R | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
£ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Spire Corporation |
(Exact name of registrant as specified in its charter) |
Massachusetts | 04-2457335 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
One Patriots Park, Bedford, Massachusetts | 01730-2396 | |
(Address of principal executive offices) | (Zip Code) |
781-275-6000 |
(Registrant’s telephone number including area code) |
Large accelerated filer £ | Accelerated filer £ | Non-accelerated filer £ | Smaller reporting company R |
(Do not check if a smaller reporting company) |
Page | ||
PART I. | Financial Information | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | Other Information | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Unaudited Condensed Consolidated Financial Statements |
September 30, 2011 | December 31, 2010 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 2,324 | $ | 6,259 | |||
Restricted cash | 21 | 21 | |||||
Accounts receivable – trade, net | 4,563 | 7,324 | |||||
Inventories, net | 15,001 | 10,932 | |||||
Deferred cost of goods sold | 3,903 | 1,018 | |||||
Deposits on equipment for inventory | 652 | 88 | |||||
Prepaid expenses and other current assets | 631 | 809 | |||||
Total current assets | 27,095 | 26,451 | |||||
Property and equipment, net | 3,625 | 4,588 | |||||
Intangible and other assets, net | 687 | 820 | |||||
Available-for-sale investments, at quoted market value (cost of $2,002 and $1,980 at September 30, 2011 and December 31, 2010, respectively) | 2,144 | 2,426 | |||||
Deposit – related party | 300 | 300 | |||||
Total assets | $ | 33,851 | $ | 34,585 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Current portion of capital lease obligation | 46 | 44 | |||||
Revolving line of credit | 1,157 | 1,157 | |||||
Accounts payable | 3,327 | 6,487 | |||||
Accrued liabilities | 5,214 | 4,221 | |||||
Advances on contracts in progress | 13,899 | 9,010 | |||||
Liabilities of discontinued operations | 135 | 366 | |||||
Total current liabilities | 23,778 | 21,285 | |||||
Long-term portion of capital lease obligation | 24 | 58 | |||||
Deferred compensation | 2,144 | 2,426 | |||||
Other long-term liabilities | 1,076 | 911 | |||||
Total long-term liabilities | 3,244 | 3,395 | |||||
Total liabilities | 27,022 | 24,680 | |||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value; 20,000,000 shares authorized; 8,362,633 and 8,360,133 shares issued and outstanding on September 30, 2011 and December 31, 2010, respectively | 84 | 84 | |||||
Additional paid-in capital | 22,294 | 21,979 | |||||
Accumulated deficit | (15,691 | ) | (12,604 | ) | |||
Accumulated other comprehensive income | 142 | 446 | |||||
Total stockholders’ equity | 6,829 | 9,905 | |||||
Total liabilities and stockholders’ equity | $ | 33,851 | $ | 34,585 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Net sales and revenues | |||||||||||||||
Sales of goods | $ | 6,164 | $ | 17,235 | $ | 33,542 | $ | 51,520 | |||||||
Contract research and service revenues | 2,779 | 3,410 | 8,505 | 10,335 | |||||||||||
Total net sales and revenues | 8,943 | 20,645 | 42,047 | 61,855 | |||||||||||
Cost of sales and revenues | |||||||||||||||
Cost of goods sold | 4,499 | 14,439 | 25,263 | 42,978 | |||||||||||
Cost of contract research and services | 2,394 | 2,356 | 6,871 | 7,607 | |||||||||||
Total cost of sales and revenues | 6,893 | 16,795 | 32,134 | 50,585 | |||||||||||
Gross margin | 2,050 | 3,850 | 9,913 | 11,270 | |||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative expenses | 3,678 | 4,620 | 12,104 | 13,827 | |||||||||||
Internal research and development expenses | 114 | 280 | 786 | 939 | |||||||||||
Total operating expenses | 3,792 | 4,900 | 12,890 | 14,766 | |||||||||||
Gain on termination of contracts | — | — | — | 837 | |||||||||||
Operating loss from continuing operations | (1,742 | ) | (1,050 | ) | (2,977 | ) | (2,659 | ) | |||||||
Interest expense, net | (26 | ) | (24 | ) | (91 | ) | (163 | ) | |||||||
Foreign exchange gain (loss) | 1 | (8 | ) | (1 | ) | (21 | ) | ||||||||
Total other expense, net | (25 | ) | (32 | ) | (92 | ) | (184 | ) | |||||||
Loss from continuing operations before income tax benefit (provision) | (1,767 | ) | (1,082 | ) | (3,069 | ) | (2,843 | ) | |||||||
Income tax benefit (provision) - continuing operations | (3 | ) | 167 | (18 | ) | 1,146 | |||||||||
Loss from continuing operations | (1,770 | ) | (915 | ) | (3,087 | ) | (1,697 | ) | |||||||
Loss from discontinued operations before sale of business unit | — | — | — | (123 | ) | ||||||||||
Gain on sale of business unit | — | — | — | 2,604 | |||||||||||
Income tax provision - discontinued operations | — | — | — | (992 | ) | ||||||||||
Income from discontinued operations, net of tax | — | — | — | 1,489 | |||||||||||
Net loss | $ | (1,770 | ) | $ | (915 | ) | $ | (3,087 | ) | $ | (208 | ) | |||
Basic and diluted income (loss) per share: | |||||||||||||||
From continuing operations, net of tax | $ | (0.21 | ) | $ | (0.11 | ) | $ | (0.37 | ) | $ | (0.21 | ) | |||
From discontinued operations, net of tax | — | — | — | 0.18 | |||||||||||
Basic and diluted loss per share | $ | (0.21 | ) | $ | (0.11 | ) | $ | (0.37 | ) | $ | (0.03 | ) | |||
Weighted average number of common and common equivalent shares outstanding – basic | 8,362,633 | 8,338,188 | 8,361,891 | 8,336,406 | |||||||||||
Weighted average number of common and common equivalent shares outstanding – diluted | 8,362,633 | 8,338,188 | 8,361,891 | 8,336,406 |
Nine Months Ended September 30, | |||||||
2011 | 2010 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (3,087 | ) | $ | (208 | ) | |
Less: Net income from discontinued operations, net of tax | — | 1,489 | |||||
Loss from continuing operations | (3,087 | ) | (1,697 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,388 | 1,201 | |||||
Deferred tax benefit | — | (992 | ) | ||||
Deferred compensation | (304 | ) | 74 | ||||
Stock-based compensation | 306 | 374 | |||||
Provision for accounts receivable reserve | (24 | ) | (111 | ) | |||
Provision for inventory reserve | 657 | 122 | |||||
Changes in assets and liabilities: | |||||||
Restricted cash | — | 1,320 | |||||
Accounts receivable | 2,785 | 1,240 | |||||
Inventories | (4,726 | ) | 10,083 | ||||
Deferred cost of goods sold | (2,885 | ) | 4,972 | ||||
Deposits, prepaid expenses and other current assets | (386 | ) | (41 | ) | |||
Accounts payable, accrued liabilities and other liabilities | (2,002 | ) | (7,663 | ) | |||
Advances on contracts in progress | 4,889 | (11,311 | ) | ||||
Net cash used in operating activities of continuing operations | (3,389 | ) | (2,429 | ) | |||
Net cash used in operating activities of discontinued operations | (231 | ) | (1,182 | ) | |||
Net cash used in operating activities | (3,620 | ) | (3,611 | ) | |||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (235 | ) | (690 | ) | |||
Additions to intangible and other assets | (57 | ) | (154 | ) | |||
Net cash used in investing activities of continuing operations | (292 | ) | (844 | ) | |||
Net cash provided by investing activities of discontinued operations | — | 2,646 | |||||
Net cash (used in) provided by investing activities | (292 | ) | 1,802 | ||||
Cash flows from financing activities: | |||||||
Principal payments on capital lease obligations | (32 | ) | (29 | ) | |||
Principal payments on equipment line of credit | — | (768 | ) | ||||
Proceeds from exercise of stock options | 9 | 9 | |||||
Net cash used in financing activities | (23 | ) | (788 | ) | |||
Net decrease in cash and cash equivalents | (3,935 | ) | (2,597 | ) | |||
Cash and cash equivalents, beginning of period | 6,259 | 8,999 | |||||
Cash and cash equivalents, end of period | $ | 2,324 | $ | 6,402 | |||
Supplemental disclosures of cash flow information: | |||||||
Interest paid | $ | 91 | $ | 178 | |||
Interest received | $ | — | $ | 15 | |||
Income taxes paid (refunded), net | $ | (31 | ) | $ | 10 |
1. | Description of the Business |
2. | Interim Financial Statements |
• | provide updated guidance on how multiple deliverables that exist in an arrangement should be separated, and how the consideration should be allocated; |
• | require an entity to allocate revenue in an arrangement using estimated selling prices (“ESP”) of each element if a vendor does not have vendor-specific objective evidence of selling price (“VSOE”) or third-party evidence of selling price (“TPE”); and |
• | eliminate the use of the residual method and require a vendor to allocate revenue using the relative selling price method. |
3. | Accounts Receivable/Advances on Contracts in Progress |
(in thousands) | September 30, 2011 | December 31, 2010 | |||||
Amounts billed | $ | 4,521 | $ | 7,196 | |||
Accrued revenue | 146 | 258 | |||||
4,667 | 7,454 | ||||||
Less: Allowance for doubtful accounts | (104 | ) | (130 | ) | |||
Net accounts receivable - trade | $ | 4,563 | $ | 7,324 | |||
Advances on contracts in progress | $ | 13,899 | $ | 9,010 |
4. | Inventories and Deferred Costs of Goods Sold |
(in thousands) | September 30, 2011 | December 31, 2010 | |||||
Raw materials | $ | 2,721 | $ | 2,919 | |||
Work in process | 9,850 | 4,262 | |||||
Finished goods | 2,430 | 3,751 | |||||
Net inventory | $ | 15,001 | $ | 10,932 | |||
Deferred cost of goods sold | $ | 3,903 | $ | 1,018 |
5. | Loss Per Share |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
Weighted average number of common and common equivalent shares outstanding – basic | 8,362,633 | 8,338,188 | 8,361,891 | 8,336,406 | |||||||
Add: Net additional common shares upon assumed exercise of common stock options | — | — | — | — | |||||||
Adjusted weighted average number of common and common equivalents shares outstanding – diluted | 8,362,633 | 8,338,188 | 8,361,891 | 8,336,406 |
6. | Operating Segments and Related Information |
(in thousands) | Solar | Biomedical | Optoelectronics | Total Company | |||||||||||
For the three months ended September 30, 2011 | |||||||||||||||
Net sales and revenues | $ | 6,177 | $ | 2,003 | $ | 763 | $ | 8,943 | |||||||
Operating income (loss) from continuing operations | $ | (1,331 | ) | $ | 405 | $ | (816 | ) | $ | (1,742 | ) | ||||
For the three months ended September 30, 2010 | |||||||||||||||
Net sales and revenues | $ | 17,289 | $ | 2,104 | $ | 1,252 | $ | 20,645 | |||||||
Operating income (loss) from continuing operations | $ | (1,132 | ) | $ | 324 | $ | (242 | ) | $ | (1,050 | ) | ||||
For the nine months ended September 30, 2011 | |||||||||||||||
Net sales and revenues | $ | 33,610 | $ | 6,169 | $ | 2,268 | $ | 42,047 | |||||||
Operating income (loss) from continuing operations | $ | (1,796 | ) | $ | 1,159 | $ | (2,340 | ) | $ | (2,977 | ) | ||||
For the nine months ended September 30, 2010 | |||||||||||||||
Net sales and revenues | $ | 51,574 | $ | 6,490 | $ | 3,791 | $ | 61,855 | |||||||
Operating income (loss) from continuing operations | $ | (2,414 | ) | $ | 1,116 | $ | (1,361 | ) | $ | (2,659 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
(in thousands) | 2011 | % | 2010 | % | 2011 | % | 2010 | % | |||||||||||||||||||
United States | $ | 2,911 | 33 | % | $ | 14,370 | 70 | % | $ | 18,257 | 43 | % | $ | 38,822 | 63 | % | |||||||||||
Europe/Africa | 1,382 | 15 | 3,353 | 16 | 4,175 | 10 | 13,685 | 22 | |||||||||||||||||||
Asia | 4,465 | 50 | 2,922 | 14 | 17,504 | 42 | 9,322 | 15 | |||||||||||||||||||
Rest of the world | 185 | 2 | — | — | 2,111 | 5 | 26 | — | |||||||||||||||||||
$ | 8,943 | 100 | % | $ | 20,645 | 100 | % | $ | 42,047 | 100 | % | $ | 61,855 | 100 | % |
7. | Intangible and Other Assets |
(in thousands) | Amortization Expense | |||
2011 remaining 3 months | $ | 26 | ||
2012 | 103 | |||
2013 | 98 | |||
2014 | 87 | |||
2015 and beyond | 110 | |||
$ | 424 |
8. | Available-for-Sale Investments |
9. | Fair Value Measurements |
(in thousands) | Balance as of September 30, 2011 | Level 1 | Level 2 | Level 3 | |||||||||||
Cash and short term investments | $ | 103 | $ | 103 | $ | — | $ | — | |||||||
Common stock | |||||||||||||||
Basic Materials | 66 | 66 | — | — | |||||||||||
Consumer Goods | 8 | 8 | — | — | |||||||||||
Financial | 44 | 44 | — | — | |||||||||||
Healthcare | 48 | 48 | — | — | |||||||||||
Industrial Goods | 23 | 23 | — | — | |||||||||||
Services | 71 | 71 | — | — | |||||||||||
Technology | 27 | 27 | — | — | |||||||||||
Total Common Stock | 287 | 287 | — | — | |||||||||||
Mutual Fund | |||||||||||||||
Diversified Emerging Markets | 163 | — | 163 | — | |||||||||||
Foreign Large Blend | 122 | — | 122 | — | |||||||||||
Foreign Large Growth | 165 | — | 165 | — | |||||||||||
Foreign Small/Mid Value | 126 | — | 126 | — | |||||||||||
Large Growth | 471 | — | 471 | — | |||||||||||
Small Blend | 174 | 174 | — | — | |||||||||||
Value Fund | 68 | — | 68 | — | |||||||||||
Total Mutual Fund | 1,289 | 174 | 1,115 | — | |||||||||||
Fixed income | |||||||||||||||
Domestic | 443 | — | 443 | — | |||||||||||
International | 22 | — | 22 | — | |||||||||||
Total Fixed Income | 465 | — | 465 | — | |||||||||||
Total available-for-sale investments (1) | $ | 2,144 | $ | 564 | $ | 1,580 | $ | — | |||||||
Percent of total | 100 | % | 26 | % | 74 | % | — | % |
(1) | Changes in the fair value of available-for-sale investments are recorded in accumulated other comprehensive income, a component of stockholders’ equity, in the Company’s unaudited condensed consolidated balance sheets. |
10. | Notes Payable and Credit Arrangements |
11. | Stock Option Plan and Stock-Based Compensation |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Cost of contract research, services and licenses | $ | 5 | $ | 5 | $ | 19 | $ | 22 | |||||||
Cost of goods sold | 17 | 18 | 61 | 56 | |||||||||||
Administrative and selling | 63 | 96 | 226 | 296 | |||||||||||
Total stock-based compensation | $ | 85 | $ | 119 | $ | 306 | $ | 374 |
Number of Shares | Weighted-Average Exercise Price | Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||
Options Outstanding at December 31, 2010 | 760,732 | $ | 6.56 | ||||||||||
Granted | 30,000 | $ | 3.50 | ||||||||||
Exercised | (2,500 | ) | $ | 3.50 | |||||||||
Cancelled/expired | (5,125 | ) | $ | 3.51 | |||||||||
Options Outstanding at September 30, 2011 | 783,107 | $ | 6.47 | 6.14 | $ | — | |||||||
Options Exercisable at September 30, 2011 | 627,107 | $ | 6.70 | 5.64 | $ | — | |||||||
Option vested and expected to vest at September 30, 2011 | 783,107 | $ | 6.47 | 6.14 | $ | — |
Year | Expected Dividend Yield | Risk-Free Interest Rate | Expected Option Life | Expected Volatility Factor | |||||||
2011 | — | 1.54 | % | 5.1 years | 77.9 | % | |||||
2010 | — | 1.47 | % | 4.2 years | 81.3 | % |
12. | Comprehensive Loss |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net Loss | $ | (1,770 | ) | $ | (915 | ) | $ | (3,087 | ) | $ | (208 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Change in unrealized gain (loss) on available for sale marketable securities, net of tax | (372 | ) | 186 | (304 | ) | 74 | |||||||||
Total comprehensive loss | $ | (2,142 | ) | $ | (729 | ) | $ | (3,391 | ) | $ | (134 | ) |
13. | Gains on Termination of Contracts |
14. | Discontinued Operations and Assets Held for Sale |
(in thousands) | September 30, 2011 | December 31, 2010 | |||||
Liabilities of Discontinued Operations | |||||||
Current liabilities of discontinued operations | |||||||
Accounts payable | $ | 135 | $ | 257 | |||
Accrued liabilities | — | 109 | |||||
Total current liabilities of discontinued operations | 135 | 366 | |||||
Total liabilities of discontinued operations | $ | 135 | $ | 366 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net sales and revenues | $ | — | $ | — | $ | — | $ | 1,656 | |||||||
Gross margin | $ | — | $ | — | $ | — | $ | (136 | ) | ||||||
Loss from discontinued operations before sale of business unit | $ | — | $ | — | $ | — | $ | (123 | ) | ||||||
Gain on sale of business unit | — | — | — | 2,604 | |||||||||||
Income tax provision | — | — | — | (992 | ) | ||||||||||
Net Income from discontinued operations, net of tax | $ | — | $ | — | $ | — | $ | 1,489 |
15. | Subsequent Events |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
Net sales and revenues | 100 | % | 100 | % | 100 | % | 100 | % | |||
Cost of sales and revenues | 77 | 81 | 76 | 82 | |||||||
Gross margin | 23 | 19 | 24 | 18 | |||||||
Selling, general and administrative expenses | (41 | ) | (23 | ) | (29 | ) | (22 | ) | |||
Internal research and development expenses | (1 | ) | (1 | ) | (2 | ) | (2 | ) | |||
Gains on termination of contracts | — | — | — | 2 | |||||||
Operating loss from continuing operations | (19 | ) | (5 | ) | (7 | ) | (4 | ) | |||
Other expense, net | (1 | ) | — | — | — | ||||||
Loss from continuing operations before income tax benefit (provision) | (20 | ) | (5 | ) | (7 | ) | (4 | ) | |||
Income tax benefit (provision) - continuing operations | — | 1 | — | 2 | |||||||
Loss from continuing operations | (20 | ) | (4 | ) | (7 | ) | (2 | ) | |||
Income from discontinued operations, net of tax | — | — | — | 2 | |||||||
Net loss | (20 | )% | (4 | )% | (7 | )% | — | % |
Three Months Ended September 30, | Decrease | ||||||||||||
(in thousands) | 2011 | 2010 | $ | % | |||||||||
Sales of goods | $ | 6,164 | $ | 17,235 | (11,071 | ) | (64 | )% | |||||
Contract research and services revenues | 2,779 | 3,410 | (631 | ) | (19 | )% | |||||||
Net sales and revenues | $ | 8,943 | $ | 20,645 | (11,702 | ) | (57 | )% |
Nine Months Ended September 30, | Decrease | |||||||||||||
(in thousands) | 2011 | 2010 | $ | % | ||||||||||
Sales of goods | $ | 33,542 | $ | 51,520 | $ | (17,978 | ) | (35 | )% | |||||
Contract research and services revenues | 8,505 | 10,335 | (1,830 | ) | (18 | )% | ||||||||
Net sales and revenues | $ | 42,047 | $ | 61,855 | $ | (19,808 | ) | (32 | )% |
Three Months Ended September 30, | Increase (Decrease) | |||||||||||||||||||
(in thousands) | 2011 | % | 2010 | % | $ | % | ||||||||||||||
Cost of goods sold | $ | 4,499 | 73 | % | $ | 14,439 | 84 | % | $ | (9,940 | ) | (69 | )% | |||||||
Cost of contract research and services | 2,394 | 86 | % | 2,356 | 69 | % | 38 | 2 | % | |||||||||||
Net cost of sales and revenues | $ | 6,893 | 77 | % | $ | 16,795 | 81 | % | $ | (9,902 | ) | (59 | )% |
Nine Months Ended September 30, | Decrease | |||||||||||||||||||
(in thousands) | 2011 | % | 2010 | % | $ | % | ||||||||||||||
Cost of goods sold | $ | 25,263 | 75 | % | $ | 42,978 | 83 | % | $ | (17,715 | ) | (41 | )% | |||||||
Cost of contract research and services | 6,871 | 81 | % | 7,607 | 74 | % | (736 | ) | (10 | )% | ||||||||||
Net cost of sales and revenues | $ | 32,134 | 76 | % | $ | 50,585 | 82 | % | $ | (18,451 | ) | (36 | )% |
Three Months Ended September 30, | Decrease | |||||||||||||||||||
(in thousands) | 2011 | % | 2010 | % | $ | % | ||||||||||||||
Selling, general and administrative | $ | 3,678 | 41 | % | $ | 4,620 | 23 | % | $ | (942 | ) | (20 | )% | |||||||
Internal research and development | 114 | 1 | % | 280 | 1 | % | (166 | ) | (59 | )% | ||||||||||
Operating expenses | $ | 3,792 | 42 | % | $ | 4,900 | 24 | % | $ | (1,108 | ) | (23 | )% |
Nine Months Ended September 30, | Increase(Decrease) | |||||||||||||||||||
(in thousands) | 2011 | % | 2010 | % | $ | % | ||||||||||||||
Selling, general and administrative | $ | 12,104 | 29 | % | $ | 13,827 | 22 | % | $ | (1,723 | ) | (12 | )% | |||||||
Internal research and development | 786 | 2 | % | 939 | 2 | % | (153 | ) | (16 | )% | ||||||||||
Operating expenses | $ | 12,890 | 31 | % | $ | 14,766 | 24 | % | $ | (1,876 | ) | (13 | )% |
September 30, | December 31, | Decrease | ||||||||||||
(in thousands) | 2011 | 2010 | $ | % | ||||||||||
Cash and cash equivalents | $ | 2,324 | $ | 6,259 | $ | (3,935 | ) | (63 | )% | |||||
Working capital | $ | 3,317 | $ | 5,166 | $ | (1,849 | ) | (36 | )% |
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 Year | 2 - 3 Years | 4 - 5 Years | More Than 5 Years | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Second Restated Revolving Credit Facility (SVB) | $ | 842 | $ | 842 | ||||||||||||||||
Restated Ex-Im Facility (SVB) | $ | 315 | $ | 315 | ||||||||||||||||
Purchase obligations | $ | 2,419 | $ | 2,350 | $ | 69 | $ | — | ||||||||||||
Unrelated party capital leases | $ | 70 | $ | 46 | $ | 24 | $ | — | ||||||||||||
Operating leases: | ||||||||||||||||||||
Unrelated party operating leases | $ | 334 | $ | 164 | $ | 170 | ||||||||||||||
Related party operating leases | $ | 20,196 | $ | 3,443 | $ | 7,382 | $ | 6,354 | $ | 3,017 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 5. | Other Information |
Item 6. | Exhibits |
31.1 | Certification of the Chairman of the Board, Chief Executive Officer and President pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certificationof the Chief Financial Officer and Treasurer pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification of the Chairman of the Board, Chief Executive Officer and President pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification of the Chief Financial Officer and Treasurer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. |
101.INS* | XBRL Instance Document |
101.SCH* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | XBRL Taxonomy Extension Lable Linkbase Document |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
Spire Corporation | |||
Dated: | November 10, 2011 | By: | /s/ Roger G. Little |
Roger G. Little | |||
Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) | |||
Dated: | November 10, 2011 | By: | /s/ Robert S. Lieberman |
Robert S. Lieberman | |||
Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit | Description |
31.1 | Certification of the Chairman of the Board, Chief Executive Officer and President pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification of the Chief Financial Officer and Treasurer pursuant to §302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of the Chairman of the Board, Chief Executive Officer and President pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification of the Chief Financial Officer and Treasurer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. |
101.INS* | XBRL Instance Document |
101.SCH* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | XBRL Taxonomy Extension Lable Linkbase Document |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
1. | I have reviewed this quarterly report on Form 10-Q of Spire Corporation. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | November 10, 2011 | By: | /s/ Roger G. Little | |
Roger G. Little | ||||
Chairman of the Board Chief Executive Office and President | ||||
1. | I have reviewed this quarterly report on Form 10-Q of Spire Corporation. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | November 10, 2011 | By: | /s/ Robert S. Lieberman | |
Robert S. Lieberman | ||||
Chief Financial Officer and Treasurer | ||||
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 10, 2011 | By: | /s/ Roger G. Little | |
Roger G. Little | ||||
Chairman of the Board Chief Executive Office and President | ||||
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 10, 2011 | By: | /s/ Robert S. Lieberman | |
Robert S. Lieberman | ||||
Chief Financial Officer and Treasurer | ||||
Consolidated Balance Sheets Parenthetical Statement (USD $) In Thousands, except Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Available-for-sale investments, at quoted market value, cost | $ 2,002 | $ 1,980 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 8,362,633 | 8,360,133 |
Common stock, shares outstanding | 8,362,633 | 8,360,133 |
Document and Entity Information Document | 9 Months Ended | |
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Sep. 30, 2011 | Nov. 07, 2011 | |
Entity Information [Line Items] | ||
Entity Registrant Name | SPIRE Corp | |
Entity Central Index Key | 0000731657 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 8,362,633 |
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Intangible and Other Assets | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Intangible and Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible and Other Assets [Text Block] | Intangible and Other Assets Patents amounted to $186 thousand and $244 thousand, net of accumulated amortization of $853 thousand and $795 thousand, at September 30, 2011 and December 31, 2010, respectively. Licenses amounted to $67 thousand and $71 thousand, net of accumulated amortization of $8 thousand and $4 thousand, at September 30, 2011 and December 31, 2010, respectively. Patent cost is primarily composed of cost associated with securing and registering patents that the Company has been awarded or that have been submitted to, and the Company believes will be approved by, the government. License cost is composed of the cost to acquire rights to the underlying technology or know-how. These costs are capitalized and amortized over their useful lives or terms, ordinarily five years, using the straight-line method. There are no expected residual values related to these patents. Amortization expense, relating to patents and licenses, was approximately $20 thousand and $45 thousand for the three months ended September 30, 2011 and 2010, respectively. Amortization expense, relating to patents and licenses, was approximately $62 thousand and $64 thousand for the nine months ended September 30, 2011 and 2010, respectively. For disclosure purposes, the table below includes future amortization expense for patents and licenses owned by the Company as well as estimated amortization expense related to patents that remain pending at September 30, 2011 of $171 thousand. This estimated expense for patents pending assumes that the patents are issued immediately, and therefore are being amortized over five years on a straight-line basis. Estimated amortization expense for the periods ending December 31, is as follows:
Also included in other assets are refundable deposits made by the Company of approximately $263 thousand and $250 thousand at September 30, 2011 and December 31, 2010, respectively. |
Comprehensive Loss | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | Comprehensive Loss Comprehensive loss includes certain changes in equity that are excluded from net loss and consists of the following:
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Accounts Receivable/Advances on Contract in Progress | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounts Receivable/Advances on Contracts in Progress [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivables and Advances on Contracts in Progress [Text Block] | Accounts Receivable/Advances on Contracts in Progress Net accounts receivable, trade consists of the following:
Accrued revenue represents revenues recognized on contracts for which billings have not been presented to customers as of the balance sheet date. These amounts are billed and generally collected within one year. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to pay amounts due. The Company actively pursues collection of past due receivables as the circumstances warrant. Customers are contacted to determine the status of payment and senior accounting and operations management are included in these efforts as is deemed necessary. A specific reserve will be established for past due accounts when it is probable that a loss has been incurred and the Company can reasonably estimate the amount of the loss. The Company does not record an allowance for government receivables and invoices backed by letters of credit as realizeability is reasonably assured. Bad debts are written off against the allowance when identified. There is no dollar threshold for account balance write-offs. While rare, a write-off is only recorded when all efforts to collect the receivable have been exhausted. The Company received payments of $37 thousand $163 thousand for the nine months ended September 30, 2011 and 2010, respectively, against amounts which had been previously reserved for in allowance for doubtful accounts. Advances on contracts in progress represent billings that have been presented to the customer, as either deposits or progress payments against future shipments, but revenue has not been recognized. |
Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Fair Value Measurements The hierarchy established under ASC 820-10 gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). As required by ASC 820-10, the Company's available-for-sale investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy under ASC 820-10, and its applicability to the Company's available-for-sale investments, are described below: Level 1 - Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. As required by ASC 820-10, the Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price. Level 2 - Pricing inputs are quoted prices for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments. Level 3 - Pricing inputs are unobservable for the investment, that is, inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability. Level 3 includes investments that are supported by little or no market activity. Valuation Techniques Fair value is a market-based measure considered from the perspective of a market participant who would buy the asset or assume the liability rather than the Company's own specific measure. All of the Company's fixed income securities are priced using a variety of daily data sources, largely readily-available market data and broker quotes. To validate these prices, the Company compares the fair market values of the Company's fixed income investments using market data from observable and corroborated sources. The Company also performs the fair value calculations for its common stock and mutual fund securities using market data from observable and corroborated sources. In periods of market inactivity, the observability of prices and inputs may be reduced for certain instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3. During the three and nine months ended September 30, 2011, none of the Company's instruments were reclassified between Level 1, Level 2 or Level 3. The following table presents the financial instruments related to the Company’s available-for-sale investment carried at fair value on a recurring basis as of September 30, 2011 by ASC 820-10 valuation hierarchy (as defined above).
The carrying amounts reflected in the Company's unaudited condensed consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and capital lease obligations approximate fair value due to their short-term maturities. The fair value of the Company's revolving line of credit has been estimated by management based on the terms that it believes it could obtain in the current market for debt of the same terms and remaining maturities. Due to the short-term nature of the remaining maturities, frequency of amendments to its terms and the variable interest rates, the carrying value of the revolving line of credit approximates fair value at September 30, 2011. |
Discontinued Operations and Assets | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Discontinued Operations and Assets Held for Sale [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Discontinued Operations and Assets Held for Sale In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the accompanying unaudited condensed consolidated balance sheets, statements of operations and cash flows present the results and assets of the Medical Products Business Unit as discontinued operations. During the second quarter of 2009, the Company began pursuing an exclusive sales process of the Medical Products Business Unit. The Company (i) determined that the Medical Products Business Unit was a separate component of the Company's business as, historically, management reviewed separately the Medical Products Business Unit's financial results apart from the Company's ongoing continuing operations, (ii) eliminated the Medical Products Business Unit's financial results from ongoing operations and (iii) determined that the Company will have no further continuing involvement in the operations of the Medical Products Business Unit or cash flows from the Medical Products Business Unit after the sale. On December 14, 2009, the Company completed the sale of the Medical Products Business Unit to Bard Access Systems, Inc. The purchase price for the Medical Products Business Unit was $12.4 million, including (i) $9.4 million that was paid in cash to the Company at closing, (ii) $100 thousand that was paid in cash at closing to two of the Company's employees, including Mark Little, Chief Executive Officer of Spire Biomedical, as consideration for their execution of non‑competition agreements, and (iii) $2.9 million that was paid in cash to the Company in the second quarter of 2010 based on the achievement of certain milestones described below (the “Contingent Purchase Price”). Certain of the assets were transferred to Bard at the closing, and certain other assets (the “Contingent Deferred Assets”) were transferred to Bard upon the completion of a product recall related to such assets, which occurred in the second quarter of 2010. Until the Contingent Deferred Assets were transferred by the Company, it continued to manufacture and supply to Bard certain hemodialysis catheter products under the terms of a distribution agreement (the “Transition Period”). The Contingent Deferred Assets were transferred to Bard and Bard paid $1.5 million of the Contingent Purchase Price to the Company in the second quarter of 2010. In addition, Bard paid $1.4 million of the remaining Contingent Purchase Price to the Company in the second quarter of 2010 based upon the achievement of milestones related to the manufacture and supply of certain quantities of hemodialysis catheter products under the distribution agreement. The transfer price for hemodialysis catheter products delivered to Bard under the distribution agreement was equal to the Company's standard costs of goods, including related overhead, without mark-up and calculated in accordance with U.S. generally accepted accounting principles. The Company initiated a voluntary recall of certain catheters based upon three field complaints of catheter malfunctions received in the third quarter of 2009. No patient injury or complications resulted from the malfunction. It was determined that under certain molding conditions, there was a possibility that insufficient bonding may occur which could cause the catheter to malfunction. As it could not be isolated to a particular lot, the Company initiated a voluntary recall of any inventory held by our distributors and their customers. As the manufacturer of record, the Company is responsible for ensuring that the product meets the product specifications and the associated product liability that may result in failure those specifications. Not included in discontinued operations are certain indirect costs of the Medical Products Business Unit that have been reclassified to selling, general and administrative expense of $162 thousand for the nine months ended September 30, 2010. The voluntary recall was initiated in October 2009 and in February 2010, the Company determined that it had achieved a 100% effectiveness rating based upon the recall criteria. The U.S. Food and Drug Administration advised the Company in June 2010 that the recalls were terminated. Spire Biomedical warrants that any of its catheter products found to be defective will be replaced. No warranty is made that the failure of the product will not occur, and Spire disclaims any responsibility for any medical complications. Spire Biomedical warrants that its services only will meet the agreed upon specifications. There were no assets of the Medical Products Business Unit as of September 30, 2011 and December 31, 2010. The liabilities of the Medical Products Business Unit as of September 30, 2011 and December 31, 2010 are as follows:
Condensed results of operations relating to the Medical Products Business Unit are as follows:
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Notes Payable and Credit Arrangements | 9 Months Ended |
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Sep. 30, 2011 | |
Notes Payable and Credit Arrangements [Abstract] | |
Debt Disclosure [Text Block] | Notes Payable and Credit Arrangements On June 22, 2009, the Company entered into two separate credit facilities with Silicon Valley Bank (the “Bank” or “SVB”) providing for credit lines of up to $8 million in the aggregate: (i) an Amended and Restated Loan and Security Agreement (the “Restated Revolving Credit Facility”) pursuant to which the Bank agreed to provide the Company with a credit line of up to $3 million and (ii) an Export-Import Bank Loan and Security Agreement (the “Ex-Im Facility”) pursuant to which the Bank agreed to provide the Company with a credit line of up to $5 million to be guaranteed by the Export-Import Bank of the United States (the “EXIM Bank”). The Company's obligations under these two credit facilities were secured by substantially all of the assets of the Company. In addition, under the Restated Revolving Credit Facility, the Company's existing equipment credit facility with the Bank was amended whereby the parties agreed that there would be no additional availability under such facility and, based on an outstanding principal amount of $1.2 million on June 22, 2009, the Company would continue to make monthly installments of principal of $97 thousand plus accrued interest until the outstanding balance was paid in full (the “Equipment Term Loan”). On November 16, 2009, the Company entered into two separate amended and restated credit facilities with the Bank continuing to provide for credit lines of up to $8 million in the aggregate: (i) a Second Amended and Restated Loan and Security Agreement (the “Second Restated Revolving Credit Facility”) pursuant to which the Bank agreed to continue to provide the Company with a credit line of up to $3 million and (ii) an Amendment and Restated Export-Import Bank Loan and Security Agreement (the “Restated Ex-Im Facility”) pursuant to which the Bank agreed to continue to provide the Company with a credit line of up to $5 million to be guaranteed by the EXIM Bank. The Company's obligations under these two amended credit facilities are secured by substantially all of the assets of the Company. Advances under the Second Restated Revolving Credit Facility are limited to 80% of eligible receivables. Originally, interest on outstanding borrowings accrued at a rate per annum equal to the greater of (i) the prime rate plus 3.0% or (ii) 9.0%; with reductions in the rate if certain events occur, as defined. Advances under the Restated Ex-Im Facility are limited to (i) 90% of eligible receivables subject to a suitable foreign currency hedge agreement if applicable, plus (ii) 75% of all other eligible receivables billed in foreign currency, plus (iii) the 50% of the value of eligible inventory, as defined. Originally, interest on outstanding borrowings accrued at a rate per annum equal to the greater of (i) the prime rate plus 3.0% or (ii) 9.0%; with reductions in the rate if certain events occur, as defined. In addition, under the Second Restated Revolving Credit Facility, with respect to the Company's outstanding Equipment Term Loan with the Bank, the Company was required to continue to make monthly installments of principal of $97 thousand plus accrued interest until the outstanding balance was paid in full. Interest on the Equipment Term Loan accrued at a rate per annum equal to the greater of (i) the prime rate plus 1.75% or (ii) 7.75%. The final payment with respect to the Equipment Term Loan was made in June, 2010. Under the Second Restated Revolving Credit Facility and the Restated Ex-Im Facility, as long as any commitment remains outstanding under the facilities, the Company must comply with a financial covenant by maintaining cash and availability line of $1.0 million. In addition, until all amounts under the credit facilities with the Bank are repaid, covenants under the credit facilities impose restrictions on the Company's ability to, among other things, incur additional indebtedness, create or permit liens on our assets, merge, consolidate or dispose of assets (other than in the ordinary course of business), make dividend and other restricted payments, make certain debt or equity investments, make certain acquisitions, engage in certain transactions with affiliates or change the business conducted by the Company. Any failure by the Company to comply with the covenants and obligations under the credit facilities could result in an event of default, in which case the Bank may be entitled to declare all amounts owed to be due and payable immediately. On June 15, 2010, the Company and the Bank entered into (i) the First Loan Modification Agreement amending certain terms of the Second Restated Revolving Credit Facility and (ii) the First Loan Modification Agreement amending certain terms of the Restated Ex-Im Facility (collectively, the “Loan Modifications”). Pursuant to the terms of the Loan Modifications, the Company and the Bank agreed to (i) create a letter of credit sub-facility within the Company's existing credit line, (ii) decrease the interest rate with regard to financed eligible accounts from SVB Prime Rate plus 3.0% per annum to SVB Prime Rate plus 2.5% per annum while (iii) reducing the interest rate floor from 6.0% per annum to 4.0% per annum and (iv) extending the maturity date of the Second Restated Revolving Credit Facility and Restated Ex-Im Facility to December 31, 2011. In addition to the above, in the event the Company achieves certain levels of liquidity, based on cash on hand and availability under the credit facility, the Bank will waive the requirement that the Company cash collateralize any letters of credit issued by the Bank pursuant to the new letter of credit sub-facility in an aggregate amount up to $1.5 million. Finally, because the Company has made all the required payments under the Equipment Term Loan, the Bank acknowledged that the Equipment Term Loan has been paid in full and all references to it in the Second Restated Revolving Credit Facility have been deleted. On March 31, 2011, the Bank agreed to increase the letter of credit sub‑facility under the Company's credit facility with the Bank from $1.5 million to $2.5 million. The Company has used $1.4 million of this sub-facility at September 30, 2011 and December 31, 2010, respectively. On November 8, 2011, the Company and the Bank entered into amendments to the Second Restated Revolving Credit Facility and the Restated Ex-Im Facility providing that, during the period from November 8, 2011 until the earlier to occur of the date on which the Company delivers its November 2011 financial reports to the Bank or December 31, 2011, and provided the Company maintains liquidity at least equal to twice the amount of its advances drawn and letters of credit issued under the Second Restated Revolving Credit Facility and the Restated Ex-Im Facility, the Company will be able to borrow (i) up to $2 million under the Second Restated Revolving Credit Facility and (ii) up to $5 million under the Restated Ex-Im Facility less the amount of outstanding letters of credit. Once the Company maintains liquidity of $6 million the line will revert to the prior terms of the credit facilities, as previously amended, noted above. All other terms and conditions under the credit facilities remain the same. Advances outstanding under the Second Restated Revolving Credit Facility were $842 thousand at September 30, 2011 and December 31, 2010, respectively. Advances outstanding under the Restated Ex-Im Facility were $315 thousand at September 30, 2011 and December 31, 2010, respectively. As of September 30, 2011, the interest rate per annum on the Second Restated Revolving Credit Facility and Restated Ex-Im Facility was 6.5% and 6.5%, respectively. Combined availability under the Second Restated Revolving Credit Facility and the Restated Ex-Im Facility was $2.1 million as of September 30, 2011. |
Available-for-Sale Investments | 9 Months Ended |
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Sep. 30, 2011 | |
Available-for-Sale Investments [Abstract] | |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | Available-for-Sale Investments Available-for-sale securities consist of assets held as part of the Spire Corporation Non-Qualified Deferred Compensation Plan. These investments have been classified as available-for-sale investments and are reported at fair value, with unrealized gains and losses included in accumulated other comprehensive income. The unrealized gain on these marketable securities was $142 thousand and $446 thousand as of September 30, 2011 and December 31, 2010, respectively. |
Description of Business | 9 Months Ended |
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Sep. 30, 2011 | |
Description of the Business [Abstract] | |
Nature of Operations [Text Block] | Description of the Business Spire Corporation (“Spire” or the “Company”) develops, manufactures and markets highly-engineered products and services in three principal business areas: (i) capital equipment for the photovoltaic solar industry, (ii) biomedical and (iii) optoelectronics, generally bringing to bear expertise in materials technologies, surface science and thin films across all three business areas, discussed below. In the photovoltaic solar area, the Company develops, manufactures and markets specialized equipment for the production of terrestrial photovoltaic modules from solar cells, provides photovoltaic systems for application to powering buildings with connection to the utility grid and supply photovoltaic materials. The Company’s equipment has been installed in approximately 200 factories in 50 countries. In the biomedical area, the Company provides value-added surface treatments to manufacturers of orthopedic and other medical devices that enhance the durability, antimicrobial characteristics or other material characteristics of their products; and performs sponsored research programs into practical applications of advanced biomedical and biophotonic technologies. In the optoelectronics area, the Company provides custom compound semiconductor foundry and fabrication services on a merchant basis to customers involved in biomedical/biophotonic instruments, telecommunications and defense applications. Services include compound semiconductor wafer growth, other thin film processes and related device processing and fabrication services. The Company also provides materials testing services and performs services in support of sponsored research into practical applications of optoelectronic technologies. On December 14, 2009, the Company completed the sale of its medical products business unit, which develops and markets coated and uncoated hemodialysis catheters and related devices for the treatment of chronic kidney disease (the “Medical Products Business Unit”), to Bard Access Systems, Inc. (“Bard”). Accordingly, the results and liabilities of the Medical Products Business Unit are being presented herein as discontinued operations. See Note 14 to the unaudited condensed consolidated financial statements. Operating results will depend upon revenue growth and product mix, as well as the timing of shipments of higher priced products from the Company’s solar equipment line, delivery of solar systems and solar materials. Export sales amounted to 67% and 57% of net sales and revenues for the three and nine months ended September 30, 2011, respectively. Export sales amounted to 30% and 37% of net sales and revenues for the three and nine months ended September 30, 2010, respectively. The Company has incurred operating losses from continuing operations in 2011 and 2010. Operating loss from continuing operations was $1.7 million and $3.0 million for the three and nine months ended September 30, 2011, respectively, and $1.1 million and $2.7 million for the three and nine months ended September 30, 2010, respectively. Net cash used in operating activities was $3.6 million for the nine months ended September 30, 2011 and 2010. As of September 30, 2011, the Company had unrestricted cash and cash equivalents of $2.3 million compared to $6.3 million as of December 31, 2010. The Company has numerous options on how to fund future operational losses or working capital needs, including but not limited to sales of equity, bank debt or the sale or license of assets and technology, as it has done in the past; however, there are no assurances that the Company will be able to sell equity, obtain or access bank debt, or sell or license assets or technology on a timely basis and at appropriate values. The maturity date of the Company's credit facilities is December 31, 2011. The Company has developed several plans including cost containment efforts and outside financing to offset a decline in business due to global economic conditions. As a result, the Company believes it has sufficient resources to finance its current operations through at least September 30, 2012. |
Inventories and Deferred Costs of Goods Sold | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Inventory and Deferred Costs of Goods Sold [Text Block] | Inventories and Deferred Costs of Goods Sold Inventories, net of $1.1 million and $425 thousand of reserves at September 30, 2011 and December 31, 2010, respectively, consist of the following at:
Deferred cost of goods sold represents costs of equipment that has shipped to the customer and title has passed. The Company defers these costs until the related revenue is recognized. |
Loss Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Text Block] | Loss Per Share The following table provides a reconciliation of the denominators of the Company’s reported basic and diluted loss per share computations for the periods ended:
For the three and nine months ended September 30, 2011, zero and 660 shares, respectively and for the three and nine months ended September 30, 2010, 3,567 and 6,939 shares, respectively, of common stock issuable relative to stock options were excluded from the calculation of diluted shares because their inclusion would have been anti-dilutive due to the Company’s net loss position. In addition, for the three and nine months ended September 30, 2011, 783,107 and 773,107 shares, respectively, and for the three and nine months ended September 30, 2010, 732,266 and 712,821 shares, respectively, of common stock issuable relative to stock options were excluded from the calculation of diluted shares because their inclusion would have been anti-dilutive, due to their exercise prices exceeding the average market price of the stock for the period. |
Gains on Termination of Contracts | 9 Months Ended |
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Sep. 30, 2011 | |
Gains on Termination of Contracts [Abstract] | |
termination of contract [Text Block] | Gains on Termination of Contracts In the fourth quarter of 2009, the Company determined that three purchase and sale agreements with Jiangxi Gemei Sci-Tech., LLC (“Jiangxi”) related to a module equipment line and cell equipment line were terminated due to a breach of contract by Jiangxi. Jiangxi had failed to make payments as required by the agreements and has not responded to numerous communications by the Company. The Company made commitments to purchase equipment on behalf of Jiangxi and due to Jiangxi not making contractual payments, the Company entered into settlement agreements with these vendors in the fourth quarter of 2009 and first quarter of 2010. As a result of the settlement agreement entered into in the first quarter of 2010 and deposits paid by Jiangxi less settlements paid to vendors, the Company recognized a gain on termination of contracts of $837 thousand in the first quarter of 2010. |
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Segment Reporting Disclosure [Text Block] | Operating Segments and Related Information The following table presents certain continuing operating division information in accordance with the provisions of ASC 280, “Segments Reporting.”
The following table shows net sales and revenues by geographic area (based on customer location):
Revenues from contracts with United States government agencies for the three months ended September 30, 2011 and 2010 were approximately $108 thousand and $3.4 million or 1% and 16% of total net sales and revenues, respectively. Revenues from contracts with United States government agencies for the nine months ended September 30, 2011 and 2010 were approximately $8.6 million and $19.0 million or 20% and 31% of total net sales and revenues, respectively. Revenues from the delivery of solar equipment to two customers accounted for 28% and 13%, respectively, of total net sales and revenues for the three month period ended September 30, 2011. Revenues from the delivery of solar equipment and recurring revenues from the sale of solar cell materials to the same customer accounted for 2% and 17%, respectively, of total net sales and revenues for the nine month period ended September 30, 2011. Revenues from the delivery of solar equipment to another two customers account for 18% and 13% of total net sales and revenues for the nine month period ended September 30, 2011. Recurring revenues from the sale of solar cell materials to one customer account for 12% of total net sales and revenues for the three month period ended September 30, 2010. Revenues from the delivery of a solar equipment module line to one customer account for 15% of total net sales and revenues for the three month period ended September 30, 2010. Revenues from the delivery of four solar systems to one customer account for 35% of total net sales and revenues for the three month period ended September 30, 2010. Revenues from the delivery of a solar equipment module line and recurring revenues from the sale of solar cell materials to the same customer account for 9% and 17%, respectively, of total net sales and revenues for the nine month period ended September 30, 2010. Revenues from the delivery of a solar equipment cell line and solar equipment module line to the same customer account for 12% and 6%, respectively, of total net sales and revenues for the nine month period ended September 30, 2010. Revenues from the delivery of four solar systems to one customer account for 12% of total net sales and revenues for the nine month period ended September 30, 2010. One customer represented approximately 18% of net accounts receivable, trade at September 30, 2011 and two customers represented approximately 16% and 12% of net accounts receivable, trade at December 31, 2010. |
Interim Financial Statements | 9 Months Ended | ||||||||||||
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Sep. 30, 2011 | |||||||||||||
Interim Financial Statements [Abstract] | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto for the year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustment) necessary to fairly present the Company’s financial position as of September 30, 2011 and December 31, 2010 and the results of its operations for the three and nine months ended September 30, 2011 and 2010 and cash flows for the nine months ended September 30, 2011 and 2010. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2011. The unaudited condensed consolidated balance sheet as of December 31, 2010 has been derived from audited financial statements as of that date. During the second quarter of 2009, the Company began pursing an exclusive sales process of its Medical Products Business Unit. On December 14, 2009, the Company completed the sale of the Medical Products Business Unit to Bard. Accordingly, the results of operations, assets and liabilities of the Medical Products Business Unit are being presented herein as discontinued operations. See Note 14 to the unaudited condensed consolidated financial statements. Summary of Significant Accounting Policies With the exception of the Company's revenue recognition policy which has been updated below, the significant accounting policies followed by the Company are set forth in Note 2 to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC. Revenue Recognition The Company derives its revenues from continuing operations from three primary sources: (1) commercial products including, but not limited to, solar energy manufacturing equipment, solar energy systems and solar energy materials; (2) biomedical and semiconductor processing services; and (3) United States government funded research and development contracts The Company generally recognizes product revenue upon shipment of products provided there are no uncertainties regarding customer acceptance, persuasive evidence of an arrangement exists, the sales price is fixed or determinable, and collectability is reasonably assured. These criteria are generally met at the time of shipment when the risk of loss and title passes to the customer. The Company's OEM (original equipment manufacturer) capital equipment solar energy business builds complex customized machines to order for specific customers. It is the Company's policy to recognize revenues for this equipment when title of the product has passed to the customer, provided that customer acceptance is obtained prior to shipment and the equipment is expected to operate the same in the customer's environment as it does in the Company's environment. When an arrangement with the customer includes future obligations or customer acceptance, revenue is recognized when those obligations are met or customer acceptance has been achieved. Typically, the Company is able to separate arrangements with multiple elements into more than one unit of accounting as it relates to the passage of title, training and installation services. The Company allocates total fees under contract to each element using the relative fair value method and revenue is recognized upon delivery of each element. In October 2009, the FASB issued Accounting Standard Update No. 2009-13 (“ASU 2009-13”), Multiple Deliverable Revenue Arrangements, amending the accounting standards for multiple-element revenue arrangements to:
The Company applied the provisions of this accounting guidance prospectively for applicable arrangements entered into or materially modified after January 1, 2011 (the beginning of the Company's fiscal year), which had a material impact on its consolidated financial statements. Total net sales and revenues for the three and nine months ended September 30, 2011 were $8.9 million and $42.0 million, respectively, with the application of ASU 2009-13 and would have been approximately $8.9 million and $40.3 million for the three and nine months ended September 30, 2011, respectively, had the Company not applied ASU 2009-13. The application of ASU 2009-13 could result in an increase in revenue for the remainder of 2011. The Company is not able to reasonably estimate the amount of a possible increase in revenue, as the impact will depend on the nature and size of the new or materially modified arrangements as well as the product mix and services included in the arrangements in any given future period. Prior to adoption of ASU 2009-13, when the Company was not able to establish fair value of undelivered elements with VSOE or TPE, all revenue was deferred. In accordance with ASU 2009-13, the Company allocates revenue to each element in an arrangement based on a selling price hierarchy. The selling price for a deliverable is based on VSOE of selling price, if available, TPE of selling price, if VSOE is not available, or ESP, if neither VSOE nor TPE is available. The Company's solar systems business provides photovoltaic systems for application to powering buildings with connection to the utility grid. It is the Company's policy to recognize revenues for these systems when title passes, the customer accepts the system installation and interconnection to the grid is achieved. The Company's solar materials business supplies photovoltaic materials under a United States government contact. It is the Company's policy to recognize revenues for these materials when title passes and the government accepts the materials. The Company's biomedical business provides advanced medical device surface treatment processes for performance improvement of orthopedic devices. It is the Company's policy to recognize revenues from these services when services are provided to the customer. The Company's optoelectronics business provides wafer epitaxial growth services, compound semiconductor foundry services and device fabrication. It is the Company's policy to recognize revenues from these goods and services when title of the product passes to the customer or when services are provided. The Company recognizes revenues and estimated profits on long-term government contracts on a percent complete basis where the circumstances are such that total profit can be estimated with reasonable accuracy and ultimate realization is reasonably assured. The Company records revenue and profit utilizing the percentage of completion method using a cost-to-cost methodology. A percentage of the contract revenues and estimated profits are determined utilizing the ratio of costs incurred to date to total estimated cost to complete on a contract by contract basis. Profit estimates are revised periodically based upon changes in facts, and any losses on contracts are recognized immediately. Some of the contracts include provisions to withhold a portion of the contract value as retainage until such time as the United States government performs an audit of the cost incurred under the contract. The Company's policy is to take into revenue the full value of the contract, including any retainage, as it performs against the contract since the Company has not experienced any substantial losses as a result of audits performed by the United States government. New Accounting Pronouncements In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2011-05 ("ASU 2011-05"), Presentation of Comprehensive Income. The update eliminates the option to present the components of other comprehensive income as part of the statement of stockholders' equity. Instead, entities must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. The update will be effective for public companies for interim and annual periods beginning after December 15, 2011 with early adoption permitted. The Company does not believe that the application of the provision of ASU 2011-05 will have a material impact on its consolidated financial statements. In May 2011, the FASB issued ASU No. 2011-04 ("ASU 2011-04"), Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards, an amendment to FASB Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement. The update revises the application of the valuation premise of highest and best use of an asset, the application of premiums and discounts for fair value determination, as well as the required disclosures for transfers between Level 1 and Level 2 fair value measures and the highest and best use of nonfinancial assets. The update provides additional disclosures regarding Level 3 fair value measurements and clarifies certain other existing disclosure requirements. The update will be effective for public companies for interim and annual periods beginning after December 15, 2011 with early adoption prohibited. The Company does not believe that the application of the provision of ASU 2011-04 will have a material impact on its consolidated financial statements. |
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Stock Option Plan and Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
The Company has recognized stock-based compensation expense of approximately $85 thousand and $119 thousand for the three months ended September 30, 2011 and 2010, respectively. The Company has recognized stock-based compensation expense of approximately $306 thousand and $374 thousand for the nine months ended September 30, 2011 and 2010, respectively. The total non-cash, stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented is included in the following expense categories:
At September 30, 2011, the Company had outstanding options under two option plans: the 1996 Equity Incentive Plan (the “1996 Plan”) and the 2007 Stock Equity Plan (the “2007 Plan”, together the “Plans”). Both Plans were approved by stockholders and provided that the Board of Directors may grant options to purchase the Company’s common stock to key employees and directors of the Company. Incentive and non-qualified options must be granted at least at the fair market value of the common stock or, in the case of certain optionees, at 110% of such fair market value at the time of grant. The options may be exercised, subject to certain vesting requirements, for periods up to ten years from the date of issue. The 1996 Plan expired with respect to the issuance of new grants as of December 10, 2006. Accordingly, future grants may be made only under the 2007 Plan. A summary of options outstanding under the Plans as of September 30, 2011 and changes during the nine month period is as follows:
Compensation expense related to stock options to be charged in future periods amounts to approximately $401 thousand at September 30, 2011 and will be recognized over a weighted-average period of 2.08 years. The per-share weighted-average fair value of stock options granted during the three and nine months ended September 30, 2011 was $1.29 and $2.20, respectively, and $2.50 and $2.56 for the three and nine months ended September 30, 2010, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
The risk free interest rate reflects treasury yields rates over a term that approximates the expected option life. The expected option life is calculated based on historical lives of all options issued under the Plans. The expected volatility factor is determined by measuring the actual stock price volatility over a term equal to the expected life of the options granted. |
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Subsequent Events | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events The Company evaluated subsequent events through the date of this filing and had no subsequent events to report. |