================================================================================
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</Table>
SUPERCONDUCTIVE COMPONENTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
SUPERCONDUCTIVE COMPONENTS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JUNE 10, 2005
AND
PROXY STATEMENT
================================================================================
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
SUPERCONDUCTIVE COMPONENTS, INC.
2839 Charter Street
Columbus, Ohio 43228
(614) 486-0261
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 2005
May 2, 2005
To Our Shareholders:
The Annual Meeting of Shareholders of Superconductive Components, Inc.
(the "Company") will be held at the offices of the Company located at 2839
Charter Street, Columbus, Ohio, on Friday, June 10, 2005, at 9:00 a.m., local
time, for the following purposes:
1. To elect five directors of the Company, each to serve for terms
expiring at the next Annual Meeting of Shareholders.
2. To transact any other business which may properly come before the
meeting or any adjournment thereof.
You will be most welcome at the annual meeting, and we hope you can
attend. Directors and officers of the Company and representatives of its
registered independent public accounting firm will be present to answer your
questions and to discuss the Company's business.
We urge you to execute and return the enclosed proxy as soon as possible
so that your shares may be voted in accordance with your wishes. If you attend
the annual meeting, you may cast your vote in person and your proxy will not be
used. If your shares are held in account at a brokerage firm or bank, you must
instruct them on how to vote your shares.
By Order of the Board of Directors,
Daniel Rooney
President, Chief Executive Officer, and
Chairman of the Board of Directors
PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
SUPERCONDUCTIVE COMPONENTS, INC.
2839 Charter Street
Columbus, Ohio 43228
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 10, 2005
This proxy statement is furnished to the shareholders of Superconductive
Components, Inc., an Ohio corporation (the "Company"), in connection with the
solicitation of proxies to be used in voting at the Annual Meeting of
Shareholders to be held on June 10, 2005, and at any adjournment or postponement
thereof (the "Annual Meeting"). The enclosed proxy is being solicited by the
Company's Board of Directors. This proxy statement and the enclosed proxy will
be first sent or given to the Company's shareholders on approximately May 2,
2005.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of stock. Representatives of the
Company may solicit proxies by mail, telegram, telephone, fax, or personal
interview.
The shares represented by the accompanying proxy will be voted as directed
if the proxy is properly signed and received by the Company prior to the Annual
Meeting. If no directions are made to the contrary, the proxy will be voted FOR
the election of Daniel Rooney, Robert J. Baker, Jr., Walter J. Doyle, Robert H.
Peitz, and Edward W. Ungar as Directors of the Company and, at the discretion of
persons acting under the proxy, to transact such other business as may properly
come before the meeting or any adjournment thereof. Any shareholder giving a
proxy has the power to revoke it at any time before it is exercised by filing a
written notice with the Secretary of the Company prior to the meeting.
Shareholders of record who attend the meeting may vote in person and their
proxies will not be used.
Holders of record of the Company's common stock at the close of business
on April 22, 2005, will be entitled to vote at the Annual Meeting. At that time,
the Company had 2,439,360 shares of the Company's common stock outstanding and
entitled to vote. Each share of the Company's common stock outstanding on the
record date entitles the holder to one vote on each matter submitted at the
Annual Meeting.
The presence, in person or by proxy, of a majority of the outstanding
shares of the Company's common stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. Abstentions and broker non-votes
will be counted for purposes of determining the presence or absence of a quorum.
Broker non-votes occur when brokers, who hold their customers' shares in street
name, sign and submit proxies for such shares and vote such shares on some
matters, but not others. Typically, this would occur when brokers have not
received any instructions from their customers, in which case the brokers, as
the holders of record, are permitted to vote on "routine" matters, which
typically include the election of directors.
The election of the director nominees requires the favorable vote of a
plurality of all votes cast by the holders of the Company's common stock at a
meeting at which a quorum is present. Proxies that are marked "Withhold
Authority" and broker non-votes will not be counted toward such nominee's
achievement of a plurality and thus will have no effect. Each other matter to be
submitted to the shareholders for approval or ratification at the Annual Meeting
requires the affirmative vote of the holders of a majority of the Company's
common stock present and entitled to vote on the matter. For purposes of
determining the number of shares of the Company's common stock voting on the
matter, abstentions will be counted and will have the effect of a negative vote;
broker non-votes will not be counted and thus will have no effect.
ELECTION OF DIRECTORS
The Company's Restated Code of Regulations provides that the number of
directors shall be fixed by the Board. The total number of authorized directors
currently is fixed at five. The nominees for director, if elected, will serve
for one-year terms expiring at the next Annual Meeting of Shareholders. Daniel
Rooney, Robert J. Baker, Jr., Walter J. Doyle, Robert H. Peitz, and Edward W.
Ungar currently serve as directors of the Company and are being nominated by the
Board of Directors for re-election as directors.
It is intended that, unless otherwise directed, the shares represented by
the enclosed proxy will be voted FOR the election of Messrs. Rooney, Baker,
Doyle, Peitz, and Ungar as directors. In the event that any nominee for director
should become unavailable, the number of directors of the Company may be
decreased pursuant to the Restated Code of Regulations or the Board of Directors
may designate a substitute nominee, in which event the shares represented by the
enclosed proxy will be voted for such substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR.
The following table sets forth for each nominee for director of the
Company, such person's name, age, and his position with the Company:
NAME AGE POSITION
---- --- --------
Daniel Rooney 51 President, Chief Executive Officer and
Chairman of the Board of Directors
Robert J. Baker, Jr. 65 Director
Walter J. Doyle 70 Director
Robert H. Peitz 44 Director
Edward W. Ungar 68 Director
Daniel Rooney has served as a Director of the Company since joining the
Company in March 2002 as President and Chief Executive Officer. Mr. Rooney was
elected as the Chairman of the Board of Directors of the Company on January 8,
2003. Prior to joining the Company, Mr. Rooney was General Manager for Johnson
Matthey, Color and Coatings Division, Structural Ceramics Sector North America
from 1994 to 2001. Prior to that, Mr. Rooney held various management positions
at TAM Ceramics, Inc., a Cookson Group Company.
Robert J. Baker, Jr., Ph.D. has served as a Director of the Company since
1992. Dr. Baker is the president and founder of Venture Resources International
and the co-founder of Business Owners Consulting Group, which assist companies
in the development of growth strategies, including marketing position and
competitive strategies. Dr. Baker is currently a visiting member of the Capital
University faculty serving the MBA program.
Edward W. Ungar has been a Director of the Company since 1990. Mr. Ungar
is the President and founder of Taratec Corporation, a technology business
consulting firm in Columbus, Ohio. Prior to forming Taratec Corporation in 1986,
Mr. Ungar was an executive with Battelle Memorial Institute.
Walter J. Doyle has served as a Director of the Company since 2004. Mr.
Doyle is the President of Forest Capital, an angel capital firm. Previously, Mr.
Doyle was President and CEO of Industrial Data Technologies Corp. for 21 years.
Mr. Doyle earned an Electrical Engineering degree from City College of New York
(CCNY) and an MBA from the Harvard Business School.
2
Robert H. Peitz has served as a Director of the Company since 2004. Prior
to being appointed as a director of the Company, Mr. Peitz was a managing
director and head of financial markets for PB Capital. Mr. Peitz's 15 years of
experience at PB Capital include 10 years as Treasurer. Mr. Peitz is a graduate
of the University of Cincinnati; Bachelor of Arts Economics and has an MBA from
the American Graduate School of International Management. He also attended the
European Business School and completed the Executive Development Program at the
Kellogg School of Management at Northwestern University.
INFORMATION CONCERNING THE BOARD OF DIRECTORS, EXECUTIVE OFFICERS, AND PRINCIPAL
SHAREHOLDERS
MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company had a total of eight meetings during
the fiscal year ended December 31, 2004 ("fiscal 2004"). During fiscal 2004, no
director attended fewer than 75% of the meetings of the Board of Directors, held
during the period for which he has been a director, and the total number of
meetings held by all committees of the Board of Directors in which he served,
during the periods that he served. Directors who are employed by the Company
receive no compensation for serving as directors.
Non-employee directors periodically receive stock options with an exercise
price equal to the fair market value of the Company's common stock on the date
of grant and a ten-year term issued under the Company's 1995 Stock Option Plan.
Directors are also reimbursed for all reasonable out-of-pocket expenses. On
January 21, 2004, each of Messrs. Baker, Jr. and Ungar received an option to
purchase 10,000 shares of common stock of the Company, exercisable on January
21, 2005 and expire 10 years from the date of grant at a price of $2.60 per
share.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee and a Stock Option and Compensation
Committee (the "Compensation Committee"). The purpose of the Audit Committee is
to pre-approve all auditing and permitted non-audit services performed by the
Company's registered independent public accounting firm. The Audit Committee
also receives reports from the Company's registered independent public
accounting firm as required by the Securities Exchange Act of 1934, as amended.
The Chairman of the Audit Committee is Mr. Peitz, and the members are Messrs.
Doyle and Ungar. Although the Audit Committee was formed in April 2003, the
entire Board of Directors acted as the Audit Committee for purposes of
compliance with the Securities Exchange Act of 1934 before Messrs. Peitz and
Doyle were appointed to the Board of Directors in July 2004. The Audit Committee
met once during fiscal 2004, and it does not have a committee charter. The Board
has determined that Messrs. Doyle and Peitz qualify as "audit committee
financial experts" as that term is defined in Item 401(e) of Regulation S-B.
In performing its duties the Audit Committee has (1) reviewed and
discussed the 2004 audited financial statements of the corporation with
management; (2) discussed with the registered independent public accounting firm
the matters required to be discussed by SAS 61, as may be modified or
supplemented; (3) received the written disclosures and the letter from the
registered independent public accounting firm required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standards No. 1, Independence
Discussions with Audit Committees), as may be modified and supplemented, and has
discussed with the registered independent public accounting firm the registered
independent public accounting firm's independence; and (4) recommended that the
audited financial statements be included in Company's Annual Report on Form
10-KSB for fiscal 2004 for filing with the Securities and Exchange Commission.
The Compensation Committee of the Board of Directors reviews executive
compensation and administers the Company's stock option and incentive
compensation performance plans. The Chairman of the Compensation Committee is
Dr. Baker and the members are Messrs. Doyle and Ungar. The Compensation
Committee met twice during fiscal 2004.
Due to the limited size of the Company's Board of Directors, the Board of
Directors has determined that it is not necessary to establish a nominating
committee. All of the directors participate in the consideration of director
nominees.
3
SHAREHOLDER COMMUNICATION
The Company's Board of Directors welcomes communications from
shareholders. Shareholders may send communications to the Board of Directors or
to any director in particular, c/o Superconductive Components, Inc., 2839
Charter Street, Columbus, Ohio 43228. Any correspondence addressed to the Board
of Directors or to any one of the Company's Directors in care of the Company's
offices will be forwarded to the addressee without review by management.
It is the Company's expectation that all members of the Board of Directors
attend the Annual Meeting of Shareholders. All members of the Company's Board of
Directors were present at the Company's 2004 Annual Meeting of Shareholders,
except Messrs. Baker, Doyle, and Peitz. Messrs. Doyle and Peitz were not elected
to the Board of Directors until after the 2004 Annual Meeting of Shareholders.
EXECUTIVE OFFICERS
In addition to Mr. Rooney, the following persons are executive officers of
the Company:
Gerald S. Blaskie, age 47, has served as the Company's Chief Financial
Officer since April 2001. Prior to joining the Company, Mr. Blaskie was the
Controller at Cable Link, Inc. from February 2000 to March 2001. From 1997 to
2000, he was the Plant Manager at Central Ohio Plastics Corporation, where he
also served as Controller from 1993 to 1997.
Scott Campbell, Ph.D., age 47, has served as the Company's Vice President
of Technology since March 2005. Dr. Campbell served as the Company's Vice
President of Research and Engineering from July 2004 to March 2005. Dr. Campbell
joined the company in July 2002 as the Company's Technical Director. Prior to
joining the Company, he was Senior Research Manager at Oxynet, Inc. for five
years.
Officers are elected annually by the Board of Directors and serve at its
discretion.
FAMILY RELATIONSHIPS
There are no family relationships among the directors and executive
officers of the Company.
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 31, 2005, the beneficial
ownership of the Company's common stock by each of the Company's directors, each
executive officer named in the Summary Compensation Table, and by all directors
and executive officers as a group.
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) CLASS(3)
--------------------------- --------------------- -------------
Daniel Rooney(4) 89,300 3.5%
Robert J. Baker, Jr.(5) 53,744 2.2%
Walter J. Doyle(6) 86,600 3.5%
Robert H. Peitz(7) 136,696 5.5%
Edward W. Ungar(8) 31,000 1.3%
All directors and executive officers
as a group (7 persons)(9) 442,340 16.4%
- --------------
(1) The address of all directors and executive officers is c/o Superconductive
Components, Inc., 2839 Charter Street, Columbus, Ohio 43228.
(2) For purposes of the above table, a person is considered to "beneficially
own" any shares with respect to which he exercises sole or shared voting
or investment power or as to which he has the right to acquire the
beneficial ownership within 60 days of March 31, 2005. Unless otherwise
indicated, voting power and
4
investment power are exercised solely by the person named above or shared
with members of his or her household.
(3) "Percentage of Class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Company on March 31, 2005 plus the number of shares such person has the
right to acquire within 60 days of March 31, 2005.
(4) Includes 82,000 common shares, which may be acquired by Mr. Rooney under
stock options exercisable within 60 days of March 31, 2005.
(5) Includes 31,000 common shares, which may be acquired by Dr. Baker under
stock options exercisable within 60 days of March 31, 2005, and 16,728
shares which are held in Dr. Baker's IRA, and 1,666 shares held by Venture
Resources International. Dr. Baker is the controlling principal and has
sole investment and voting power over the securities held by Venture
Resources International.
(6) Includes 4,250 common shares, which may be acquired by Mr. Doyle under
stock purchase warrants exercisable within 60 days of March 31, 2005.
(7) Includes 64,823 common shares, which may be acquired by Mr. Peitz under
stock options and stock purchase warrants exercisable within 60 days of
March 31, 2005.
(8) Includes 31,000 common shares, which may be acquired by Mr. Ungar under
stock options exercisable within 60 days of March 31, 2005.
(9) Includes 258,073 common shares, which may be acquired under stock options
and stock purchase warrants exercisable within 60 days of March 31, 2005.
OWNERSHIP OF COMMON STOCK BY PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 31, 2005, relating
to the beneficial ownership of common stock by each person known by the Company
to own beneficially more than 5% of the outstanding shares of common stock of
the Company.
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) CLASS(3)
- --------------------------- --------------------- ------- -----
Curtis A. Loveland(4) 1,048,714 39.4%
Windcom Investments SA(5) 335,205 13.6%
Thomas G. Berlin(6) 283,200 11.4%
Laura F. Shunk(7) 157,895 6.4%
Daniel A. Funk(8) 149,765 6.0%
Robert H. Peitz(9) 136,696 5.5%
- ---------------------
(1) The address of Curtis A. Loveland is c/o Porter, Wright, Morris & Arthur
LLP, 41 South High Street, Columbus, Ohio 43215. The address of Windcom
Investments SA is Corso Elvezia 25, 6900 Lugan, CH. The address of Thomas
G. Berlin is c/o Berlin Financial Ltd., 1325 Carnegie Avenue, Cleveland,
Ohio 44115. The address of Laura F. Shunk is c/o Hudak & Shunk Company,
LPA, 8300 Mulberry Road, P.O. Box 490, Chesterland, Ohio 44026. The
address of Daniel A. Funk is c/o Peak Performance Orthopedics, 8997
Terwilligers Ridge Drive, Cincinnati, Ohio 45249. The address of Robert H.
Peitz is c/o Superconductive Components, Inc., 2839 Charter Street,
Columbus, Ohio 43228.
(2) For purposes of this table, a person is considered to "beneficially own"
any shares with respect to which he or she exercises sole or shared voting
or investment power or as to which he has the right to acquire the
beneficial ownership within 60 days of March 31, 2005. Unless otherwise
indicated, voting power and investment power are exercised solely by the
person named above or shared with members of his or her household.
5
(3) "Percentage of Class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Company on March 31, 2005, plus the number of shares such person has the
right to acquire within 60 days of March 31, 2005.
(4) Includes (i) 31,000 shares of common stock, which can be acquired by Mr.
Loveland under stock options exercisable within 60 days of March 31, 2005;
(ii) 318,406 shares of common stock beneficially owned as the executor of
the Estate of Edward R. Funk, of which 103,050 shares of common stock can
be acquired by Mr. Loveland on behalf of the estate under stock options
and warrants exercisable within 60 days of March 31, 2005; (iii) 415,352
shares of common stock beneficially owned by Mr. Loveland as the executor
of the Estate of Ingeborg V. Funk, of which 90,000 shares of common stock
can be acquired by Mr. Loveland on behalf of the estate under stock
options and warrants exercisable within 60 days of March 31, 2005; and
(iv) 283,756 shares beneficially owned by Mr. Loveland as the trustee of
generation-skipping irrevocable trusts established by Edward R. and
Ingeborg V. Funk.
(5) Based on the Schedule 13G/A filed on February 14, 2005, Dr. Karl
Kohlbrenner, CEO of Windcom Investments SA, has voting and dispositive
power over the shares of common stock on behalf of the company. Windcom
Investments SA's ownership includes 20,286 shares of common stock, which
can be acquired by Windcom Investments SA under stock purchase warrants
exercisable within 60 days of March 31, 2005.
(6) According to information provided to the Company by Mr. Berlin, his
ownership includes 158,200 shares of common stock held by Berlin Capital
Growth L.P., of which 20,833 shares of common stock can be acquired under
stock purchase warrants exercisable within 60 days of March 31, 2005. Mr.
Berlin has shared voting and dispositive power over the shares of common
stock in this limited partnership as the controlling principal of Berlin
Capital Growth L.P. Mr. Berlin's ownership also includes 20,833 shares of
common stock, which can be acquired by Mr. Berlin under stock purchase
warrants exercisable within 60 days of March 31, 2005.
(7) Based on the Schedule 13G filed on February 11, 2005, Ms. Shunk's
ownership includes 46,501 shares of common stock, which can be acquired by
Ms. Shunk under stock purchase warrants exercisable within 60 days of
March 31, 2005.
(8) Based on the Schedule 13G filed on February 11, 2005, Mr. Funk's ownership
includes 46,501 shares of common stock, which can be acquired by Dr. Funk
under stock purchase warrants exercisable within 60 days of March 31,
2005.
(9) Includes 64,823 shares of common stock, which can be acquired by Mr. Peitz
under stock options and stock purchase warrants exercisable within 60 days
of March 31, 2005.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information regarding
compensation paid each of the Company's last three fiscal years to the Company's
Chief Executive Officer, who is the Company's only executive officer whose
combined salary and bonus exceeded $100,000 for the year ended December 31, 2004
(the "Named Executive Officer"). Mr. Rooney has an employment contract that
entitles him to 100% of his compensation for six months following his
termination without cause. Following the initial six month period after his
termination, Mr. Rooney is also entitled to receive six months of pay at a rate
of 50% of his compensation at the time of his termination.
6
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
RESTRICTED SECURITIES
ANNUAL COMPENSATION STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS AWARD OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- -------------------------------------- ---- -------- ----- ---------- ---------- ------------
DANIEL ROONEY 2004 $137,172 - - 10,000 -
President, Chief Executive Officer 2003 $133,218 - - - -
and Chairman of the Board of Directors 2002 $105,501 - - 100,000 -
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows grants of options to purchase the Company's
common stock to the Company's Named Executive Officer during fiscal 2004.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS GRANTED EMPLOYEES IN PRICE
NAME (#) FISCAL YEAR ($/SHARE) EXPIRATION DATE
- ------------- --------------- ------------ --------- ---------------
Daniel Rooney 10,000 14.3% 2.60 Jan. 21, 2014
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2004
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides certain information regarding the number and
value of stock options held by the Company's Named Executive Officer at December
31, 2004.
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
ON VALUE (#) FISCAL YEAR-END ($)(1)
EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------- -------- -------- ----------- ------------- ----------- -------------
Daniel Rooney - - 82,000 28,000 $76,000 $19,000
- -------------------------
(1) Represents the total gain which would be realized if all in-the-money
options held at year end were exercised, determined by multiplying the
number of shares underlying the options by the difference between the per
share option exercise price and the per share fair market value at year
end ($2.50 at December 31, 2004). An option is in-the-money if the fair
market value of the underlying shares exceeds the exercise price of the
option.
(2) If shares were acquired on exercise, the value realized would be
calculated based on the number of shares exercised multiplied by the
excess of the fair market value of a share of the Company's common stock
on the date of exercise over the exercise price of the stock option.
7
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth additional information as of December 31,
2004, concerning shares of the Company's common stock that may be issued upon
the exercise of options and other rights under the Company's existing equity
compensation plans and arrangements, divided between plans approved by the
Company's shareholders and plans or arrangements not submitted to the Company's
shareholders for approval. The information includes the number of shares covered
by, and the weighted average exercise price of, outstanding options and other
rights and the number of shares remaining available for future grants excluding
the shares to be issued upon exercise of outstanding options, warrants, and
other rights.
NUMBER OF SECURITIES
REMAINING AVAILABLE
NUMBER OF SECURITIES FOR ISSUANCE UNDER
TO BE ISSUED UPON WEIGHTED-AVERAGE EQUITY COMPENSATION
EXERCISE OF EXERCISE PRICE OF PLANS (EXCLUDING
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED
WARRANTS AND RIGHTS WARRANTS AND RIGHTS IN COLUMN (a))
(a) (b) (c)
-------------------- -------------------- --------------------
Equity compensation plans approved
by security holders (1) 475,250 $1.93 397,450
Equity compensation plans not
approved by security holders (2) 405,347 $2.28 -
------- ----- -------
Total 880,597 $2.09 397,450
======= ===== =======
- -----------------------
(1) Equity compensation plans approved by shareholders include the Company's
1995 Stock Option Plan.
(2) Includes 405,347 stock purchase warrants that can be acquired to purchase
405,347 shares of the Company's common stock, which were issued by the
Company in exchange for consideration in the form of goods and services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NOTES PAYABLE
Effective December 31, 2000, the Company converted accounts payable and
accrued interest payable to Edward R. Funk and Ingeborg V. Funk totaling
$132,270 to a note payable to Dr. and Ms. Funk. In March 2002, Dr. Funk paid a
management consulting fee of $50,000 on behalf of the Company. The Company
increased the amount of the note payable to Dr. Funk in the same amount. The
principal balance and accrued and unpaid interest totaled $192,717 as of
December 31, 2004.
CAPITAL LEASE
In November 2001, the Company entered into an agreement with Edward R.
Funk for the Company's lease of certain equipment. The Company has made no
payments under the agreement. The principal balance and accrued and unpaid
interest totaled $75,872 as of December 31, 2004.
CONVERTIBLE PROMISSORY NOTES AND STOCK PURCHASE WARRANTS
On January 7, 2000, the Company issued common stock purchase warrants at
$2.50 (fair market value at date of grant) per common share for 150,000 shares
of common stock related to the subordinated notes payable to Edward R. and
Ingeborg V. Funk. The warrants are 100% vested and expire ten years from the
date of grant of January 7, 2000. The Estate of Edward R. Funk and the Estate of
Ingeborg V. Funk are both greater than 5% beneficial owners of the Company.
On June 30, 2003, the Company issued a $100,000 convertible promissory
note payable to Windcom Investments SA, a greater than 5% beneficial owner of
the Company. The interest on the convertible promissory
8
note was determined by the Prime Commercial Rate in effect at Bank One, N.A.,
Columbus, Ohio. In addition, the Company issued to Windcom Investments SA,
warrants to purchase 20,333 shares of the Company's common stock at $1.00 per
share. The warrants vested according to the following schedule: (1) 8,333 vested
on the date of grant; and (2) 12,000 vested at a rate of 333 per month for 32
months, then 336 per month for 4 months. On May 13, 2004, in accordance with the
terms of the convertible promissory note, the balance and accrued and unpaid
interest owed automatically converted to 43,119 shares of common stock after the
Company raised over $500,000 in private equity financing. As of May 13, 2004,
the vested warrants were fixed at 11,633; no additional warrants will vest. In
connection with the private equity financing, the Company also issued to Windcom
Investments SA 8,623 warrants to purchase shares of common stock at $2.88 per
share.
On June 30, 2003, the Company issued to the Estate of Edward R. Funk,
warrants to purchase 10,000 shares of common stock at $1.00 per share in
connection with a lease guarantee. The warrants vest according to the following
schedule: (1) 4,600 vest on the date of grant; and (2) 5,400 vest at a rate of
150 per month for 36 months.
On June 30, 2003, the Company issued three $166,666.67 convertible
promissory notes payable to Laura F. Shunk, Daniel A. Funk and Robert H. Peitz,
respectively. Messrs. Funk and Peitz, and Ms. Shunk are greater than 5%
beneficial owners of the Company. Mr. Peitz currently serves as a director on
the Company's Board of Directors. The interest on the convertible promissory
notes was determined by the Prime Commercial Rate in effect at Bank One, N.A.,
Columbus, Ohio. In addition, the Company issued to each of Messrs. Funk and
Peitz, and Ms. Shunk warrants to purchase 33,889 shares of the Company's common
stock at $1.00 per share. The warrants vested according to the following
schedule: (1) 13,889 vested on the date of grant; and (2) 20,000 vested at a
rate of 556 per month for 32 months, then 552 per month for four months. On May
13, 2004, in accordance with the terms of the convertible promissory notes, the
balance and accrued and unpaid interest owed on each note automatically
converted to 71,873 shares of common stock after the Company raised over
$500,000 in private equity financing. As of May 13, 2004, the vested warrants
were fixed at 14,374; no additional warrants will vest. In connection with the
private equity financing, the Company also issued to each Messrs. Funk and
Peitz, and Ms. Shunk 19,449 warrants to purchase shares of common stock at $2.88
per share.
On June 30, 2003, the Company issued two $64,677.50 convertible promissory
notes to Laura F. Shunk and Daniel A. Funk, respectively, in connection with the
Series A Preferred Stock Redemption. Dr. Funk and Ms. Shunk are greater than 5%
beneficial owners of the Company. The interest on the convertible promissory
notes was determined by the Prime Commercial Rate in effect at Bank One, N.A.,
Columbus, Ohio. In addition, the Company issued to each of Dr. Funk and Ms.
Shunk, warrants to purchase 13,151 shares of the Company's common stock at $1.00
per share. The warrants vested according to the following schedule: (1) 5,260
vested on the date of grant; and (2) 7,891 vested at a rate of 220 per month for
35 months, then 191 per month for one month. On May 13, 2004, in accordance with
the terms of the convertible promissory notes, the balance and accrued and
unpaid interest owed on each note automatically converted to 27,891 shares of
common stock after the Company raised over $500,000 in private equity financing.
As of May 13, 2004, the vested warrants were fixed at 7,460; no additional
warrants will vest. In connection with the private equity financing, the Company
also issued to each Dr. Funk and Ms. Shunk 5,578 warrants to purchase shares of
common stock at $2.88 per share.
On November 3, 2004, the Company entered into a revolving loan agreement,
dated as of November 3, 2004, between the Company, as borrower, and Robert H.
Peitz, as lender. Mr. Peitz currently serves as a director on the Company's
Board of Directors. In connection with the revolving loan agreement the Company
received a revolving loan in an amount up to two hundred thousand dollars
($200,000). Interest on the outstanding balance will be compounded monthly at an
interest rate equal to 2% in excess of the Prime Commercial Rate in effect at
Huntington National Bank, Columbus, Ohio. Under the terms of the revolving loan
agreement, the Company requested advances of the $200,000 credit line in
increments of $50,000. In partial consideration for the revolving loan
agreement, the Company granted warrants to Mr. Peitz to purchase up to 20,000
shares of the Company's common stock for the price of $2.50 per share. The
warrants vested at a rate of 5,000 for each $50,000 increment advanced to the
Company, and the warrants expire November 1, 2009. As of April 1, 2005, the
Company has received $200,000 under the loan agreement, and all warrants under
the agreement have vested. Mr. Peitz will have the option to convert the loan
balance and accrued and unpaid interest to equity at any time prior to repayment
if the Company obtains any equity financing equal to or in excess of $200,000 on
the same terms as the equity financing.
On April 14, 2005, the Company entered into a convertible promissory note
dated as of April 14, 2005 between the Company, as borrower, and Robert H.
Peitz, as lender. Mr. Peitz currently serves as a director on the Company's
Board of Directors. In connection with this convertible promissory note, the
Company will receive a
9
loan in the amount of two hundred thousand dollars ($200,000). Interest on the
outstanding balance will be 10% per annum, compounded monthly. The convertible
promissory note contains customary default provisions, and will be secured by
substantially all of the Company's assets and subject to a standard security
agreement. The accrued interest and outstanding principal owed on the
convertible promissory note is payable on June 30, 2006, but the Company may
repay it early on 15 days notice to Mr. Peitz. At anytime before repayment, the
outstanding principal and accrued interest owed will automatically covert to
equity on the same price and terms as any private equity financing received by
the Company after the date of the loan agreement, provided that the Company
receives at least five hundred thousand dollars ($500,000) from the equity
financing. If the Company completes an equity financing, but receives less than
$500,000, Mr. Peitz will have the option to otherwise convert the outstanding
principal and accrued interest owed under the same terms as the equity
financing.
LEGAL SERVICES
Curtis A. Loveland is the Secretary of the Company and is the beneficial
owner of greater than 5% of the outstanding common stock of the Company, which
ownership includes (i) 318,406 shares of common stock beneficially owned as the
executor of the Estate of Edward R. Funk, (ii) 415,352 shares of common stock
beneficially owned by Mr. Loveland as the executor of the Estate of Ingeborg V.
Funk, and (iii) 283,756 shares beneficially owned by Mr. Loveland as the trustee
of generation-skipping irrevocable trusts established by Edward R. and Ingeborg
V. Funk. Mr. Loveland is also a partner with Porter, Wright, Morris & Arthur
LLP, the Company's legal counsel. During fiscal 2004, the Company incurred fees
to Porter, Wright, Morris & Arthur LLP in the amount of $65,069.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and greater than 10% shareholders to file reports
of ownership and changes in ownership of the Company's securities with the
Securities and Exchange Commission ("SEC"). Copies of the reports are required
by SEC regulation to be furnished to the Company. Based on its review of such
reports, the Company believes that all reporting persons complied with all
filing requirements during the fiscal year ended December 31, 2004, except for
late Form 4 filings by Robert J. Baker Jr., Robert H. Peitz, and Windcom
Investments SA, and late Form 3 filings for the Estate of Edward R. Funk and the
Estate of Ingeborg V. Funk. Each of these reporting persons failed to timely
file one beneficial ownership report. The Form 4 filed for Mr. Peitz reflected
one untimely transaction. The Form 4 filings for Dr. Baker and Windcom
Investments SA reflected two untimely transactions. The Form 3 filings for the
Estate of Edward R. Funk and the Estate of Ingeborg V. Funk did not report any
untimely transactions.
REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM
The Company expects that Hausser + Taylor LLP will continue as the
Company's registered independent public accounting firm for the 2005 fiscal
year. Hausser + Taylor LLP served as the registered independent public
accounting firm for the Company for fiscal 2004 and throughout the periods
covered by the Company's financial statements. Representatives of Hausser +
Taylor LLP are expected to attend the Annual Meeting of Shareholders in order to
respond to questions from shareholders, and they will have the opportunity to
make a statement.
Hausser + Taylor LLP has a continuing relationship with American Express
Tax and Business Services, Inc. ("TBS") from which it leases auditing staff who
are full time, permanent employees of TBS and through which Hausser + Taylor
LLP's partners provide non-audit services. As a result of this arrangement,
Hausser + Taylor LLP has no full time employees, and, therefore, none of the
audit services performed were provided by permanent full-time employees of
Hausser + Taylor LLP. Hausser + Taylor LLP manages and supervises the audit and
audit staff and is exclusively responsible for the opinion rendered in
connection with its examination.
10
FEES OF THE REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2004
AUDIT FEES
The aggregate fees billed by Hausser + Taylor, LLP for professional
services rendered by Hausser + Taylor, LLP for the audit of the Company's annual
financial statements and review of financial statements included in the
Company's Form 10-QSB were $47,000 for fiscal 2004 and $44,000 for fiscal 2003.
AUDIT RELATED FEES
There were no audit related fees in either of the last two years for
assurance and related services that are reasonably related to the performance of
the audit or review of the financial statements that are not reported under
audit fees.
TAX FEES
The Company paid $300 in 2004 and $300 in 2003 in aggregate tax fees for
professional services rendered for tax compliance and tax advice in connection
to the Company's internally prepared corporate tax return.
ALL OTHER FEES
None.
SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Each year the Board of Directors submits its nominations for election of
directors at the annual meeting of shareholders. Other proposals may be
submitted by the Board of Directors or the shareholders for inclusion in the
proxy statement for action at the annual meeting. Any proposal submitted by a
shareholder for inclusion in the proxy statement for the annual meeting of
shareholders to be held in 2006 must be received by the Company (addressed to
the attention of the Secretary) on or before January 2, 2006. Any shareholder
proposal submitted outside the processes of Rule 14a-8 under the Securities
Exchange Act of 1934 for presentation at the Company's 2006 annual meeting will
be considered untimely for purposes of Rule 14a-4 and 14a-5 if notice thereof is
received by the Company after March 18, 2006. To be submitted at the meeting,
any such proposal must be a proper subject for shareholder action under the laws
of the State of Ohio.
SOLICITATION EXPENSES
The cost of this solicitation will be paid by the Company. In addition to
the solicitation of proxies by mail, the directors, officers and employees of
the Company may solicit proxies personally or by telephone. The Company may
request persons holding shares in their names for others to forward soliciting
materials to their principals to obtain authorization for the execution of
proxies, and the Company may reimburse such persons for their expenses in doing
so.
11
ANNUAL REPORT
The Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 2004, containing financial statements for such year and the signed
opinion of Hausser + Taylor LLP, registered independent public accounting firm,
with respect to such financial statements, is being sent to shareholders
concurrently with this proxy statement. The Annual Report is not to be regarded
as proxy soliciting material, and management does not intend to ask, suggest or
solicit any action from the shareholders with respect to such report.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. If other matters should come before the meeting, however, each
of the persons named in the proxy intends to vote in accordance with his
judgement on such matters.
By Order of the Board of Directors
Daniel Rooney
President, Chief Executive Officer, and
Chairman of the Board of Directors
12
SUPERCONDUCTIVE
COMPONENTS, INC.
[ ] Mark this box with an X if you have made
changes to your name or address details above.
ANNUAL MEETING PROXY CARD
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD FOR WITHHOLD
01 - Robert J. Baker, Jr. [ ] [ ] 04 - Daniel Rooney [ ] [ ]
02 - Walter J. Doyle [ ] [ ] 05 - Edward W. Ungar [ ] [ ]
03 - Robert H. Peitz [ ] [ ]
2. To transact any other business which may properly come before the
annual meeting or any adjournment thereof.
B AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, dated May 2, 2005, and the proxy statement of the Company
furnished therewith. Any proxy heretofore given to vote said shares is hereby
revoked.
Signature(s) shall agree with the name(s) printed on this Proxy. If shares are
registered in two names, both shareholders should sign this Proxy. If signing as
attorney, executor, administrator, trustee or guardian, please give your full
title as such.
Signature 1 - Please keep signature within the box
- --------------------------------------------------
- --------------------------------------------------
Signature 2 - Please keep signature within the box
- --------------------------------------------------
- --------------------------------------------------
Date (mm/dd/yyyy)
- --------------------------------------------------
/ /
- --------------------------------------------------
PROXY - SUPERCONDUCTIVE COMPONENTS,INC.
2839 CHARTER STREET, COLUMBUS, OHIO 43228
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - JUNE 10, 2005
The undersigned shareholder of Superconductive Components, Inc. (the "Company")
hereby appoints Daniel Rooney, Gerald S. Blaskie, and Curtis A. Loveland, or any
one of them, as attorneys and proxies with full power of substitution to each,
to vote all shares of common stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at the offices of the Company, 2839 Charter Street, Columbus, Ohio, on Friday,
June 10, 2005, at 9:00 a.m. local time, and at any adjournment or adjournments
thereof, with all of the powers such undersigned shareholder would have if
personally present, for the purposes stated on the reverse side.
The undersigned gives unto said attorneys and proxies, or substitutes, full
power and authority to do whatsoever in their opinions may be necessary or
proper to be done in the exercise of the power hereby conferred, including the
right to vote for any adjournment, hereby ratifying all that said attorneys and
proxies, or substitutes, may lawfully do or cause to be done by virtue hereof.
Any of the said attorneys and proxies, or substitutes, who shall be present and
shall act at the meeting shall have and may exercise all powers of said
attorneys and proxies hereunder.
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on other side.)