UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
CHECK THE APPROPRIATE BOX:
[ ] 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 Section 240.14a-12
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
MAY 20, 2004
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 MAY 20, 2004
April 29, 2004
To Our Shareholders:
The Annual Meeting of Shareholders of Superconductive Components, Inc.
will be held at the Holiday Inn West, located at 2350 Westbelt Drive, Columbus,
Ohio on Thursday, May 20, 2004, at 10:30 a.m., local time, for the following
purposes:
1. To elect three 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
independent certified public accountants 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
MAY 20, 2004
-----------------------------
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 May 20, 2004, 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 April 29, 2004.
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., 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 23, 2004, will be entitled to vote at the Annual Meeting. At
that time, the Company had 1,846,006 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 four. 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., 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. There is currently one vacancy on the
Board of Directors. The Board has not nominated a candidate to fill this
vacancy. Proxies may not be voted to fill this vacancy.
It is intended that, unless otherwise directed, the shares represented
by the enclosed proxy will be voted FOR the election of Messrs. Rooney, Baker,
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 50 President, Chief Executive Officer and
Chairman of the Board of Directors
Robert J. Baker, Jr. 65 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.
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 seven meetings
during the fiscal year ended December 31, 2003 ("fiscal 2003"). During fiscal
2003, each of the directors attended 75% or more of the total number of meetings
of the Board of Directors. Directors who are employed by the Company receive no
compensation for serving as directors.
2
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 and are reimbursed for all reasonable out-of-pocket expenses. On
January 16, 2003, each of Messrs. Baker, Jr. and Ungar received an option to
purchase 10,000 shares of common stock of the Company, exercisable on January
20, 2004, at any time for a period of 10 years from January 20, 2003, at a price
of $1.00 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 Audit Committee was formed on
April 10, 2003. The members of the Audit Committee are Messrs. Baker, Jr. and
Ungar. The Audit Committee does not have a charter. The Audit Committee did not
meet during 2003. The purpose of the Audit Committee will be to pre-approve all
auditing and permitted non-audit services performed by the Company's independent
auditors. The Audit Committee will also receive reports from the Company's
independent auditors as required by the Securities Exchange Act of 1934, as
amended. Although the Audit Committee was formed in April 2003, the entire Board
of Directors acted as the Audit Committee during 2003 for purposes of compliance
with the Sarbanes-Oxley Act. The Board of Directors has determined that none of
its members qualify as a financial expert. The Board of Directors believes that
the general accounting and finance knowledge possessed by each member of the
Board of Directors is sufficient under the circumstances.
In performing the duties typically assigned to an audit committee, the
entire Board of Directors has (1) reviewed and discussed the 2003 audited
financial statements of the corporation with management; (2) discussed with the
independent auditors 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 independent accountants 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 independent accountant the independent accountant's
independence; and (4) recommended that the audited financial statements be
included in Company's Annual Report on Form 10-KSB for the last fiscal year for
filing with the Securities and Exchange Commission.
The members of the Compensation Committee are Messrs. Baker, Jr. and
Ungar. The Compensation Committee met once during 2003. The Compensation
Committee of the Board of Directors reviews executive compensation and
administers the Company's stock option and incentive compensation performance
plans.
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.
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 2003 Annual Meeting
of Shareholders.
EXECUTIVE OFFICERS
In addition to Mr. Rooney, the following persons are executive officers
of the Company:
3
Gerald S. Blaskie, age 46, 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 46, 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, 2004, 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) 67,300 3.5%
Robert J. Baker, Jr.(5) 42,078 2.3%
Edward W. Ungar(6) 23,050 1.2%
All directors and executive officers as
a group (5 persons)(7) 178,428 9.6%
- --------------
(1) The address of Daniel Rooney is c/o Superconductive Components, Inc.,
2839 Charter Street, Columbus, Ohio 43228. The address of Edward W.
Ungar is c/o Taratec Corporation, 1251 Dublin Road, Columbus, Ohio
43215. The address of Robert J. Baker, Jr. is c/o Venture Resources
International Inc., P.O. Box 307343, Gahanna, Ohio, 43230.
(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, 2004.
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.
(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, 2004 plus the number of shares such person has the
right to acquire within 60 days of March 31, 2004.
(4) Includes 60,000 common shares, which may be acquired by Mr. Rooney
under stock options exercisable within 60 days of March 31, 2004.
(5) Includes 21,000 common shares, which may be acquired by Mr. Baker under
stock options exercisable within 60 days of March 31, 2004, and 16,728
shares which are held in Mr. Baker's IRA.
(6) Includes 21,500 common shares, which may be acquired by Mr. Ungar under
stock options exercisable within 60 days of March 31, 2004.
(7) Includes 148,500 common shares, which may be acquired under stock
options exercisable within 60 days of March 31, 2004.
4
OWNERSHIP OF COMMON STOCK BY PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 31, 2004,
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) 1,043,914 50.5%
Windcom Investments SA(5) 283,796 15.3%
- --------------
(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.
(2) For purposes of this 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, 2004. 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.
(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, 2004, plus the number of shares such person has
the right to acquire within 60 days of March 31, 2004.
(4) Includes (i) 21,000 shares of common stock, which can be acquired by
Mr. Loveland under stock options exercisable within 60 days of March
31, 2004; (ii) 316,156 shares of common stock beneficially owned as the
executor of the Estate of Edward R. Funk, of which 101,250 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, 2004; (iii) 422,352 shares of common stock beneficially owned by
Mr. Loveland as the executor of the Estate of Ingeborg V. Funk, of
which 97,000 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, 2004; 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) Dr. Karl Kohlbrenner, CEO of Windcom Investments SA, has voting and
dispositive power over the shares on behalf of the company. Includes
11,996 shares of common stock, which can be acquired by Windcom
Investments SA under stock purchase warrants exercisable within 60 days
of March 31, 2004.
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 $100,000 for the year ended December
31, 2003 (the "Named Executive Officer").
5
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ------------------------
AWARDS
------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
SALARY BONUS AWARD OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ----------------------------- ---- ------ ----- ---------- ---------- ------------
DANIEL ROONEY
President, Chief Executive 2003 $133,218 -- -- -- --
Officer and Chairman of the 2002 $105,501 -- -- 100,000 --
Board of Directors
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options or stock appreciation
rights during fiscal year 2003.
NUMBER OF % OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN FISCAL EXERCISE PRICE
NAME GRANTED (#) YEAR ($/SHARE) EXPIRATION DATE
---------------------------------------------------------------------------------------------
Daniel Rooney 0 -- -- --
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2003
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, 2003.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR-END(#) YEAR-END ($)(1)
----------------------------- ------------------------------
SHARES
ACQUIRED
ON VALUE
EXERCISE REALIZED
NAME (#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ -------- -------- ----------- ------------- ----------- -------------
Daniel Rooney -- -- 40,000 60,000 $92,000 $138,000
- --------------------
(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 ($3.85 at December 31, 2003). 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.
6
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth additional information as of December
31, 2003, 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) 395,500 $1.75 478,700
Equity compensation plans not
approved by security holders (2) 308,302 $1.73 --
------- ----- -------
Total 703,802 $1.74 478,700
======= ===== =======
- ----------------
(1) Equity compensation plans approved by shareholders includes the
Company's 1995 Stock Option Plan.
(2) Includes (i) 85,000 warrants that can be acquired by the Estate of
Edward R. Funk, which was issued in exchange for consideration in the
form of goods and services; (ii) 75,000 warrants that can be acquired
by the Estate of Ingeborg V. Funk, which was issued in exchange for
consideration in the form of goods and services; (iii) 20,333 warrants
that can be acquired by Windcom Investments SA, which was issued in
exchange for consideration in the form of goods and services; (iv)
47,040 warrants that can be acquired by Laura Shunk, which was issued
in exchange for consideration in the form of goods and services; (v)
47,040 warrants that can be acquired by Daniel A. Funk, which was
issued in exchange for consideration in the form of goods and services;
(vi) 33,889 warrants that can be acquired by Robert H. Peitz, which was
issued in exchange for consideration in the form of goods and services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DIAMOND FIBER COMPOSITES, INC.
The Company had trade and other receivables from Diamond Fiber
Composites, Inc. ("DFC"), a company jointly owned by the Estate of Edward R.
Funk and Peter Williams, who is not affiliated with the Company. DFC had rented
space from the Company and also used utilities for which DFC was billed monthly.
The Company has also supplied tools to DFC in the past. The Company had trade
and other receivables due from DFC totaling $11,785 at December 31, 2003. The
receivables related to the sale of inventory, rent for warehouse space and
reimbursement of expenses. As of March 31, 2004, the receivable was no longer
outstanding and DFC no longer rents space or utilities from the Company.
NOTES PAYABLE
Effective December 31, 2000, the Company converted accounts payable and
accrued interest payable to Dr. and Mrs. Funk totaling $132,270 to a note
payable to Dr. and Mrs. Funk. The note provides for monthly payments of
principal and interest of $2,000 per month for the period of February 1, 2001,
through December 1, 2002, and thereafter, in monthly installments of $4,000 for
principal and interest until the entire outstanding balance is paid in full. The
note bears interest at prime, which was 4.0% at December 31, 2003.
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.
7
CAPITAL LEASES
In November 2001, the Company entered into an agreement with Dr. Funk
for the Company's lease of certain equipment. The agreement expires in 2006, and
requires the Company to make total minimum lease payments during the term of
agreement of $74,940. The Company made no payments under the agreement in fiscal
2003.
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 Windom Investments SA, a greater than 5% beneficial owner of the
Company. The interest on the promissory note shall be determined by the Prime
Commercial Rate in effect at Bank One, N.A., Columbus, Ohio. The promissory note
may be converted into the Company's common stock at any time after June 30, 2004
and prior to June 30, 2006 at a rate of $2.00 per share. If within one year from
June 30, 2003 the Company obtains at least $500,000 in outside investor equity
financing, then the unpaid portion of the principal and any accrued and unpaid
interest on the promissory note shall automatically convert into shares of the
Company's common stock at a price per share equal to the price at which shares
are sold in the outside investor equity financing. Additionally, 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 vest according to the
following schedule: (1) 8,333 vest on the date of grant; and (2) 12,000 vest at
a rate of 333 per month for 32 months, then 336 per month for 4 months.
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 Shunk, Daniel A. Funk and Robert H. Peitz,
respectively. Mr. Funk and Ms. Shunk are relatives of Edward R. Funk, whose
estate is a greater than 5% beneficial owner of the Company. Mr. Peitz is a
relative of Ingeborg V. Funk, whose estate is a greater than 5% beneficial owner
of the Company. The interest on the promissory note shall be determined by the
Prime Commercial Rate in effect at Bank One, N.A., Columbus, Ohio. The
promissory notes may be converted into the Company's common stock at any time
after June 30, 2004 and prior to June 30, 2006 at a rate of $2.00 per share. If
within one year from June 30, 2003 the Company obtains at least $500,000 in
outside investor equity financing, then the unpaid portion of the principal and
any accrued and unpaid interest on the promissory notes shall automatically
convert into shares of the Company's common stock at a price per share equal to
the price at which shares are sold in the outside investor equity financing.
Additionally, the Company issued to each of Mr. Funk, Ms. Shunk, and Mr. Peitz,
warrants to purchase 33,889 shares of the Company's common stock at $1.00 per
share. The warrants vest according to the following schedule: (1) 13,889 vest on
the date of grant; and (2) 20,000 vest at a rate of 556 per month for 32 months,
then 552 per month for four months.
On June 30, 2003, the Company issued two $64,677.50 convertible
promissory notes to Mr. Funk and Ms. Shunk, respectively, in connection with the
Series A Preferred Stock Redemption. The interest on the promissory notes shall
be determined by the Prime Commercial Rate in effect at Bank One, N.A.,
Columbus, Ohio. The promissory notes may be converted into the Company's common
stock at any time after June 30, 2004 and prior to June 30, 2006 at a rate of
$2.00 per share. If within one year from June 30, 2003 the Company obtains at
least $500,000 in outside investor equity financing, then the unpaid portion of
the principal and any accrued and unpaid interest on the promissory notes shall
automatically convert into shares of the Company's common stock at a price per
share equal to the price at which shares are sold in the outside investor equity
financing. Additionally, the Company issued to each of Mr. Funk and Ms. Shunk,
warrants to purchase 13,151 shares of the Company's common stock at $1.00 per
share. The warrants vest according to the following schedule: (1) 5,260 vest on
the date of grant; and (2) 7,891 vest at a rate of 220 per month for 35 months,
then 191 per month for one month.
8
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) 316,156 shares of common stock
beneficially owned as the executor of the Estate of Edward R. Funk, (ii) 422,352
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 year
2003, the Company incurred fees to Porter, Wright, Morris & Arthur LLP in the
amount of $56,542.
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, 2003, except for
late Form 3 filings by the Estate of Edward R. Funk and the Estate of Ingeborg
V. Funk.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company expects that Hausser + Taylor LLP, independent public
accountants, will continue as auditors for the Company for the 2004 fiscal year.
Hausser + Taylor LLP served as the independent auditors for the Company for the
2003 fiscal year 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.
FEES OF THE INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
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 $44,000 for fiscal 2003 and $32,500 for fiscal 2002.
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 2003 and $250 in 2002 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.
9
SHAREHOLDER PROPOSALS FOR 2005 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 2005 must be received by the Company (addressed to
the attention of the Secretary) on or before December 28, 2004. Any shareholder
proposal submitted outside the processes of Rule 14a-8 under the Securities
Exchange Act of 1934 for presentation at the Company's 2005 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 14, 2005. 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.
ANNUAL REPORT
The Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 2003, containing financial statements for such year and the signed
opinion of Hausser + Taylor LLP, independent auditors, 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
10
SUPERCONDUCTIVE COMPONENTS, INC.
2839 CHARTER STREET, COLUMBUS, OHIO 43228
---------------------------------------------
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - MAY 20, 2004
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 Holiday Inn West, located at 2350 Westbelt Drive, Columbus, Ohio, on
Thursday, May 20, 2004, at 10:30 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 matters listed on the reverse side.
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.)
ANNUAL MEETING PROXY CARD
A. ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
|_| FOR |_| WITHHOLD
01 - Robert J. Baker, Jr.
02 - Daniel Rooney
03 - Edward W. Ungar
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 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.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, dated April 29, 2004, 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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dated: , 2004
---------------------------------------------
- -----------------------------------------------------------
(Signature)
- -----------------------------------------------------------
(Signature)