-----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, PyGxM/SZQq7aAZFfHq1ha8R8NcJOq4unb5SIIhdLNsAgW+pxapBDArUFYGtbNhT+ NYYdGqkvfLfgWJmVlwr+Aw== 0001072613-01-500548.txt : 20010516 0001072613-01-500548.hdr.sgml : 20010516 ACCESSION NUMBER: 0001072613-01-500548 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 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 SEC ACT: SEC FILE NUMBER: 000-12742 FILM NUMBER: 1634881 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 1 form10-q_10684.txt SPIRE CORP. FORM 10-QSB DATED MARCH 31, 2001 2001 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB (MARK ONE) |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001. or |_| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---------------- ---------------- Commission file number: 0-12742 SPIRE CORPORATION - -------------------------------------------------------------------------------- (NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) Massachusetts 04-2457335 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER) One Patriots Park, Bedford, Massachusetts 01730-2396 781-275-6000 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE) Securities registered under Section 12(b) of the Exchange Act: Title of Each Class Name of Each Exchange on Which Registered - -------------------------------------------------------------------------------- Not applicable Not applicable Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.01 par value, Nasdaq ------------------------------------ Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 6,693,035 outstanding shares of the issuer's only class of common equity, Common Stock, $.01 par value, on April 30, 2001. Transitional Small Business Disclosure Format (Check One): Yes |_| No |X| ================================================================================ SPIRE CORPORATION INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Condensed Consolidated Balance Sheets at 3 March 31, 2001 (unaudited) and December 31, 2000 Condensed Consolidated Statements of Operations 4 For the Three Months Ended March 31, 2001 and 2000 (unaudited) Condensed Consolidated Statements of Cash Flows 5 For the Three Months Ended March 31, 2001 and 2000 (unaudited) Notes to Condensed Consolidated Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings. 10 Item 6. Exhibits and Reports on Form 8-K. 10 SIGNATURES 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SPIRE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 2001 2000 ----------- ----------- (UNAUDITED) ASSETS Current assets Cash and cash equivalents $ 7,664,646 $ 7,463,382 Accounts receivable, trade: Amounts billed 1,876,785 2,210,901 Retainage 45,457 45,457 Unbilled costs 764,561 977,800 ----------- ----------- 2,686,803 3,234,158 Less allowance for doubtful accounts 108,000 108,000 ----------- ----------- Net accounts receivable 2,578,803 3,126,158 ----------- ----------- Inventories 3,057,332 2,958,840 Deferred income taxes 260,000 260,000 Prepaid expenses and other current assets 266,111 326,725 ----------- ----------- Total current assets 13,826,892 14,135,105 ----------- ----------- Property and equipment 14,955,622 15,084,479 Less accumulated depreciation and amortization 12,824,784 12,913,912 ----------- ----------- Net property and equipment 2,130,838 2,170,567 ----------- ----------- Patents (less accumulated amortization, $483,292 in 2001 and $478,287 in 2000) 147,126 131,128 Other assets 4,867 5,567 ----------- ----------- 151,993 136,695 ----------- ----------- $16,109,723 $16,442,367 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 1,804,349 $ 1,230,607 Accrued liabilities 1,217,734 1,229,432 Notes payable 675,000 550,000 Advances on contracts in progress 1,677,041 2,100,910 ----------- ----------- Total current liabilities 5,374,124 5,110,949 ----------- ----------- Stockholders' equity Common stock, $.01 par value; shares authorized 20,000,000; issued 6,686,324 shares in 2001 and 6,681,824 shares in 2000 66,863 66,818 Additional paid-in capital 8,884,646 8,877,019 Retained earnings 1,784,090 2,387,581 ----------- ----------- Total stockholders' equity 10,735,599 11,331,418 ----------- ----------- $16,109,723 $16,442,367 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 SPIRE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------------- 2001 2000 ----------- ----------- Net sales and revenues Contract research, service and license revenues $ 1,251,200 $ 2,376,954 Sales of goods 1,968,670 2,154,666 ----------- ----------- Total sales and revenues 3,219,870 4,531,620 ----------- ----------- Costs and expenses Cost of contract research, services and licenses 890,661 1,531,622 Cost of goods sold 1,618,404 1,313,919 Selling, general and administrative expenses 1,394,252 1,338,360 ----------- ----------- Total costs and expenses 3,903,315 4,183,901 ----------- ----------- Earnings (loss) from operations (683,445) 347,719 ----------- Interest income, net 79,953 125,093 ----------- ----------- Earnings (loss) before income taxes (603,491) 472,812 Income tax expense -- 205,600 ----------- ----------- Net earnings (loss) $ (603,491) $ 267,212 =========== =========== Earnings (loss) per share of common stock - basic $ (0.09) $ 0.04 =========== =========== Earnings (loss) per share of common stock - diluted $ (0.09) $ 0.04 =========== =========== Weighted average number of common and common equivalent shares outstanding - basic 6,685,477 6,590,478 =========== =========== Weighted average number of common and common equivalent shares outstanding - diluted 6,685,477 7,030,724 =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 SPIRE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, --------------------------------- 2001 2000 ------------ ------------ Cash flows from operating activities: Net earnings (loss) $ (603,491) $ 267,212 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 120,735 111,929 Loss (gain) on sale and abandonment of assets 25,740 -- Changes in assets and liabilities: Accounts receivable 547,355 (1,107,428) Inventories (98,492) 284,259 Prepaid expenses and other current assets 60,614 (43,173) Income taxes payable -- (864,400) Accounts payable and accrued liabilities 562,044 (895,220) Advances on contracts in progress (423,869) (650,027) ------------ ------------ Net cash provided by (used in) operating activities 190,636 (2,896,848) ------------ ------------ Cash flows from investing activities: Additions to property and equipment (98,709) (110,362) Increase in patent costs (24,035) (1,015) Other assets 700 (3,800) ------------ ------------ Net cash provided by (used in) investing activities (122,044) (115,177) ------------ ------------ Cash flows from financing activities: Net borrowings (payments) on short-term debt 125,000 -- Exercise of stock options 7,672 151,384 ------------ ------------ Net cash provided by (used in) financing activities 132,672 151,384 ------------ ------------ Net increase (decrease) in cash and cash equivalents 201,264 (2,860,641) Cash and cash equivalents, beginning of period 7,463,382 10,709,370 ------------ ------------ Cash and cash equivalents, end of period $ 7,664,646 $ 7,848,729 ============ ============ Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 18,443 $ 3,000 ============ ============ Income taxes $ 6,000 $ 1,070,000 ============ ============
See accompanying notes to condensed consolidated financial statements. 5 SPIRE CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2001 1. INTERIM FINANCIAL STATEMENTS. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial position as of March 31, 2001 and the results of operations for the three months ended March 31, 2001 and 2000 and cash flows for the three months ended March 31, 2001 and 2000. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2001. 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, 2000. The financial statements, with the exception of the December 31, 2000 balance sheet, are unaudited and have not been examined by independent certified public accountants. 2. INVENTORIES. Inventories consist of the following: March 31, December 31, 2001 2000 ---------- ---------- Raw materials $1,050,611 $ 588,732 Work in process 1,679,450 1,951,842 Finished goods 327,271 418,266 ---------- ---------- $3,057,332 $2,958,840 ========== ========== 3. EARNINGS PER SHARE. The following table provides a reconciliation of the denominators of the basic and diluted earnings (loss) per share computations for the Company's reported earnings (loss):
Three Months Ended March 31, -------------------------- 2001 2000 --------- --------- Weighted average number of common shares outstanding - basic 6,685,477 6,590,478 Add net additional common shares upon exercise of common stock options -- 440,246 --------- --------- Adjusted weighted average common shares outstanding - diluted 6,685,477 7,030,724 ========= =========
At March 31, 2001, 263,710 shares of common stock issuable under stock options were outstanding, but were not included in the calculation of diluted earnings per share because the Company incurred a net loss for the three months ended March 31, 2001 and, therefore, the effect would be antidilutive. 6 4. OPERATING SEGMENTS AND RELATED INFORMATION. The following table presents certain operating division information in accordance with the provisions of SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information", which was adopted in 1998.
Solar Solar Biomedical Biophotonics Total Equipment Systems Division Division Company ----------- ----------- ----------- ----------- ----------- For the Three Months Ended March 31, 2001 - ----------------------------------------- Net sales and revenues $ 2,112,956 $ 19,742 $ 883,855 $ 203,717 $ 3,219,870 Earnings (loss) from operations (166,821) (211,301) (230,211) (75,111) (683,444) For the Three Months Ended March 31, 2000 - ----------------------------------------- Net sales and revenues $ 2,129,899 $ 226,309 $ 1,355,628 $ 819,784 $ 4,531,620 Earnings (loss) from operations 157,902 (27,085) 123,572 93,328 347,719
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECTION AND OTHER PARTS OF THIS REPORT CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS AND TIMING DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED OR REFERRED TO IN THIS REPORT AND IN ITEM 6 OF THE ANNUAL REPORT OF FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2000. Overview. - -------- Spire develops, manufactures and markets highly-engineered solar electric module manufacturing equipment and systems and provides biomedical processing services. Spire is the world's leader in the design and manufacture of specialized equipment for the production of terrestrial photovoltaic modules from solar cells, with its equipment installed in 144 factories and in 42 countries. Spire's value-added biomedical processing services offer surface treatments to enhance the durability or the antimicrobial characteristics of orthopedic and other medical devices. Results of Operations. - --------------------- The following table sets forth certain items as a percentage of net sales and revenues for the periods presented:
Three Months Ended March 31, -------------------------- 2001 2000 -------- -------- Net sales and revenues 100% 100% Cost of sales and revenues 78 63 -------- -------- Gross profit 22 37 Selling, general and administrative expenses 43 29 -------- -------- Earnings (loss) from operations (21) 8 Earnings (loss) before income taxes (19) 10 Income tax expense (benefit) -- 5 -------- -------- Net earnings (loss) (19)% 6% ======== ========
7 Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000. - -------------------------------------------------------------------------------- NET SALES AND REVENUES Net sales and revenues decreased $1,312,000 or 29% for the three months ended March 31, 2001 to $3,220,000, compared to $4,532,000 for the three months ended March 31, 2000. Contract research, service and license revenues decreased $1,126,000 or 47% to $1,251,000 for the three months ended March 31, 2001 compared to $2,377,000 for 2000. Sales of goods decreased $186,000 or 9% to $1,969,000 for 2001, compared to $2,155,000 for 2000. Sales in goods decreased due to lower systems sales in Chicago. The following table categorizes the Company's net sales and revenues for the periods presented:
Three Months Ended March 31, ----------------------------------------------- 2001 2000 % Change ---------- ---------- ---------- Contract research, service and license revenues $1,251,000 $2,377,000 (47)% Sales of goods 1,969,000 2,155,000 (9)% ---------- ---------- Net sales and revenues $3,220,000 $4,532,000 (29)% ========== ==========
COST OF SALES AND REVENUES The cost of contract research, service and license revenues decreased $641,000 to $891,000, but increased to 71% of related revenues, for the three months ended March 31, 2001, compared to $1,532,000 or 64% of related revenues for the three months ended March 31, 2000. The decrease is due to a change in product mix, and lower volume. Cost of goods sold decreased $304,000 to $1,618,000, but increased to 82% of related sales, for the three months ended March 31, 2001, compared to $1,314,000 or 61% of related sales, for the three months ended March 31, 2000, due to lower volume. The following table categorizes the Company's cost of sales and revenues for the periods presented, stated in dollars and as a percentage of related sales and revenues:
Three Months Ended March 31, -------------------------------------------------------- 2001 % 2000 % ---------- ---------- ---------- ---------- Cost of contract research, service and license revenues $ 891,000 71% $1,532,000 64% Cost of goods sold 1,618,000 82% 1,314,000 61% ---------- ---------- Total cost of sales and revenues $2,509,000 78% $2,846,000 63% ========== ==========
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the three months ended March 31, 2001 increased $56,000 to $1,394,000, and increased to 43% of sales and revenues, compared to $1,338,000 or 29% of sales and revenues for the three months ended March 31, 2000. The increase in selling, general and administrative expenses is due to the Company investing in its sales and marketing activities. INTEREST The Company earned $100,000 of interest income for the three months ended March 31, 2001, compared to $128,000 of interest income for the three months ended March 31, 2000. The Company incurred interest expense of $20,000 in the three months ended March 31, 2001 of which none was capitalized, compared to no interest expense for the three months ended March 30, 2000. INCOME TAXES The Company recorded no tax for the three months ended March 31, 2001, compared to $206,000 of income tax expense for the three months ended March 31, 2000. 8 NET EARNINGS (LOSS) The Company reported a net loss for the three months ended March 31, 2001 of $603,000, compared to net earnings of $267,000 for the three months ended March 31, 2000. Liquidity and Capital Resources. - ------------------------------- To date the Company has been able to fund its operating cash requirements using proceeds from sale of assets, operations and available lines of credit. On July 25, 2000, the Company entered into a revolving credit agreement with the Silicon Valley Bank, replacing its previous credit facility with the Bank. This agreement provides for a $2 million revolving credit facility, based upon eligible accounts receivable requirements. 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 line is secured by all assets of the Company. At March 31, 2001, interest on the line was at the Bank's prime rate plus 1/2 percent (8.5%). The line contains covenants including provisions relating to profitability and net worth. The Company was in default of the covenants as of March 31, 2001. The line is classified as a current liability. As of March 31, 2001, the Company had $675,000 outstanding under this revolving credit facility. The Company believes it has sufficient resources to finance its current operations for the foreseeable future through working capital, its existing line of credit and available lease arrangements. Cash and cash equivalents increased $202,000 to $7,665,000 at March 31, 2001 from $7,463,000 at December 31, 2000. To date, there are no material commitments by the Company for capital expenditures. At March 31, 2001, the Company's retained earnings were $1,784,000, compared to retained earnings of $2,388,000 as of December 31, 2000. Working capital as of March 31, 2001 decreased 6% to $8,453,000, compared to $9,024,000 as of December 31, 2000. Recent Accounting Pronouncements. - -------------------------------- In June 1998, Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." was issued. The Company adopted SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138, on January 1, 2001. The adoption of SFAS No. 133 has not had a material impact on the Company's financial position or overall trends in results of operations and has not resulted in significant changes to its financial risk management practices. In January 2001, the EITF reached a consensus on Issue 00-22, ACCOUNTING FOR "POINTS" AND CERTAIN OTHER TIME-BASED OR VOLUME-BASED SALES INCENTIVE OFFERS, AND OFFERS FOR FREE PRODUCTS OR SERVICES TO BE DELIVERED IN THE FUTURE. Issue 00-22 will require that certain volume-based cash rebates to customers currently recognized as marketing costs be classified as a reduction of revenue. The consensus is effective for the first quarter of 2001 and was not material to our consolidated financial statements. Impact of Inflation and Changing Prices. - --------------------------------------- Historically, the Company's business has not been materially impacted by inflation. Manufacturing equipment sales are generally quoted, manufactured and shipped within a cycle of approximately six months, allowing for orderly pricing adjustments to the cost of labor and purchased parts. The Company has not experienced any negative effects from the impact of inflation on long-term contracts. The Company's service business is not expected to be seriously affected by inflation because its procurement-production cycle typically ranges from two weeks to several months, and prices generally are not fixed for more than one year. Research and development contracts usually include cost escalation provisions. 9 Foreign Exchange Fluctuation. - ---------------------------- The Company sells only in U.S. dollars, generally against an irrevocable confirmed letter of credit through a major U.S. bank. Therefore the Company is not directly affected by foreign exchange fluctuations on its current orders. However, fluctuations in foreign exchange rates do have an effect on the Company's customers' access to U.S. dollars and on the pricing competition on certain pieces of equipment that the Company sells in selected markets. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is subject, from time to time, to legal proceedings and claims arising out of its business, which cover a wide range of matters. Management, after review and consultation with counsel, considers that any liability from all of these legal proceedings and claims would not materially affect the consolidated financial position, results of operations or liquidity of the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits. -------- No exhibits are filed herewith. b. Reports of Form 8-K. ------------------- No reports on Form 8-K were filed by the Registrant in the quarter ended March 31, 2001. 10 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Spire Corporation 15 May 2001 By: /s/ Roger G. Little - ------------------------ ------------------------------------ Date Roger G. Little President, Chief Executive Officer and Chairman of the Board 15 May 2001 By: /s/ Richard S. Gregorio - ------------------------ ------------------------------------ Date Richard S. Gregorio Vice President and Chief Financial Officer, Treasurer, Clerk and Principal Accounting Officer 11 -----END PRIVACY-ENHANCED MESSAGE-----