-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MMx3wyCjBldK4jwDOYrqYWgFJ5JodUu7CeZbnfPUut3ilE1SRAZ8Hbvt+1ufeBEq JGBPEMrDjHxz7T8jjUq5ug== 0000950135-96-003756.txt : 19960928 0000950135-96-003756.hdr.sgml : 19960928 ACCESSION NUMBER: 0000950135-96-003756 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960820 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPIRE CORP CENTRAL INDEX KEY: 0000731657 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 042457335 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12742 FILM NUMBER: 96617879 BUSINESS ADDRESS: STREET 1: ONE PATRIOTS PARK CITY: BEDFORD STATE: MA ZIP: 01730-2396 BUSINESS PHONE: 6172756000 MAIL ADDRESS: STREET 2: ONE PATRIOTS PARK CITY: BEDFORD STATE: MA ZIP: 01730-2396 10QSB/A 1 SPIRE CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (fee required) For the quarterly period ended June 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (no fee required) For the transition period from ____________________ to________________________________ Commission file number 0-12742 SPIRE CORPORATION Exact name of small business issuer in its charter Massachusetts 04-2457335 State or other jurisdiction of I.R.S. employer identification number incorporation or organization One Patriots Park, Bedford, Massachusetts 01730-2396 Address of principal executive offices Zip code Issuer's telephone number 617-275-6000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _______ State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. There were 3,020,025 shares of the issuer's only class of common equity, Common Stock, $.01 par value, on July 31, 1996. Transitional Small Business Disclosure Format (check one) Yes________ No X 2 SPIRE CORPORATION INDEX
Page Number ----------- PART I - FINANCIAL INFORMATION - ------------------------------ Consolidated Balance Sheets 3 June 30, 1996 and December 31, 1995 Consolidated Statements of Operations 4 For the Three Months Ended June 30, 1996 and 1995 and For the Six Months Ended June 30, 1996 and 1995 Consolidated Statements of Cash Flows 5 For the Six Months Ended June 30, 1996 and 1995 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial 7 & 8 Condition and Results of Operations PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. 8 Item 6. Exhibits and Reports on Form 8-K. 8
2 3 SPIRE CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS
June 30, December 31, 1996 1995 ----------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 326,574 $ 1,130,428 Accounts receivable: Amounts billed 2,206,069 2,401,536 Retainage 78,553 97,350 Unbilled costs 593,477 449,188 ----------- ----------- 2,878,099 2,948,074 Less allowance for doubtful accounts 25,000 95,000 ----------- ----------- Net accounts receivable 2,853,099 2,853,074 ----------- ----------- Inventories (Note 2) 1,307,278 1,126,734 Prepaid expenses and other current assets 500,002 369,483 ----------- ----------- Total current assets 4,986,953 5,479,719 ----------- ----------- Property and equipment 22,335,302 21,980,123 Less accumulated depreciation and amortization 17,848,345 17,330,271 ----------- ----------- Net property and equipment 4,486,957 4,649,852 ----------- ----------- Computer software costs (less accumulated amortization, $803,314 in 1996 and $786,862 in 1995) 98,821 36,719 Patents (less accumulated amortization, $459,580 in 1996 and $434,490 in 1995) 506,591 518,087 Other assets 244,927 260,053 ----------- ----------- 850,339 814,859 ----------- ----------- $10,324,249 $10,944,430 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of capital lease obligation $ 3,557 $ 10,401 Accounts payable 1,201,567 1,494,877 Accrued liabilities 667,299 789,153 Advances on contracts in progress 785,918 755,756 ----------- ----------- Total current liabilities 2,658,341 3,050,187 Stockholders' equity: Common Stock, $.01 par value; shares authorized 6,000,000; issued 3,567,185 shares in 1996 and 3,560,360 shares in 1995 35,672 35,604 Additional paid-in capital 8,491,066 8,468,903 Retained earnings 331,045 564,424 ----------- ----------- Treasury stock at cost, 544,660 shares in 1996 and 537,160 in 1995 1,191,875 1,174,688 ----------- ----------- Total stockholders' equity 7,665,908 7,894,243 ----------- ----------- $10,324,249 $10,944,430 =========== ===========
See accompanying notes to consolidated financial statements. 3 4 SPIRE CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net sales and revenues: Contract research and service revenues $2,956,093 $3,355,067 $5,558,002 $6,813,682 Sales of manufacturing equipment 1,532,960 1,303,563 2,768,950 2,428,170 ---------- ---------- ---------- ---------- Total sales and revenues 4,489,053 4,658,630 8,326,952 9,241,852 ---------- ---------- ---------- ---------- Costs and expenses: Cost of contract research and services 2,019,458 2,413,844 3,949,424 4,875,038 Cost of manufacturing equipment 1,321,956 1,150,212 2,397,927 2,144,979 Selling, general and administrative expenses 1,124,990 1,071,871 2,228,900 2,178,693 ---------- ---------- ---------- ---------- 4,466,404 4,635,927 8,576,251 9,198,710 ---------- ---------- ---------- ---------- Earnings (loss) from operations 22,649 22,703 (249,299) 43,142 Interest income (expense), net 10,413 (20,540) 15,920 (38,174) ---------- ---------- ---------- ---------- Earnings (loss) before income taxes 33,062 2,163 (233,379) 4,968 Income tax expense (benefit) 0 0 0 0 ---------- ---------- ---------- ---------- Net earnings (loss) $ 33,062 $ 2,163 $ (233,379) $ 4,968 ========== ========== ========== ========== Earnings (loss) per share of Common Stock $ 0.01 $ 0.00 $ (0.08) $ 0.00 ========== ========== ========== ========== Weighted average number of common and common equivalent shares outstanding 3,037,817 3,065,722 3,032,595 3,068,394
See accompanying notes to condensed consolidated financial statements. 4 5 SPIRE CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, ---------------------------------- 1996 1995 ----------- ------------ Cash flows from operating activities: Net earnings (loss) $ (233,379) $ 4,968 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 569,906 672,823 Changes in assets and liabilities: Accounts receivable (25) 924,514 Inventories (180,544) 91,773 Prepaid expense and other current assets (130,519) 120,954 Accounts payable and accrued liabilities (415,164) (841,256) Advances on contracts in progress 30,162 45,377 ----------- ------------ Net cash (used for) provided by operating activities (359,563) 1,019,153 ----------- ------------ Cash flows from investing activities: Additions to property and equipment (355,180) (177,140) Increase in patent costs (13,594) (61,590) Other assets (73,717) 59,848 ----------- ------------ Net cash used for investing activities (442,491) (178,882) ----------- ------------ Cash flows from financing activities: Net payments on short-term debt -- (750,000) Payments on long-term borrowing (6,844) (34,121) Exercise of stock options 22,231 -- Repurchase of common stock (17,187) -- ----------- ------------ Net cash used for financing activities (1,800) (784,121) ----------- ------------ Net increase (decrease) in cash and cash equivalents (803,854) 56,150 Cash and cash equivalents, beginning of period 1,130,428 166,567 ----------- ------------ Cash and cash equivalents, end of period $ 326,574 $ 222,717 =========== ============ Supplemental disclosures of cash flow information: Cash paid during the quarter for: Interest expense $ 0 $ 38,174 =========== ============ Income taxes $ 0 $ 0 =========== ============
See accompanying notes to consolidated financial statements. 5 6 SPIRE CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Six Months Ended June 30, 1996 and 1995 (1) Interim Financial Statements In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to fairly present the Company's financial position as of June 30, 1996 and December 31, 1995 and the results of operations and changes in cash flows for the six months ended June 30, 1996 and 1995. The results of operations for the six months ended June 30, 1996 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 1996. The 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-KSB for the year ended December 31, 1995. The financial statements, with the exception of the December 31, 1995 balance sheet, are unaudited and have not been examined by independent public accountants. (2) Inventories
Inventories consist of the following: June 30, December 31, 1996 1995 ---------- ------------ (Unaudited) Raw materials $ 487,771 $ 487,255 Work in process 819,507 639,479 ---------- ---------- $1,307,278 $1,126,734 ========== ==========
6 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations Net sales and revenues for the quarter ended June 30, 1996 decreased 4% to $4,489,000 compared to $4,659,000 for the quarter ended June 30, 1995. For the quarter ended June 30, 1996, the Company had net earnings of $33,000 compared to net earnings of $2,000 for the quarter ended June 30, 1995. Retained earnings were $331,000 as of June 30, 1996 compared to $564,000 as of December 31, 1995. Working capital as of June 30, 1996 was $2,329,000 compared to $2,430,000 as of December 31, 1995.
June 30, June 30, % Revenues for the three months ended: 1996 1995 Change ---------- ---------- ------ Contract research and service revenues $2,956,000 $3,355,000 (12%) Manufacturing equipment sales 1,533,000 1,304,000 18% ---------- ----------- Net sales and revenues $4,489,000 $4,659,000 (4%) ========== =========== June 30, June 30, % Revenues for the six months ended: 1996 1995 Change ---------- ----------- ------ Contract research and service revenues $5,558,000 $6,814,000 (18%) Manufacturing equipment sales 2,769,000 2,428,000 14% ----------- ----------- Net sales and revenues $8,327,000 $9,242,000 (10%) ========== ==========
Net sales and revenues for contract research and services for the quarter ended June 30, 1996 declined 12% to $2,956,000 compared to $3,355,000 in 1995. The Company has elected to rely less on government research contracts. Manufacturing equipment sales increased 18% to $1,533,000 compared to $1,304,000 in the same period of 1995, due to increased market demand.
June 30, % of June 30, % of % Cost of Sales for the three months ended: 1996 Revenues 1995 Revenues Change --------- -------- ---------- -------- ------ Contract research and service cost of sales $2,019,000 68% $2,413,000 72% (4%) Manufacturing equipment cost of sales 1,322,000 86% 1,150,000 88% (2%) ----------- ---------- Total cost of sales $3,341,000 74% $3,563,000 76% (2%) ========== ==========
June 30, % of June 30, % of % Cost of Sales for the six months ended: 1996 Revenues 1995 Revenues Change ---------- -------- --------- -------- ------ Contract research and service cost of sales $3,949,000 71% $4,875,000 72% (1%) Manufacturing equipment cost of sales 2,398,000 87% 2,145,000 88% (1%) ---------- ---------- Total cost of sales $6,347,000 76% $7,020,000 76% 0% ========== ==========
The cost of contract research and service revenues declined to 71% for the six months ended June 30, 1996 compared to 72% for the six months ended June 30, 1995. Cost of manufacturing equipment decreased to 87% for the six months ended June 30, 1996 compared to 88% for the six months ended June 30, 1995. The decrease in cost of sales is due to a decrease in overhead expenses. 7 8 Selling, general and administrative expenses for the six months ended June 30, 1996 were 27% of sales compared to 24% of sales for the six months ended June 30, 1995. Selling, general and administration expenses increased as a percentage of sales due to the lower volume. Depreciation and amortization expenses for the six months ended June 30, 1996 decreased 15% to $570,000 compared to $673,000 in 1995. Expenditures for capital equipment were $355,000 for the six months ended June 30, 1996 compared to $177,000 for the six months ended June 30, 1995. The Company incurred interest income of $8,000 in the first six months of 1996 compared to an interest expense of $38,000 in the same period of 1995. Liquidity and Capital Resources On April 5, 1996, the Company extended its a revolving credit facility with a bank. This agreement established a $2 million revolving credit agreement, subject to the availability of eligible accounts receivable. This line of credit has been established to provide the Company with resources for general working capital purposes and Standby Letter of Credit guarantees for foreign customers. The loan is secured by all assets of the Company. Interest on the loan is at prime. The note contains restrictive covenants including provisions relating to profitability and net worth. As of June 30, 1996, the Company had no outstanding balance under this revolving credit line. The Company believes it has sufficient resources to finance its anticipated capital expenditures through working capital, existing lines of credit or available lease arrangements. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. In May, 1985, Electronic Space Systems Corporation ("ESSCO") filed suit against the Company in the Commonwealth of Massachusetts, Middlesex County, Civil Action No. 85-3126. ESSCO sought to recover for, inter alia, alleged breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty and for alleged unfair or deceptive acts or practices in violation of Massachusetts General Laws Chapter 93A ("M.G.L. Ch. 93A") in connection with ESSCO's allegation that the Company wrongfully repudiated certain contractual obligations and a partnership agreement for the marketing of photovoltaic products in the People's Republic of China and certain other markets. The Company filed an answer denying liability to ESSCO and also filed counterclaims against ESSCO alleging, inter alia, ESSCO's breach of contract, misrepresentation, breach of fiduciary duty, tortious interference with the Company's contracts, interference with the Company's advantageous business relationships and unfair or deceptive practices in violation of M.G.L. Ch. 93A and seeking a declaratory judgment that certain agreements between the Company and ESSCO relating to the marketing of photovoltaic products are void. The trial to determine the liability of the parties commenced on March 11, 1992, and on March 27, 1992, the jury returned a verdict that, inter alia, each party had breached various obligations to the other. Various post-trial motions by both parties were rejected in all material respects by the Court. A trial to assess the compensation due as a result of the liability determinations made by the first jury was held from September 27, 1993 to October 15, 1993. The Company was awarded compensation on one claim; ESSCO's previously agreed upon base compensation was reduced by the full amount of the Company's counterclaim on a second issue; and the jury was unable to reach a verdict on the third issue, involving ESSCO's misuse of the Company's proprietary information. The Company intends to pursue vigorously its claim for damages resulting from ESSCO's misuse of the Company's proprietary information. A retrial date has not yet been established. The net result of the two trials to date is that neither party has a material liability to the other, although the Company's claim for damages resulting from ESSCO's misuse of the Company's proprietary information and the parties' M.G.L. Ch. 93A claims against each other have yet to be decided. A hearing on the M.G.L. Ch. 93A issues was held in December 1993, but the Court has not yet ruled on those issues. Based on the proceedings to date and discussion with legal counsel, the Company believes that the outcome of this matter will not have a material negative effect on the Company's financial position and results of operations but may have a positive impact. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. A. Exhibits - No exhibits have been included. B. The Company filed no reports on Form 8-K during the quarter ended June 30, 1996. 8 9 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SPIRE CORPORATION (Registrant) By: /s/ Roger G. Little 13 August 1996 --------------------------------------- -------------- Roger G. Little Date President, Chief Executive Officer and Chairman of the Board By: /s/ Richard S. Gregorio 13 August 1996 --------------------------------------- -------------- Richard S. Gregorio Date Vice President and Chief Financial Officer, Treasurer, Clerk and Principal Accounting Officer 9 EX-27 2 FIANANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY B REFERENCE TO SUCH FORM 10-QSB 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 326,574 0 2,878,099 25,000 1,307,278 4,986,953 22,335,302 17,848,345 10,324,249 2,658,341 0 0 0 35,672 8,491,066 10,324,249 0 8,326,952 0 6,347,351 2,228,900 0 15,920 (233,379) 0 (233,379) 0 0 0 (233,379) (0.08) 0
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