Superconductor Technologies Inc. (SCON, Financial) filed Quarterly Report for the period ended 2009-09-26.
Superconductor Technologies Inc. manufactures and markets high-performance filters to service providers and original equipment manufacturers in the mobile wireless telecommunications industry. The company's product, the SuperFilter, combines high-temperature superconductors with cryogenic cooling technology to produce a filter with significant advantages over conventional filters. The company was engaged primarily in research and development and generated revenues primarily from government research contracts. Superconductor Technologies Inc. has a market cap of $59.9 million; its shares were traded at around $2.66 with and P/S ratio of 5.3.
Net commercial product revenues increased to $3.0 million in the third quarter of 2009 from $2.7 million in the third quarter of 2008, an increase of $244,000, or 9%. The increase in the three month period was primarily the result of higher sales volume for our SuperLink product due to customer program acceleration. For the first nine months of 2009 net commercial product revenues decreased to $5.9 million from $6.1 million in the same period of 2008, a decrease of 3%. The decrease in the nine month period was the result of slightly lower sales of both our SuperLink and AmpLink products especially in the first quarter of 2009. The average sales prices for our products were unchanged. Our three largest customers accounted for 98% of our total net commercial product revenues in the first nine months of 2009, compared to 95% in the first nine months of 2008. These customers generally purchase products through non-binding commitments with minimal lead times. Consequently, our commercial product revenues can fluctuate dramatically from quarter to quarter based on changes in our customers capital spending patterns.
Government contract revenues increased by $453,000, or 53%, to $1.3 million in the third quarter of 2009 from $854,000 in the third quarter of 2008, and were the result of revenue recognized for shipments on one contract and a funding increase on another contract. For the first nine months of 2009 government contract revenues decreased to $2.7 million from $3.9 million, a decrease of $1.2 million or 31%. This decrease was due to a funding delay on a current contract and completion of another contract in the second quarter. In March 2009, our SURF contract was funded for an additional twelve months and provides for progress billing of up to $4.1 million.
Cost of commercial product revenues includes all direct costs, manufacturing overhead, provision for excess and obsolete inventories and restructuring and impairment charges relating to the manufacturing operations. The cost of commercial product revenue decreased by $131,000, or 4%, to $2.9 million for the third quarter of 2009 compared to $3.1 million for the third quarter of 2008. For the first nine months of 2009, the cost of commercial product revenues totaled $7.1 million compared with $7.3 million for the first nine months of 2008, a decrease of $66,000, or less than 1%. The lower costs resulted principally from lower sales.
Net cash used in operations totaled $5.1 million in the first nine months of 2009. We used $6.8 million cash to fund our net loss. Cash increased as a result of a $2.0 million reduction of inventory and a $838,000 increase in accounts payable, accrued expenses and other liabilities, offset by a $670,000 increase in accounts receivable and a $524,000 increase in prepaid expenses and other assets.
As of December 31, 2008, we had net operating loss carryforwards for federal and state income tax purposes of approximately $291.4 million and $168.8 million, respectively, which expire in the years 2009 through 2028. Of these amounts, $88.3 million and $23.5 million, respectively, resulted from the acquisition of Conductus, Inc. Included in the net operating loss carryforwards are deductions related to stock options of approximately $24.1 million and $13.1 million for federal and California income tax purposes, respectively. To the extent net operating loss carryforwards are recognized for accounting purposes, the resulting benefits related to the stock options will be credited to stockholders equity. In addition, we had research and development and other tax credits for federal and state income tax purposes of approximately $3.0 million and $1.4 million, respectively, which expire in the years 2009 through 2028. Of these amounts $661,000 and $736,000, respectively, resulted from the acquisition of Conductus. California has recently suspended the use of loss carryforwards.
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Superconductor Technologies Inc. manufactures and markets high-performance filters to service providers and original equipment manufacturers in the mobile wireless telecommunications industry. The company's product, the SuperFilter, combines high-temperature superconductors with cryogenic cooling technology to produce a filter with significant advantages over conventional filters. The company was engaged primarily in research and development and generated revenues primarily from government research contracts. Superconductor Technologies Inc. has a market cap of $59.9 million; its shares were traded at around $2.66 with and P/S ratio of 5.3.
Highlight of Business Operations:
Total net revenues increased by $697,000, or 19%, to $4.3 million in the third quarter of 2009 from $3.6 million in the third quarter of 2008. Total net revenues decreased by $1.4 million or 14% to $8.6 million in the first nine months of 2009 from $10.0 million in the same period of 2008. Total net revenues consist primarily of commercial product revenues and government contract revenues.Net commercial product revenues increased to $3.0 million in the third quarter of 2009 from $2.7 million in the third quarter of 2008, an increase of $244,000, or 9%. The increase in the three month period was primarily the result of higher sales volume for our SuperLink product due to customer program acceleration. For the first nine months of 2009 net commercial product revenues decreased to $5.9 million from $6.1 million in the same period of 2008, a decrease of 3%. The decrease in the nine month period was the result of slightly lower sales of both our SuperLink and AmpLink products especially in the first quarter of 2009. The average sales prices for our products were unchanged. Our three largest customers accounted for 98% of our total net commercial product revenues in the first nine months of 2009, compared to 95% in the first nine months of 2008. These customers generally purchase products through non-binding commitments with minimal lead times. Consequently, our commercial product revenues can fluctuate dramatically from quarter to quarter based on changes in our customers capital spending patterns.
Government contract revenues increased by $453,000, or 53%, to $1.3 million in the third quarter of 2009 from $854,000 in the third quarter of 2008, and were the result of revenue recognized for shipments on one contract and a funding increase on another contract. For the first nine months of 2009 government contract revenues decreased to $2.7 million from $3.9 million, a decrease of $1.2 million or 31%. This decrease was due to a funding delay on a current contract and completion of another contract in the second quarter. In March 2009, our SURF contract was funded for an additional twelve months and provides for progress billing of up to $4.1 million.
Cost of commercial product revenues includes all direct costs, manufacturing overhead, provision for excess and obsolete inventories and restructuring and impairment charges relating to the manufacturing operations. The cost of commercial product revenue decreased by $131,000, or 4%, to $2.9 million for the third quarter of 2009 compared to $3.1 million for the third quarter of 2008. For the first nine months of 2009, the cost of commercial product revenues totaled $7.1 million compared with $7.3 million for the first nine months of 2008, a decrease of $66,000, or less than 1%. The lower costs resulted principally from lower sales.
Net cash used in operations totaled $5.1 million in the first nine months of 2009. We used $6.8 million cash to fund our net loss. Cash increased as a result of a $2.0 million reduction of inventory and a $838,000 increase in accounts payable, accrued expenses and other liabilities, offset by a $670,000 increase in accounts receivable and a $524,000 increase in prepaid expenses and other assets.
As of December 31, 2008, we had net operating loss carryforwards for federal and state income tax purposes of approximately $291.4 million and $168.8 million, respectively, which expire in the years 2009 through 2028. Of these amounts, $88.3 million and $23.5 million, respectively, resulted from the acquisition of Conductus, Inc. Included in the net operating loss carryforwards are deductions related to stock options of approximately $24.1 million and $13.1 million for federal and California income tax purposes, respectively. To the extent net operating loss carryforwards are recognized for accounting purposes, the resulting benefits related to the stock options will be credited to stockholders equity. In addition, we had research and development and other tax credits for federal and state income tax purposes of approximately $3.0 million and $1.4 million, respectively, which expire in the years 2009 through 2028. Of these amounts $661,000 and $736,000, respectively, resulted from the acquisition of Conductus. California has recently suspended the use of loss carryforwards.
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