
about February 9, 2000.                                                         

   The date of this prospectus is February 9, 2000

424B1
2nd Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 The SuperFilter(R) System

 [GRAPHIC SHOWING PRINCIPAL FEATURES OF SUPERFILER (R) SYSTEM OMITTED]

424B1
3rd Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 3rd
PROSPECTUS SUMMARY

     The  following  is  only a  summary.  You  should  refer  to  the  detailed
information and financial  statements and accompanying notes contained elsewhere
in this  prospectus  and in the documents  delivered  with this  prospectus  and
referenced under the heading "Information Incorporated by Reference."           

 SUPERCONDUCTOR TECHNOLOGIES, INC.

     Superconductor  Technologies Inc. manufactures and markets high performance
subsystems that incorporate high-temperature superconducting,  or HTS, materials
and cryogenic  technologies.  Our principal  product  line,  the  SuperFilter(R)
system,  is a front-end  filter and amplifier  system  designed to  dramatically
improve the performance of wireless telecommunications base stations.           

     Superconductivity is a physics phenomenon resulting in a lack of electrical
resistance in certain materials when cooled to low temperatures. Zero electrical
resistance can provide fundamental performance  improvements for many electrical
and electronic components. Superconductors have the potential for widespread use
in many different  applications,  ranging from  microelectronics,  such as radio
frequency circuits, to levitating trains and ultra-efficient power lines.       

     Several years ago, we identified the wireless  telecommunications market as
the most  viable  path to  commercialization  of HTS  because of the current and
expected rapid growth of the market and our ability to address critical needs of
the market with HTS.  Wireless  communications  markets are growing rapidly on a
global scale with many developing  countries deploying wireless technology as an
alternative to wireline  networks.  In many U.S. and European  metropolitan  and
rural areas,  the growth of traditional  cellular and newer digital  networks is
leading to coverage, call quality, and capacity problems.                       

     The Cellular  Telecommunications  Industry  Association,  or CTIA, reported
approximately 69.2 million wireless phone subscribers in the U.S. as of December
31, 1998. The year-end 1998 number  represents a 25.1% annual  increase over the
1997 subscribers at year-end and a 34% annual increase over the past five years.
It is anticipated that this growth trend will continue for the next two to three
years,  and slightly  taper  thereafter.  The CTIA  estimates that there will be
roughly 128 million  wireless  voice  subscribers  in the U.S. by year-end 2004,
representing  penetration  of  approximately  45%.  Analysts  estimate  that the
worldwide number of wireless subscribers will increase nearly five-fold over the
next  four  years - to 975  million  in  2003.  To  provide  services  to  these
customers,  it is estimated  that the number of  installed  base  stations  will
increase from 200,000 in 1998 to 1.1 million in 2003. We believe that this rapid
growth represents a significant market opportunity,  as each newly deployed base
station must  incorporate  a front-end  filter and amplifier  system,  with call
quality issues arguing for an HTS solution in many instances.                   

     In  order to  penetrate  the  wireless  telecommunications  market,  we are
marketing our SuperFilter(R)  systems to wireless service providers and to large
systems  manufacturers,  or OEMs, for inclusion in base stations,  which are the
basic   building   blocks  of  wireless   networks.   In  1998,  our  management
significantly  expanded  our  sales  and  marketing  efforts.  Field  trials  of
SuperFilter(R)  systems have been conducted  with more than 30 cellular  service
providers,  including  all of the top 10  carriers  in the U.S.  In 1998,  these
efforts resulted in orders for more than 100 SuperFilter(R) systems, and in 1999
to December 1, we have received  additional orders for more than 110 systems. We
shipped 83  SuperFilter(R)  systems in 1998,  and 70 systems in the first  three
quarters of 1999.  In August 1999, we entered into a long-term  sales  agreement
with  United  States  Cellular  Corporation,  for  a  minimum  purchase  of  100
SuperFilter(R)  systems  by  December  31,  2000 and  anticipate  U.S.  Cellular
purchasing a minimum of an additional 400  SuperFilter(R)  systems by August 27,
2004.  To prove the economic  benefits of the  product,  we continue to actively
conduct  numerous  demonstrations  and  field  trials  in the  U.S.and  in Latin
America.                                                                        

     Wireless  base  station  performance  is limited by the need for  tradeoffs
between interference  rejection, or selectivity,  and receiver sensitivity.  The
SuperFilter(R)  system  eliminates  the need to tradeoff one  capability for the
other.  Its high  selectivity  and  ultra-low  noise figure  provide a number of
important benefits for cellular service providers. These include:               

3 

424B1
4th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 4th
o    Increasing uplink coverage by 50% to 100%;             

o    Reducing dropped calls by up to 50%;                   

o    Reducing interference (improving call quality);        

o    Increasing handset battery life by up to 100%; and     

o    Increasing call minutes by up to 100%.                 

     The markets for our products  are  intensely  competitive.  Our current and
potential  competitors  include  conventional RF filter  manufacturers  and both
established  and  newly  emerging  companies  developing  similar  or  competing
superconducting  technologies.  We compete  primarily with  Conductus,  Inc. and
Illinois  Superconductor  Corporation with respect to our superconducting filter
systems.                                                                        

     Due to the  proprietary  and  technological  nature of our  products and in
order  to  produce  high-quality   products,   management  decided  to  directly
manufacture the key components of the product line. These key components include
superconducting  filters,  cryogenic  coolers,  cryogenic  packaging  and  final
enclosures,  as well as system assembly and test,  quality and material  control
functions.  Management  believes  that  this will  enable  us to better  control
manufacturing  processes,  achieve  required cost  reductions and produce highly
reliable and quality products.                                                  

     For more  than ten  years,  we have had a  successful  government  contract
research  and  development  programs  business.  We are the clear leader in high
performance  HTS development  for these  programs.  This  technology  foundation
places us in a unique position of long-term technical  strength.  We believe the
government   programs   business  will  continue  to  ensure  overall  technical
leadership and will enable technology advances. These technological enhancements
will be available to both the government programs and the commercial  businesses
- thus  enabling us to exploit the  significant  market  opportunity.  Since our
formation in 1987 and through the third  quarter of 1999,  we have received over
$54.8  million  dollars in revenue  from  government  research  and  development
contracts.                                                                      

     We are a world leader in HTS thin film  materials and products  technology.
We  hold  exclusive  worldwide  rights  to the  thallium-based  high-temperature
superconductors for all applications.  These have the highest operating critical
temperature of all manufacturable HTS compounds, up to 127(Degree)K. We have led
the  development of processes for the high-yield  manufacture of these materials
and  hold  several  broad  patents  on  these  materials.  We also  have led the
development of HTS RF and microwave  filters and cryogenic low noise amplifiers,
using  proprietary   design  tools  and  processes,   achieving  the  high-yield
manufacture of the most selective and lowest noise devices  available  today. We
have also pioneered the development of efficient,  low-cost cryogenic  packaging
for RF and  microwave  circuitry.  Cryogenic  coolers are a key  technology  and
manufacturing  expertise  at  Superconductor.   We  have  pioneered  the  volume
manufacture of long-life Stirling cryocoolers for use in our HTS systems.       

     As of December 8, 1999,  we hold 19 U.S.  patents.  Nine of our patents are
for technologies  directed toward producing thin-film  materials,  including our
proprietary  thin-film  process for thallium  barium  calcium  cooper oxide,  or
TBCCO,  production.  In  addition,  we  currently  hold six  patents for circuit
designs and two patents  covering  cryogenics and packaging.  We have 21 patents
pending,  including  five related to  materials,  four  covering  design and six
related to cryogenics and packaging. As we have developed prototype products, we
have increased the number of design patents  applied for in an effort to protect
all phases of product development.                                              

     We were  incorporated in Delaware in May 1987. Our facilities and executive
offices are located at 460 Ward Drive, Santa Barbara, California 93111-2310, and
our telephone number is (805) 683-7646.                                         

4 

424B1
5th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 5th
                                                        [Enlarge/Download Table]


                                  THE OFFERING                                                                     
                                                                                                                   

Total common stock offered........................... 2,473,701 shares                                             

Offering price....................................... $3.25 per share                                              

Outstanding common stock                                                                                           
      Before offering................................ 7,739,218 shares, exclusive of options and                   
                                                      warrants and before conversion of preferred stock            

      After offering................................. 10,212,919 shares, exclusive of options and                  
                                                      warrants and before conversion of preferred stock            

      Preferred stock conversion..................... The holder of series A-2, A-3, and C preferred stock,        
                                                      representing 118,751 shares of outstanding                   
                                                      preferred stock, is converting those shares into             
                                                      an aggregate of 2,458,491 shares of common stock,            
                                                      and effective concurrently with the consummation             
                                                      of the offering.  We have agreed to issue to that            
                                                      holder warrants to purchase up to an aggregate               
                                                      of 250,000 shares of common stock in connection with         
                                                      that conversion.  The exercise price of the warrants will be 
                                                      $3.58 per share, based on 110% of the offering price of $3.25
                                                      per share, and the warrants will be exercisable              
                                                      for five years.                                              

Use of proceeds...................................... To fund the purchase of capital equipment and                
                                                      the further development of commercial products,              
                                                      and for working capital and other general                    
                                                      corporate purposes                                           

Nasdaq National Market symbol........................ SCON                                                         

5 

424B1
6th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 6th
SUMMARY FINANCIAL DATA
 (Dollars thousands, except per share amounts)

                                                        [Enlarge/Download Table]


                                                                                                Nine Months Ended       
                                                                                            --------------------------- 
                                                              Years Ended December 31,      September 26,    October 2, 
                                                     -----------------------------------                                
                                                                                                                        
                                                     1996           1997           1998        1998             1999    
                                                    -------        ------         ------    ----------      ----------- 
                                                                                            (unaudited)     (unaudited) 
Statement of Operations Data:                                                                                           
Net Revenues:                                                                                                           
   Government contract revenues................     $7,104         $8,104          $6,029     $5,178             $3,674 
   Commercial product revenues.................        250            175           1,954      1,031              1,265 
   Sub license royalties.......................         38             38               0          0                  0 
                                                     -----          -----           -----      -----              ----- 
      Total net revenues.......................      7,392          8,317           7,983      6,209              4,939 

Costs and expenses:                                                                                                     
   Cost of commercial product revenues.........          0              0           5,873      4,266              4,512 
   Contract research and development...........      5,721          6,218           4,693      3,575              2,424 
   Other research and development..............      2,260          1,809           1,161        892              1,323 
   Selling, general and administrative.........      2,967          4,076           5,435      4,035              4,404 
                                                    ------         ------          ------     ------             ------ 
       Total operating expenses................     10,948         12,103          17,162     12,768             12,663 
                                                    ======         ======          ======     ======             ====== 

Loss from operations...........................     (3,556)        (3,786)         (9,179)    (6,559)            (7,724)
Other income (expense), net....................         85            245              17         39               (164)
                                                    ------         -------         ------     -------            -------
Net loss.......................................    ($3,471)       ($3,541)        ($9,162)   ($6,520)           ($7,888)

Redeemable preferred stock dividends...........          0              0            (273)         0                  0 
    Deemed distribution for accounting purposes          0              0               0          0               (456)
                                                   -------         -------        -------     -------            -------
Net loss available for common stockholders....     ($3.471)       ($3.541)        ($9,335)   ($6,520)           ($8,344)
                                                   =======         =======        =======     =======            =======
Basic and diluted loss per share:                                                                                       
    Net loss...................................     ($0.57)        ($0.40)         ($1.19)     ($.87)            ($1.02)
    Preferred stock dividends..................                                     (0.03)                              
    Deemed distribution........................          0              0               0          0              (0.06)
                                                   --------       --------        -------     -------           --------
    Net loss available to common stockholders..     ($0.57)        ($0.40)         ($1.22)    ($0.87)            ($1.08)
                                                  =========      =========       =========  =========          =========
Weighted average of number of shares outstanding  6,117,126      7,701,405       7,724,829  7,723,340          7,741,425
                                                  =========      =========       =========  =========          =========

                                                        [Enlarge/Download Table]
                                                                                            October 2, 1999         
                                                                                     -----------------------------  
                                                                                         Actual       As Adjusted(1)
                                                                                     ------------     ------------  
                                                                                               (unaudited)          
                                                                                     ------------------------------ 
                                                                                                                    
Balance Sheet Data:                                                                                                 
Cash and cash equivalents........................................................... $  1,064                $ 8,946
Working capital ....................................................................    2,536                 10,418
Total assets........................................................................   12,808                 20,690
Notes payable, long-term debt.......................................................      809                    809
Total stockholders' equity..........................................................    8,302                 16,184
__________                                                                                                          

(1)  To reflect net proceeds of $7,890,000,  after deducting  estimated offering                                    
     expenses,  on sale of  2,319,855  shares  of  common  stock to the State of                                    
     Wisconsin  Investment  Board and an  exchange  of 153,846  shares of common                                    
     stock for short term  indebtedness of $500,000 incurred December 1, 1999 to                                    
     Wilmington Securities.                                                                                         

6 

424B1
7th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 7th
RISK FACTORS

     This prospectus contains forward-looking  statements that involve risks and
uncertainties.  Superconductor's  actual  results could differ  materially  from
those  anticipated in these  forward-looking  statements as a result of numerous
factors,  including  those set forth in the following risk factors and elsewhere
in this  prospectus  and the  documents  incorporated  in  this  prospectus.  In
evaluating our business,  you should consider carefully the following factors in
addition to the other information set forth or incorporated in this prospectus. 

We need to raise money in order to continue operating.                          

     We  increased   our  sales  and   marketing   departments   and   developed
manufacturing   operations  to  support  anticipated   increased  sales  of  our
SuperFilter(R)  products.  We need additional debt or equity  financing to fully
implement our business plan. Raising additional money is not guaranteed,  and if
we  fail to do so we  will  have  insufficient  cash  to  fund  operations.  Our
independent  accountants  have indicated in their report  accompanying  our 1998
year-end  financial  statements  that,  based  on  generally  accepted  auditing
standards,  there is substantial  doubt about our ability to continue as a going
concern. If we are successful in obtaining  additional equity financing,  future
dilution to existing or future stockholders is likely to result.                

We are in the early stages of commercializing  our products,  and if we do not  
     successfully  manufacture and market our products or if our products do not
receive market acceptance, our business will be seriously affected.   

     The commercial  superconductor product market is limited.  Moreover, in the
past we have principally engaged in research and development  activities and our
commercial  experience  is limited.  Our ability to grow depends on a successful
transition  of  our   expertise  in   superconducting   filter  and   cryogenics
technologies  and  applications  to commercial  markets,  including the wireless
communications  market.  We may not be able to produce  enough  products to meet
market demand or our products may not achieve market  acceptance.  If we fail to
manufacture and market our products successfully, we will be adversely affected.

We are  dependent  for our  revenues on  successfully  selling our products to  
     wireless  communication  providers and original  equipment  manufactures of
wireless based station manufacturers.                                 

     Most of our products, including those developed for wireless communications
base stations and government applications, are intended for use as components in
base station systems or other complex  systems.  Therefore,  we must demonstrate
that our products provide  advantages to the service  providers who utilize base
station  systems and the  original  equipment  manufacturers,  or OEMs,  of base
station  systems.  These benefits include a decrease in system size, an increase
in base  station  range and a reduction in  interference.  We may not be able to
achieve  any  of  these  advantages.  Moreover,  even  if we  demonstrate  these
advantages,  the service  providers and OEMs may not choose to  incorporate  our
products into their  systems or, if they do,  related  system and  manufacturing
requirements may not be met.                                                    

Our manufacturing experience is limited.                                        

     We have sold products only in limited quantities, and primarily for limited
deployment.  During 1998, we significantly  increased our manufacturing capacity
in order to meet the  increased  demand  for our  products  as well as  expected
future requirements.  While we have increased our manufacturing capacity, we may
not be successful in overcoming the  technological,  engineering  and management
challenges associated with producing commercial quantities of superconducting or
cryogenic  products for  large-scale  deployment  at  acceptable  costs and on a
timely basis. As a result, we may not be able to reduce our manufacturing  costs
sufficiently below our selling price or to generate a positive gross profit.    

We are dependent for our revenue on government contracts.                       

     91% of our past net  revenues  have  been  from  research  and  development
contract  sales  directly to the  government or to resellers to the  government.
While we have recently devoted  substantial  resources to developing  commercial
markets for our products, we are, and expect to continue to be in the near term,
dependent  on  government  funding for our research  and  development  projects.
Government  contracts may be reduced or  eliminated at any time,  and receipt of

7 

424B1
8th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 8th
all or any part of the funds under any of our existing government  contracts not
yet performed is not guaranteed. If we fail to increase revenues from commercial
sales, a significant loss of government funding would severally harm us.        

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 and 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  termination of government
contracts,  substantial monetary fines or damages,  suspension or debarment from
doing business with the  government  and possible  civil or criminal  liability.
During the term of any suspension or debarment by a government  agency, we could
be prohibited from competing for or being awarded any contract by any government
agency. The termination of our significant government contracts,  the imposition
of fines, damages,  suspension or debarment,  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,  paid-up,
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.                                             

We have incurred significant losses and expect to continue experiencing losses  
     due to significant  marketing,  manufacturing  and research and development
costs.                                                                

     We have incurred net losses every year and, as of December 31, 1998, had an
accumulated  deficit of $36,215,000.  We expect to continue to incur significant
operating  losses  over the next  several  quarters  as we  continue  to  devote
significant  financial resources to commercializing our products,  expanding our
operations  and  product   development   activities.   Our  success  depends  on
successfully  commercializing our high temperature superconductor filter systems
for the worldwide wireless communications market, which is not guaranteed.      

We are highly dependent on our technical work force and senior management.      

     Due to the  specialized  technical  nature of our  business,  we are highly
dependent upon our attracting and retaining  qualified  technical  personnel and
senior  management,  primarily  in the  areas  of  wireless  communications  and
cryogenics.  The  loss of the  services  of one or more  members  of the  senior
management  or  technical  teams could damage our ability to achieve our product
development and commercialization  objectives. There is also intense competition
for  qualified  personnel  in the areas of our  activities  and our  ability  to
attract and retain  qualified  personnel  necessary for the  development  of its
business is uncertain.                                                          

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 revenues are dependent upon patents and proprietary  rights which may not be
enforceable.                                                          

     We rely on a combination of patent,  trademark,  trade secret and copyright
law  and  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.                                          

We are dependent on specific  patents and licenses to technologies and we will  
need additional technologies that we may not be able to access.       

     We  have  an  exclusive,  worldwide  license,  in all  fields  of  use,  to
formulations  covered by patents  held by the  University  of Arkansas  covering
thallium  barium  calcium  cooper  oxide,  or TBCCO,  the material upon which we

8 

424B1
9th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 9th
primarily  rely for our  high-temperature  superconductor  products  and product
development.  These  patents may be subject to  challenge.  In  addition,  other
parties may have developed  similar materials  utilizing TBCCO  formulations and
may design around the patented aspects of this material.  Under the terms of our
exclusive  license,  we agreed to assume  litigation  expenses for  infringement
actions, subject to a right of setoff against future royalty obligations.  If we
are  required to incur  significant  expenses  under this  agreement,  we may be
adversely affected.  In addition,  we granted each of DuPont and Superconducting
Core Technologies,  Inc. and its affiliates a non-exclusive worldwide sublicense
under our license  with the  University  of Arkansas to develop and market TBCCO
materials and superconducting technologies. There can be no assurance that these
sublicenses will not adversely affect us.                                       

     We believe that a number of patent  applications are pending that cover the
composition yttrium barium cooper oxide, or YBCO,  including  applications filed
by IBM,  AT&T and other large  potential  competitors  of ours.  YBCO is a high-
temperature  superconductor  material  which we rely upon,  although to a lesser
extent than TBCCO.  We  understand  that these  applications  are the subject of
interference  proceedings  currently  pending in the U.S.  Patent and  Trademark
Office.  We are not involved in these  proceedings.  In  addition,  we have been
issued  patents for specific  compounds that we use. We believe that a number of
international  patents may be pending  regarding  other specific YBCO compounds.
There is a  substantial  risk that one or more  third  parties  will be  granted
patents covering YBCO and that our use of these materials may require a license.
As with other patents,  we may not be able to obtain licenses to any patents for
YBCO or other  materials or these licenses may not be available on  commercially
reasonable  terms.  Our  efforts  to  develop  products  based on YBCO  would be
impaired  by our failure to obtain a license  for YBCO,  which  could  adversely
affect us.                                                                      

Rights we have to patents and pending patent applications may be challenged.    

     We own or  have  rights  under a  number  of  patents  and  pending  patent
applications   related  to  the   processing  of  TBCCO  and  YBCO.  The  patent
applications  we filed 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 likely 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  field of  superconductivity  is  characterized  by  rapidly  advancing
technology.  Our success  depends  upon our ability to keep pace with  advancing
superconductor technology, including superconducting materials and processes and

9 

424B1
10th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 10th
industry  standards.  We have focused our development efforts on TBCCO and, to a
lesser  extent,   YBCO.  TBCCO  or  YBCO  may  not  ultimately  be  commercially
competitive  against other  currently  known  materials or materials that may be
discovered  in the  future.  We intend to  continue  to  develop  and  integrate
advances  in  wireless  filter  and  cryogenic   cooling   technologies  in  the
manufacture  of commercial  quantities  of products.  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  for  the  commercialization  of  high-temperature   superconductor
products.                                                                       

We have focused our efforts on one material for our products, and rely primarily
on specific vendors for components of that material.                  

     To date,  we have  principally  focused our  development  efforts on TBCCO.
Although   TBCCO  has  one  of  the  highest   critical   temperatures   of  any
high-temperature superconductor material verified by the scientific community to
date, other materials are currently known to have advantages over TBCCO for some
applications.  TBCCO may not ultimately prove commercially  competitive  against
YBCO or against other currently known  materials.  Furthermore,  other materials
may be discovered with higher critical temperatures or other superior qualities,
and we may not be able to obtain the rights to those superior materials.        

     We   currently   purchase   substrates   for  growth  of   high-temperature
superconductor  thin-films from two primary  suppliers because of the quality of
the substrate provided by them. A thin film is a thin layer of  high-temperature
superconductor  material.  There are additional components that we source from a
single  vendor  due to the  present  volume.  While we are aware of  alternative
sources for our substrates,  the establishment of relationships  with additional
or  replacement  suppliers  could  be time  consuming  and  result  in a  supply
interruption,  which would have an adverse  effect on our ability to manufacture
our products in commercial quantities.                                          

Because our operations are housed in a single U.S. facility we may be subject to
business interruption.                                                

     Our primary  operations,  including  engineering,  manufacturing,  customer
service,  distribution  and  general  administration,  are  housed  in a  single
facility  in  Santa  Barbara,   California.   Any  material  disruption  in  our
operations,  whether due to fire, natural disaster or otherwise, could adversely
affect us.                                                                      

We use hazardous  materials in our  operations  which  subjects us to potential 
liability under various laws and regulations.                         

     We use hazardous  materials in our research,  development and manufacturing
operations.  As a result, we are subject to stringent  federal,  state and local
regulations governing the storage, use and disposal of those materials.  Current
or future laws and regulations may require us to make  substantial  expenditures
for  preventive or remedial  action,  reduction of chemical  exposure,  or waste
treatment or disposal.  We can be adversely  affected by the  interpretation and
enforcement  of  current  or  future  environmental  laws  and  regulations.  In
addition,  although  we believe  that our safety  procedures  for  handling  and
disposing of hazardous materials comply with state and federal standards,  there
is the risk of accidental contamination or injury from these materials. To date,
we have not incurred substantial expenditures for preventive action with respect
to  hazardous  materials or for  remedial  action with respect to any  hazardous
materials  accident.  If an accident  occurred,  we could be held liable for any
resulting  damages.  Furthermore,  the use and disposal of  hazardous  materials
involves  the risk that we could be required to incur  substantial  expenditures
for preventive or remedial actions. The liability in the event of an accident or
the costs of related  actions could exceed our resources or otherwise  adversely
affect us.                                                                      

The market  value of our shares of common  stock will  likely be diluted  due to
conversions of preferred stock                                        

     The market value of our common stock will likely be diluted by the issuance
of common  stock  upon the  conversion  of our  series  A-2,  A-3,  B-1, C and D
preferred stock and the exercise of options and warrants for the purchase of our
common  stock,  including the warrants  issued in connection  with our preferred
stock  financings  and the  related  share  exchange.  At our annual  meeting of
stockholders that was held on June 2, 1999, we received  stockholder approval of
the  elimination  of  limitations  on  conversions  of our  preferred  stock and
exercises of warrants  issued in  connection  with the series C preferred  stock
financing  and the related  exchange  agreement.  Similarly,  and at the special
meeting of stockholders  held on August 6, 1999, our  stockholders  approved the
issuance of series D  preferred  stock and related  warrants.  As a result,  the
series A-2, A-3, B-1, C and D preferred stock may be fully converted into shares

10

424B1
11th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 11th
of common  stock,  potentially  at a discount to the market  price of the common
stock  on the  date of  conversion.  Specifically,  the  series  A-2,  A-3 and C
preferred  stock will be  converted  into  2,458,491  shares of common  stock in
connection  with  this  offering.  Also,  the  holders  of  warrants  issued  in
connection  with  the  preferred  stock  financings  and  the  related  exchange
agreement  may fully  exercise  warrants for the purchase of our common stock at
prices  that may be below the market  value of our  common  stock on the date of
exercise.  The total  number of shares that may be issued  upon those  preferred
stock  conversions and warrant  exercises is currently  6,336,624  shares.  This
number of shares is subject to adjustment for future  dilutive  stock  issuances
and for recapitalizations, stock combinations, stock dividends, stock splits and
the like.                                                                       

     We anticipate  issuing  additional  securities in the foreseeable future to
satisfy  our capital  requirements.  In  addition,  to obtain  benefits  without
spending  cash, we have in the past and may in the future offer stock to parties
in connection with debt, leasing, supply agreements or similar arrangements.  In
those  cases,  we may  issue  warrants  or other  securities  providing  for the
purchase of common stock. These future financing and operating arrangements will
likely  result  in the  eventual  issuance  common  stock  that may  dilute  the
interests of the current holders of common stock.                               

We have never paid dividends on our common stock and our preferred  stock limits
our ability to pay dividends.                                         

     We have never paid a cash dividend on our common stock and do not expect to
do so in the foreseeable  future.  Cumulative  dividends on the series A-2, A-3,
B-1, C and D  preferred  stock are payable at the rates of 6%, 6%, 7%, 7% and 6%
per annum, respectively. While the series A-2, A-3, B-1, C and D preferred stock
are  outstanding,  we are limited in our ability to pay  dividends on the common
stock.  Equipment  financing  agreements  also  prohibit  us  from  paying  cash
dividends.                                                                      

The market price of our stock is volatile and fluctuates significantly          

     The  market   price  of  our  common   stock,   like  that  of  many  other
high-technology  companies,  has  fluctuated  significantly  and  is  likely  to
continue to fluctuate in the future. Announcements by us or others regarding the
receipt  of  customer  orders,   quarterly   variations  in  operating  results,
additional equity financings, changes in recommendations of securities analysts,
results  of  customer  field  trials,   scientific  discoveries,   technological
innovations,  litigation,  product  developments,  patent or proprietary rights,
government  regulation and general market conditions may impact the market price
of our common  stock.  In addition,  the  securities  markets  have  experienced
volatility  that is often  unrelated to the operating  performance of particular
companies.  In the past, following a period of volatility in the market price of
a company's  securities,  securities  class action lawsuits have been instituted
against some  companies.  If brought,  the costs of defending  litigation  could
negatively affect us.                                                           

Anti-takeover  provisions in our  certificate  of  incorporation  and bylaws may
delay, deter or prevent a merger or other business combination.       

     Our certificate of incorporation  and bylaws contain  provisions that could
delay, deter or prevent a merger,  tender offer or other business combination or
change in control that some or a majority of the stockholders  might consider to
be in their best interests,  including offers or attempted  takeovers that might
otherwise result in our  stockholders  receiving a premium over the market price
of the common stock.  Our certificate of incorporation  and bylaws,  among other
things,                                                                         

     o    restrict the ability of stockholders to call stockholders  meetings by
          allowing only stockholders holding shares in the aggregate entitled to
       cast not less than 10% of the votes at a meeting to call a meeting;

     o    eliminate  the right to call  stockholders  meetings  if our shares of
          capital  stock are (A)  designated  as  qualified  for  trading on the
          Nasdaq  National Market and (B) we have at least 800 holders of shares
of our capital stock;                                       

     o    preclude  stockholders  from raising new business for consideration at
          stockholders  meetings unless the proponent has provided us notice not
less than 90 days prior to the meeting; and                 

     o    limit  business  which may be  conducted at  stockholders  meetings to
those matters properly specified in notices to us.          

     Moreover,  we have not opted out of  Section  203 of the  Delaware  General
Corporation  Law, which  prohibits  mergers,  sales of material  assets and some
self-dealing transactions between the corporation and a holder of 15% or more of
a corporation's  outstanding  voting stock for a period of three years following
the  date  the   stockholder   became  a  15%  holder,   subject  to   specified
qualifications. This may prevent or delay a change in control.                  

11

424B1
12th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 12th
 USE OF PROCEEDS

     This prospectus  relates to the  registration of 2,473,701 shares of common
stock,  of which  2,319,855  shares are being  offered to The State of Wisconsin
Investment Board and 153,846 shares are being offered in exchange for short-term
indebtedness of $500,000  bearing 8% interest per annum.  This debt was incurred
by us on December 1, 1999 to provide for general working  capital.  The net cash
proceeds  from the sale of the 2,319,855  shares of common  stock,  based on the
offering  price of $3.25 per  share,  and  after  deducting  estimated  offering
expenses  payable by us, are estimated to be  approximately  $7.39  million.  We
expect to use the net cash proceeds from the offering:                          

     o    to fund the  purchase  of  capital  equipment  necessary  to  increase
production volume;                                          

o    to fund the further development of commercial products; and      

o    for working capital and other general corporate purposes.        

     We may also  consider  using the net cash proceeds for the  acquisition  of
complementary businesses,  products or technologies,  although we presently have
no specific  plans for any  acquisition.  Pending use of the net proceeds of the
offering,  we  intend  to  invest  the  funds in  short-term,  interest-bearing,
investment-grade obligations.                                                   

 PRICE RANGE OF COMMON STOCK

     In connection with our initial public offering,  our common stock commenced
trading on the Nasdaq  National  Market on March 9,  1993.  Our common  stock is
listed on the Nasdaq  National  Market  under the symbol  "SCON." The  following
table sets forth for the periods indicated the high and low sales prices for the
common stock as reported on the Nasdaq National Market.                         

                                                     High              Low
                                                      -------          -------
Fiscal 1997                                                       
         Quarter ended March 29, 1997.............     $4.75             $3.38
         Quarter ended June 28, 1997..............     $4.13             $2.50
         Quarter ended September 27, 1997.........     $5.31             $2.00
         Quarter ended December 31, 1997..........     $4.25             $2.19

Fiscal 1998                                                       
         Quarter ended March 28, 1998.............     $3.75             $2.50
         Quarter ended June 27, 1998..............     $6.63             $3.41
         Quarter ended September 26, 1998.........     $6.56             $4.00
         Quarter ended December 31, 1998..........     $5.75             $3.25

Fiscal 1999                                                       
         Quarter ended April 3, 1999..............     $4.63             $3.25
         Quarter ended July 3, 1999...............     $3.88             $2.19
         Quarter ended October 2, 1999............     $5.50             $2.63
         Quarter ended January 1, 2000............     $5.22             $2.75

     On February 8, 2000, the last sale price of the common stock as reported on
the Nasdaq National  Market was $8.00 per share.  As of January 1, 2000,  there 
were approximately 161 holders of record of our common stock.                   

 DIVIDEND POLICY

     We have not paid cash  dividends  on our common  stock and do not expect to
pay any dividends on the common stock in the  foreseeable  future.  Furthermore,

12

424B1
13th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 13th
our equipment  financing  agreement  prohibits us from paying cash dividends and
the series  A-2,  A-3,  B-1, C and D  preferred  stock  limit our ability to pay
dividends on our common stock. We intend to retain future earnings,  if any, for
use in our business.                                                            

CAPITALIZATION

  The following table sets forth our capitalization as of October 2, 1999:

o    on an actual basis;                                    

          o    on a pro forma basis to reflect interim short-term  borrowings of
               $500,000  bearing  interest  at 8% per  annum  incurred  by us on
               December 1, 1999 to provide for general  working  capital and the
               issuance of warrants to purchase 20,000 shares of common stock to
               vest over a five year period,  at $3.00 per share  recognized  as
               debt  issue  costs at their  fair  market  value  of  $38,000  as
       determined by the Black-Scholes option pricing model; and

          o    on a pro forma as adjusted basis to reflect (i) the  cancellation
               of $500,000 of  short-term  indebtedness  in exchange for 153,846
               shares of common stock at the offering  price of $3.25 per share,
               (ii) the sale of 2,319,855 shares of common stock to The State of
               Wisconsin  Investment  Board at the  offering  price of $3.25 per
               share, resulting in net cash proceeds of $7,389,529 and (iii) the
               conversion of 64,584 shares of preferred stock series A-2, 12,500
               shares of preferred  stock series A-3, 41,667 shares of preferred
               stock  series C into  1,322,539,  263,852 and  872,100  shares of
               common  stock,  respectively,  aggregating  2,458,491  shares  of
               common  stock.  In  addition,  the pro  forma as  adjusted  basis
               reflects  the  issuance of warrants  for the  purchase of 250,000
               shares of common  stock at $3.58 per share,  based on 110% of the
               offering  price  of  $3.25  per  share,  recognized  as a  deemed
               distribution  of $1,547,500  reflecting  the Fair Market Value of
               the warrant issued as an inducment to convert the preferred stock
           to common stock. These warrants vest over a five year period.

      This table should be read in conjunction with the financial statements and
the accompanying notes incorporated in this prospectus.                         

                                                        [Enlarge/Download Table]


                                                                            October 2, 1999                      
                                                        ---------------------------------------------------------
                                                                                                                 
                                                                                                   Pro forma     
                                                            Actual            Pro forma           As Adjusted    
                                                        ---------------     ---------------    ------------------

Short-term borrowings................................       $1,378,000           $1,878,000           $1,378,000 
                                                             ----------         -----------           -----------
Long-term debt.......................................         $809,000            $ 809,000             $809,000 
Stockholders' equity                                                                                             
   Convertible  preferred stock,  $.001 par value;                                                               
     2,000,000 shares authorized; Series A-2, 64,584,                                                            
     Series A-3, 12,500, Series B-1, 50,000, Series C,                                                           
     41,667 and Series D, 106,000 shares issued and                                                              
     outstanding actual and pro forma; Series B-1,                                                               
     12,500, Series D, 106,000 shares issued and                                                                 
     outstanding pro forma as adjusted...............       15,903,000          15,903,000             8,028,000 
   Common  stock,  $0.001 par value;                                                                             
     30,000,000  shares  authorized,  7,739,218                                                                  
     shares  issued and  outstanding  actual and                                                                 
     pro  forma,  12,671,410  shares issued and                                                                  
     outstanding pro forma as adjusted...............            8,000               8,000                13,000 
Capital in excess of par value.......................       36,950,000          36,988,000            54,296,000 
Deficit accumulated during development stage.........      (44,559,000)        (44,597,000)          (46,153,000)
                                                            -----------         -----------         -------------
Total stockholders' equity...........................        8,302,000           8,302,000            16,184,000 
                                                            -----------         -----------         -------------

Total capitalization.................................      $ 9,111,000         $ 9,111,000          $ 16,993,000 
                                                            ===========         ===========         =============

13

424B1
14th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 14th
DILUTION

     As of  October  2,  1999,  there  were  7,739,068  shares of  common  stock
outstanding,  having a net tangible book value of $6,351,000 or $0.82 per share.
Net  tangible  book value per share is  determined  by dividing the net tangible
book value  (total  tangible  assets  less total  liabilities)  by the number of
outstanding shares of common stock at that date.                                

After giving effect to:                                               

          o    the  cancellation  of  $500,000  of  short-term  indebtedness  in
               exchange for 153,846 shares of common stock at the offering price
of $3.25 per share;                               

          o    the sale of  2,319,855  shares  of  common  stock to The State of
               Wisconsin  Investment  Board at the  offering  price of $3.25 per
               share,  resulting  in net  cash  proceeds  of  $7,389,529,  after
deducting estimated offering expenses; and        

          o    the  conversion of 64,584  shares of series A-2 preferred  stock,
               12,500 shares of series A-3 preferred stock, and 41,667 shares of
               series C preferred  stock,  into  1,322,539,  263,852 and 872,100
               shares of common stock,  respectively,  aggregating  to 2,458,491
               shares of common stock,  and the issuance to the preferred  stock
               holder of warrants for the  purchase of 250,000  shares of common
               stock at $3.58 per share,  based on 110% of the offering price of
               $3.25  per  share,   recognized  as  a  deemed   distribution  of
               $1,547,500 reflecting the Fair Market Value of the warrant issued
             as an inducment to convert the preferred stock to common stock;

there will be a total of 12,671,410  shares of common stock  outstanding  with a
net  tangible  book  value of $1.39 per  share.  This  represents  an  immediate
increase in net tangible book value to existing  stockholders of $0.57 per share
and an immediate  dilution to new  investors of $1.86 per share.  The  following
table illustrates the per share dilution:                                       

                                                                [Download Table]

                                                                                

Public offering price per share........................................  $3.25  

Net tangible book value per share as of October 2, 1999, pro forma.....   0.82  
Increase in net tangible book value per share attributable to new               
     investors.........................................................   0.57  
                                                                        --------
Net tangible book value per share after this offering..................   1.39  
                                                                        --------
Dilution per share to new investors....................................  $1.86  
                                                                        ========

     The  following  table  summarizes  as of October 2,  1999,  the  difference
between the  existing  stockholders  and the new  investors  with respect to the
number  of  shares  of  common  stock  purchased  in this  offering,  the  total
consideration paid and the average price per share:                             

14

424B1
15th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 15th
                                                        [Enlarge/Download Table]
                                                                                            
                               Shares Purchased          Total Consideration        Average 
                         ---------------------------  --------------------------    Price   
                           Number           Percent      Amount          Percent  Per Share 
                         ----------         --------  -----------       --------  ----------
Existing stockholders..  7,739,068            76%     $36,958,000          82%     $  4.776 
New investors..........  2,473,701            24%     $ 8,040,000          18%     $  3.250 
    Total.............. 10,212,769           100%     $44,998,000         100%              
                        ==========         ========   ===========       ========            

     The  preceding  tables  assume no  exercise  of stock  options or  warrants
outstanding  at  October 2, 1999.  As of  October  2, 1999,  there were  options
outstanding  to  purchase  a total of  1,900,593  shares  of  common  stock at a
weighted average exercise price of $4.28 per share, of which options to purchase
1,111,961  shares at a weighted  average  exercise price of $4.50 per share were
exercisable,  and 981,809 shares  reserved for grant of future options under our
stock plans. In addition, as of October 2, 1999, there were warrants outstanding
to purchase  1,017,355  shares of common  stock at a weighted  average  exercise
price of $4.26 per share. If all options and warrants  outstanding as of October
2, 1999 had been  exercised,  the  dilution  per share to new  investors  in the
offering would be $0.98.  In addition,  subsequent to October 2, 1999, we issued
warrants to purchase an additional  20,000 shares of common stock at an exercise
price of $3.00, all of which were immediately exercisable. If these warrants had
been  outstanding as of October 2, 1999, the dilution per share to new investors
in the offering  would be $0.97.  Warrants to purchase  250,000 shares of common
stock,  at an exercise price of 110% of the closing sales price in the offering,
to be  issued  to the  holder  of  series  A-2,  A-3 and C  preferred  stock  in
connection with the conversion into common stock conditioned upon and concurrent
with this offering are also excluded from the preceding table.                  

DESCRIPTION OF CAPITAL STOCK

     The  authorized  capital  stock of  Superconductor  consists of  30,000,000
shares of common  stock,  $0.001 par value per share,  and  2,000,000  shares of
preferred stock, $0.001 par value per share.                                    

Common stock                                                                    

     As of  January  1,  2000,  there  were  7,739,218  shares of  common  stock
outstanding  and held of record by  approximately  161  stockholders  of record.
Holders of common  stock are entitled to one vote per share on all matters to be
voted upon by the  stockholders.  Subject to the rights of holders of  preferred
stock, the holders of common stock are entitled to receive ratably any dividends
that may be declared  from time to time by the board of  directors  out of funds
legally available for that purpose.  In the event of a liquidation,  dissolution
or  winding  up of  Superconductor,  subject  to the  rights of the  holders  of
preferred  stock,  the holders of common stock are entitled to share  ratably in
all assets.  The common stock has no preemptive  or  conversion  rights or other
subscription  rights.  There  are  no  redemption  or  sinking  fund  provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and  non-assessable,  and the shares of common stock to be outstanding upon
consummation of the offering will be fully paid and non-assessable.             

Preferred stock                                                                 

     Under  our  certificate  of  incorporation,   the  board  of  directors  is
authorized  to issue up to 2,000,000  shares of  preferred  stock in one or more
series  and  to  fix  the  rights,  preferences,  privileges  and  restrictions,

15

424B1
16th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 16th
including the dividend  rights,  conversion  rights,  voting rights,  redemption
price or prices, liquidation preferences,  and the number of shares constituting
any series or the designations of the series,  without further vote or action by
the  stockholders.  The  issuance  of  preferred  stock  may have the  effect of
delaying,  deferring or preventing a change of control of Superconductor without
further action of the stockholders.  The issuance of preferred stock with voting
and  conversion  rights may adversely  affect the voting power of the holders of
common stock, including the loss of voting control to others.                   

     Under this authority, the board of directors has authorized the issuance of
series A, A-1, A-2,  A-3, B, B-1, C and D preferred  stock and fixed the rights,
preferences,  privileges  and  restrictions,   including  the  dividend  rights,
conversion rights, voting rights,  redemption prices,  liquidation  preferences,
and the number of shares constituting each series. In 1998, we completed:       

          o    a $3 million  private  placement of 500,000 shares of series A 6%
cumulative convertible preferred stock;           

          o    a $1 million private placement of 125,000 shares of series A-1 6%
cumulative convertible preferred stock; and       

          o    a $4 million  private  placement of 500,000 shares of series B 7%
cumulative convertible preferred stock.           

     Each share of preferred stock was initially  convertible into two shares of
common stock. The preferred stock carried  cumulative per annum dividends as set
forth  above  and  had  liquidation  preferences  of $6,  $8  and $8 per  share,
respectively. The preferred stock also had voting rights under which the holders
of the  preferred  stock vote  together  with the holders of common  stock on an
as-converted  basis. The preferred stock was not redeemable by us prior to March
26,  2001.  Thereafter,  we  could  redeem  the  preferred  stock at 110% of the
liquidation  preference plus accrued and unpaid  dividends.  Subsequent to March
26,  2005,  until fully  redeemed,  the holders of the  preferred  stock had the
option to cause us to redeem the preferred stock at its  liquidation  preference
plus accrued and unpaid dividends.                                              

     On February 26, 1999, we entered into exchange  agreements with the holders
of the series A, series A-1 and series B preferred  stock. In the exchange,  all
of the series A, series A-1 and series B preferred  stock were exchanged for new
series of preferred stock, as follows:                                          

      Outstanding Series                          Exchanged for New Series
      -------------------                         ------------------------
    Series A                                      Series A-2
    Series A-1                                    Series A-3
    Series B                                      Series B-1

     The  features of the series  A-2,  series A-3 and series B-1 are similar to
the series A, series A-1 and series B, except for convertibility, redemption and
dividends.  Unlike the old preferred,  the new preferred stock is not redeemable
and was not freely  convertible  unless and until our stockholders  approved the
convertibility.  The series A-2 and series A-3 each carry a cumulative  dividend
of 6% per annum and the  series  B-1  carries a  cumulative  dividend  of 7% per
annum,  but each was entitled to dividends of 20% per annum if our  stockholders
did not approve the convertibility into common stock. Our stockholders  approved
the convertibility of each series on June 2, 1999.                              

In 1999, we completed:                                                

          o    a $3 million  private  placement of 41,667  shares of series C 7%
cumulative convertible preferred stock; and       

          o    a $5.3 million private placement of 106,000 shares of series D 6%
cumulative convertible preferred stock.           

     Each share of series C preferred  stock was initially  convertible  into 20
shares  of  common  stock.  The  series  C  preferred  stock  has a  liquidation
preference  of $72 per share.  The series C preferred  stock was not  originally
freely  convertible  into  common  stock,  pending  stockholder  approval of the
convertibility.  The series C  preferred  stock bears a dividend of 7% per annum
that would have increased to 20% per annum if our  stockholders  did not approve
of the  convertibility.  Our  stockholders  approved the  convertibility  of the
series C preferred  stock  restrictions  on June 2, 1999. The series C preferred
stock also has voting rights under which the holders of the preferred stock vote
together with the holders of common stock on an as-converted basis.             

     Each share of series D preferred  stock is  initially  convertible  into 20
shares  of  common  stock.  The  series  D  preferred  stock  has a  liquidation
preference  equal to the  greater of $65.00 per share or $50.00 plus all accrued
and unpaid  dividends  on the  shares.  The  series D  preferred  stock  bears a
dividend of 6% per annum.  The series D preferred  stock also has voting  rights
under which the holders of the preferred stock vote together with the holders of

16

424B1
17th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 17th
common stock on an as-converted  basis. So long as 25% of the authorized  shares
of series D preferred  stock are  outstanding,  we must  obtain  approval of the
holders  of  60%  of  the  outstanding  series  D  shares  prior  to  redeeming,
repurchasing or paying  dividends on our securities,  making  specified types of
amendments  to our  certificate  of  incorporation  or bylaws,  and  creating or
issuing specified types of new securities.                                      

     As a result of the  anti-dilution  provisions  of the series A-1, A-2 and C
preferred stock,  those series are presently  convertible into  approximately 21
shares of common stock for each share of preferred stock.                       

     The following table provides  information  about our outstanding  preferred
stock:                                                                          

                                                        [Enlarge/Download Table]

                                                                                                         
                                      Common Stock                                                       
                                      Issuable upon                                                      
    Series of         Number of       Conversion of                                                      
 Preferred Stock    Shares Issued   Preferred Shares                     Liquidation                     
                                                         Dividend        Preference         Redeemable   
------------------  --------------  ------------------  ------------  ------------------  ---------------

Series A-2                 64,584           1,322,539       6%               $6                 No       
Series A-3                 12,500             263,852       6%               $8                 No       
Series B-1                 50,000           1,055,409       7%               $8                 No       
Series C                   41,667             872,100       7%               $72                No       
Series D                  106,000           2,120,000       6%        >$65 or $50 plus          No       
                                                                          dividends                      

     The  holder  of all of the  series  A-2,  A-3  and C  preferred  stock  are
converting all of that preferred stock into 2,458,491  shares of common stock in
consideration  of the  issuance to that holder of a warrant to purchase  250,000
shares of common stock at an exercise price of $3.58 per share, based on 110% of
the offering price of $3.25 per share.  This conversion is conditioned  upon and
will occur concurrently with the consummation of this offering.                 

Warrants                                                                        

     As of  January 1, 2000,  we had  outstanding  warrants  to  purchase  up to
2,037,488 shares of common stock.                                               

     On March 26, 1998,  August 11, 1998,  and September 2, 1998, in conjunction
with our private  placements  series A-2,  A-3 and B-1 of  preferred  stock,  we
issued  warrants to purchase up to 100,000,  66,667 and 129,057 shares of common
stock,   respectively,   at  prices  of  $4.00,   $4.00  and  $5.30  per  share,
respectively.  These warrants are  exercisable for five-year  periods  beginning
March 26, 1998, August 11, 1998, and September 2, 1998, respectively.           

     On March 5, 1999,  in  connection  with our private  placements of series C
preferred  stock,  we issued warrants to purchase up to 120,000 shares of common
stock at $4.50 per share.  The warrants are exercisable  for a five-year  period
beginning March 5, 1999.                                                        

     On June 23,  1999 and August  17,  1999,  in  connection  with our  private
placements of series D preferred stock in two traunches,  we issued warrants for
the  purchase  of up to 212,000  shares of common  stock at a price of $3.00 per
share.  The warrants are exercisable for a five-year  period  beginning June 23,
1999 or August 17, 1999  depending  upon the traunch in which the warrant holder
purchased the series D preferred stock.                                         

     In connection with the preferred stock exchanges described above, we issued
warrants  to  purchase  75,000  shares of  common  stock at a price of $7.00 per
share,  expiring  February 26, 2004.  In December  1998, we amended our loan and
security  agreement to include a revolving line of credit.  For this commitment,
we issued warrants to purchase 40,000 shares of common stock at a price of $4.00
per share.  These  warrants are  exercisable  for a five-year  period  beginning
December 21, 1998. In November  1996, we issued  warrants to the  underwriter of
our secondary  offering for the purchase of 150,000  shares of common stock at a
price of $4.50 per share.  These warrants are  exercisable  for a period of four
years beginning  November 22, 1996. In August 1999, we issued warrants to United
States Cellular  Corporation to purchase  1,000,000  shares of common stock at a
price of $4.00 per share.  The warrants are subject to vesting  conditions based
on U.S. Cellular's purchases of our SuperFilter(R)  systems. At January 1, 2000,
warrants  with  respect  to 49,200  shares of common  stock had  vested and were
exercisable under that agreement. These warrants are exercisable until August   

17

424B1
18th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 18th
24, 2004.  We also had  outstanding  at January 1, 2000  warrants to purchase an
additional  144,764 shares of common stock at a weighted  average exercise price
of $3.24 per share expiring from March 5, 2004 to December 12, 2004.            

     The following  table provides  information  about the terms of the warrants
outstanding at January 1, 2000.                                                 

                                                        [Enlarge/Download Table]

                                                                                                       

                                                                    Weighted                           
                                                                    Average         Number of Shares   
                                                                 Exercise Price   Issued Upon Exercise 
Description                               Expiration Date(s)                                           
---------------------------------------  ----------------------  ---------------  ---------------------

Warrants related to Preferred Stock                                                                    
     Series A-2....................      March 26, 2003              $ 4.00                    100,000 
     Series A-3....................      August 11,2003              $ 4.00                     66,667 
     Series B-1....................      September 2, 2003           $ 5.30                    129,057 
     Series C......................      March 5, 2004               $ 4.50                    120,000 
     Series D......................      June 23, 2004 or            $ 3.00                    212,000 
                                         August 15, 2004                                               
     Exchange Warrants.............      February 26, 2004           $ 7.00                     75,000 

Other Warrants                                                                                         
     Underwriter Warrants..........      November 22, 2001           $ 4.50                    150,000 
     Silicon Valley Bank...........      December 21, 2003           $ 4.00                     40,000 
     U.S. Cellular.................      August 27, 2004             $ 4.00                  1,000,000 
       Others......................      March 5, 2004               $ 3.24                    144,764 
                                         through December 12,                                          
                                         2004                                                          
Total..............................                                                          2,037,488 

     In  addition,  in  connection  with the  conversion  of  118,751  shares of
preferred stock conditioned upon and effected concurrently with the offering, we
issued to the holder of that converted  preferred  stock warrants to purchase an
aggregate of 250,000  shares of common  stock at an exercise  price of $3.58 per
share, equal to 110% of the offering price of $3.25 per share. The warrants will
be exercisable for five years from the date of issuance.                        

Anti-takeover matters                                                           

     We are a  Delaware  corporation  and  are  subject  to  Section  203 of the
Delaware General  Corporation Law. In general,  Section 203 prohibits a Delaware
corporation  from  engaging  in a  "business  combination"  with an  "interested
stockholder" for a period of three years following the date that the stockholder
became an interested  stockholder,  unless (i) prior to the acquisition date the
board of directors of the corporation  approved either the business  combination
or the  transaction  which  resulted in the  stockholder  becoming an interested
stockholder,  or (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation  outstanding at the time the
transaction  commenced  (excluding  for  purposes of  determining  the number of
shares  outstanding those shares owned by (x) persons who are directors and also
officers and (y) employee stock plans in which employee participants do not have
the right to determine  confidentially  whether  shares held subject to the plan
will be tendered in a tender or exchange  offer),  or (iii) on or  subsequent to
the  acquisition  date the  business  combination  is  approved  by the board of
directors and authorized at an annual or special  meeting of  stockholders,  and
not by  written  consent,  by the  affirmative  vote of at least  66-2/3% of the
outstanding  voting  stock  which is not  owned by the  interested  stockholder.
Section 203 defines a "business combination" to include mergers, consolidations,
asset sales and stock issuances and other transactions  resulting in a financial
benefit to an  "interested  stockholder."  In  addition,  Section 203 defines an
"interested stockholder" to include any entity or person beneficially owning 15%
or more of the  outstanding  voting stock of the  corporation  and any entity or
person affiliated with that entity or person.                                   

18

424B1
19th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 19th
 SHARES ELIGIBLE FOR FUTURE SALE

     Upon  completion of this  offering,  including the  conversion of preferred
stock into common stock to occur  concurrently with the closing of the offering,
Superconductor   will  have  12,671,410  shares  of  common  stock  outstanding.
10,212,919  of these  shares  will be freely  tradable  without  restriction  or
further  registration  under the  Securities Act unless such shares are owned by
"affiliates"  as that term is defined under Rule 144 under the Securities Act or
unless such securities are "restricted securities" as that term is defined under
Rule 144.                                                                       

     Shares of common stock that are deemed to be "restricted securities" within
the meaning of the Securities Act may be publicly sold only if registered  under
the  Securities  Act or sold in  accordance  with an applicable  exemption  from
registration,  such  as  those  provided  by  Rule  144  promulgated  under  the
Securities Act, as described below.                                             

     In  general,  under Rule 144 as  currently  in effect,  a person or persons
whose shares are aggregated, including any affiliate of Superconductor,  who has
beneficially  owned restricted  securities for at least one year,  including the
holding  period of any prior owner other than an  affiliate  of  Superconductor,
would be entitled to sell within any three-month period, a number of shares that
does not exceed the greater of:                                                 

     (1)  one   percent   of  the   number  of  shares  of  common   stock  then
          outstanding--approximately  12,671,410  shares  immediately  after the
offering; or                                                

     (2)  the average  weekly trading volume of the common stock during the four
          calendar weeks  preceding the filing of a Form 144 with respect to the
sale.                                                       

     Sales  under  Rule 144 are  also  subject  to  manner  of sale  and  notice
requirements  and  to the  availability  of  current  public  information  about
Superconductor.  Under Rule  144(k),  a person who is not deemed to have been an
affiliate  of  Superconductor  at any time during the three  months  preceding a
sale,  and who has  beneficially  owned  restricted  securities for at least two
years,  including the holding  period of any prior owner other than an affiliate
of  Superconductor,  is entitled to sell the shares  without  complying with the
volume  limitations  or  the  manner  of  sale,  public  information  or  notice
requirements of Rule 144. Sales of shares by affiliates of  Superconductor  will
continue to be subject to the volume  limitations and the manner of sale, notice
and public information requirements.                                            

     We cannot  predict the effect,  if any, that sales of shares under Rule 144
or the  availability  of shares  for sale will have on the  market  price of the
common stock  prevailing from time to time after the offering.  We are unable to
estimate  the number of shares that may be sold in the public  market under Rule
144,  because that amount will depend on the trading volume in, and market price
for,  the common stock and other  factors.  Nevertheless,  sales of  substantial
amounts of shares in the public market, or the perception that those sales could
occur, could adversely affect the market price of the common stock.             

PLAN OF DISTRIBUTION

     All of the shares being  offered by this  prospectus  are being  offered by
Superconductor  to a limited number of institutional  investors at the price set
forth on the cover of this prospectus.  The State of Wisconsin  Investment Board
has  purchased  2,319,851  of the  shares  of  common  stock  described  in this
prospectus.                                                                     

     The shares have been registered on Superconductor's  registration statement
on Form  S-2  (File  No.  333-94053)  of  which  this  prospectus  forms a part.
Superconductor  will pay all  expenses  incident to the offering and sale of the
shares to the purchasers. In some cases,  Superconductor will agree to indemnify
the purchasers  against certain  liabilities,  including  liabilities  under the
Securities Act of 1933.                                                         

 LEGAL MATTERS

     Some legal  matters  with  respect to the  legality of the  issuance of the
shares  of common  stock  offered  by this  prospectus  will be passed  upon for
Superconductor by Nida & Maloney, LLP, Santa Barbara, California.               

19

424B1
20th Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 20th
 EXPERTS

     The financial  statements  incorporated in this  Registration  Statement on
Form S-2 by  reference  to the  Annual  Report  on Form  10-K of  Superconductor
Technologies Inc. for the year ended December 31, 1998 have been so incorporated
in reliance on the report (which contains an explanatory  paragraph  relating to
the Company's  ability to continue as a going concern as described in Note 11 to
the   financial   statements)   of   PricewaterhouseCoopers   LLP,   independent
accountants,  given on the  authority  of said firm as experts in  auditing  and
accounting.                                                                     

 INFORMATION INCORPORATED BY REFERENCE

     The SEC allows us to  "incorporate by reference"  information  that we file
with them,  which means that we can  disclose  important  information  to you by
referring  you  to  those  other  documents.  The  information  incorporated  by
reference is an important part of this prospectus,  and information that we file
later with the SEC will automatically update and supercede this information. The
following documents previously filed with the Commission by the Company pursuant
to the Exchange Act are hereby incorporated by reference in this prospectus:    

          o    our Annual  Report on Form 10-K for the year ended  December  31,
1998;                                             

o    our Current Report on Form 8-K dated February 26, 1999;

          o    our  definitive  Proxy  Statement for our annual  meeting held on
June 2, 1999;                                     

          o    our definitive  Proxy  Statement for our special  meeting held on
August 6, 1999; and                               

          o    our Quarterly  Reports on Form 10-Q for the quarters  ended April
    3, 1999, July 3, 1999 and October 2, 1999, as amended.

     All  other  reports  and  documents  filed  by us  after  the  date of this
prospectus under Sections 13(a), 14 and 15(d) of the Securities  Exchange Act of
1934 prior to the  termination  of the offering of the common  stock  covered by
this  prospectus are also  incorporated  by reference in this prospectus and are
considered  to be part of this  prospectus  from the date  those  documents  are
filed.                                                                          

     We are delivering  with this prospectus a copy of our Annual Report on Form
10-K for the fiscal year ended  December  31, 1998 and our  Quarterly  Report on
Form 10-Q for the fiscal  quarter ended October 2, 1999.  You may request a copy
of the other filings incorporated in this prospectus by reference at no cost, by
writing or telephoning us at the following address:                             

Superconductor Technologies Inc.
Attn: M. Peter Thomas, CEO
460 Ward Drive
 Santa Barbara, CA 93111
(805) 683-7646

     This prospectus is part of a registration  statement we have filed with the
SEC.  You should  rely only on the  information  incorporated  by  reference  or
provided  in this  prospectus.  No one else is  authorized  to provide  you with
different  information.  We are not making an offer of these  securities  in any
state  where  the  offer  is not  permitted.  You  should  not  assume  that the
information in this prospectus is accurate as of any date other than the date on
the front of this document.                                                     

 WHERE YOU CAN FIND MORE INFORMATION

     We are a reporting company and file annual,  quarterly and current reports,
proxy materials and other  information with the SEC. You may read and copy these
reports,  proxy  materials and other  information at the SEC's public  reference
room at 450 Fifth Street, N.W., Washington, DC 20549, New York, NY, and Chicago,
IL. You can request copies of these documents by writing to the SEC and paying a
fee for the  copying  costs.  Please  call  the SEC at  1-800-SEC-0330  for more
information  about the operation of the public  reference  room. Our SEC filings
are also available at the SEC's internet web site at  "http:\\www.sec.gov."  You
may also visit our web site at "http:\\www.suptech.com."                        

20

424B1
Last Page of 21
TOC
1st
Previous
Next
↓Bottom
Just 21st
    No dealer,  salesperson,  or other person has been  authorized to give any
information or to make any  representations  other than those  contained in this
prospectus,  and, if given or made, such information or representations must not
be relied upon as having been  authorized by the company.  This  prospectus does
not  constitute  an  offer  to sell or the  solicitation  of an offer to buy any
securities other than the securities to which it relates or any offer to sell or
the solicitation of an offer to buy securities in any  circumstances in which an
offer or solicitation  is unlawful.  Neither the delivery of this prospectus nor
any sale made hereunder shall, under any  circumstances,  create any implication
that there has been no change in the  affairs of the  company  since the date of
this prospectus or that the information  contained in this prospectus is correct
as of any date subsequent to its date.                                          

 TABLE OF CONTENTS

                                                        PAGE
                                                        ------
Prospectus Summary..........................................        3           
Risk Factors................................................        7           
Use of Proceeds.............................................       12           
Price Range of Common Stock.................................       12           
Dividend Policy.............................................       12           
Capitalization..............................................       13           
Dilution....................................................       14           
Description of Capital Stock................................       15           
Shares Eligible for Future Sale.............................       19           
Plan of Distribution........................................       19           
Legal Matters...............................................       19           
Experts.....................................................       20           
Information Incorporated By Reference.......................       20           
Where You Can Find More Information.........................       20           

SUPERCONDUCTOR TECHNOLOGIES INC.

2,473,701 SHARES

COMMON STOCK

PROSPECTUS

February 9, 2000

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B1’ Filing		Date		First		Last			Other Filings
		3/26/05		16
		12/12/04		18
		8/27/04		3		18
		8/15/04		18
		6/23/04		18
		3/5/04		18					4
		2/26/04		17		18
		12/21/03		18
		9/2/03		18
		3/26/03		18
		11/22/01		18
		3/26/01		16
		12/31/00		3					10-K
Filed on:		2/11/00
		2/9/00		1		21
		2/8/00		1		12
		1/1/00		12		18
		12/8/99		4
		12/1/99		6		13
		10/2/99		6		20			10-Q
		8/17/99		17					10-Q
		8/6/99		10		20			DEFS14A,  PRES14A
		7/3/99		12		20			10-Q,  10-Q/A
		6/23/99		17
		6/2/99		10		20			DEF 14A,  PRE 14A
		4/3/99		12		20			10-Q
		3/5/99		17
		2/26/99		16		20			8-K
		12/31/98		3		20			10-K
		12/21/98		17
		9/26/98		12					10-Q
		9/2/98		17
		8/11/98		17
		6/27/98		12					10-Q
		3/28/98		12					10-Q
		3/26/98		17
		12/31/97		12					10-K
		9/27/97		12					10-Q
		6/28/97		12					10-Q
		3/29/97		12					10-Q
		11/22/96		17					424B4
		3/9/93		12
									List all Filings