-----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, LLBDUOSjqLzAZkS6HsvWiLusg9sWnYc7WC6gXW10MMiQbGF1+/IwvmNMNS+Tr+qa pKZMojOslEz5U3pqIo31nw== 0001072613-01-501098.txt : 20020410 0001072613-01-501098.hdr.sgml : 20020410 ACCESSION NUMBER: 0001072613-01-501098 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 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: 1934 Act SEC FILE NUMBER: 000-12742 FILM NUMBER: 1786815 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 form10q_10917.txt SPIRE CORPORATION FORM 10-QSB 09/30/2001 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 September 30, 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 OF (I.R.S. EMPLOYER 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 6,732,410 outstanding shares of the issuer's only class of common equity, Common Stock, $.01 par value, on October 31, 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 September 30, 2001 (unaudited) and December 31, 2000 Condensed Consolidated Statements of Operations 4 For the Three Months Ended September 30, 2001 and 2000 and For the Nine Months Ended September 30, 2001 and 2000 (unaudited) Condensed Consolidated Statements of Cash Flows 5 For the Nine Months Ended September 30, 2001 and 2000 (unaudited) Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings. 11 Item 6. Exhibits and Reports on Form 8-K. 11 SIGNATURES
2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SPIRE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 2001 2000 ----------- ----------- (UNAUDITED) ASSETS Current assets - -------------- Cash and cash equivalents $ 7,041,278 $ 7,463,382 Accounts receivable, trade: Amounts billed 2,883,028 2,210,901 Retainage 45,457 45,457 Unbilled costs 660,034 977,800 ----------- ----------- 3,588,519 3,234,158 Less allowance for doubtful accounts 130,000 108,000 ----------- ----------- Net accounts receivable 3,458,519 3,126,158 ----------- ----------- Inventories 2,753,294 2,958,840 Deferred income taxes 60,000 260,000 Prepaid expenses and other current assets 277,543 326,725 ----------- ----------- Total current assets 13,590,634 14,135,105 ----------- ----------- Property and equipment 15,701,605 15,084,479 Less accumulated depreciation and amortization 13,068,564 12,913,912 ----------- ----------- Net property and equipment 2,633,041 2,170,567 ----------- ----------- Patents (less accumulated amortization, $488,811 in 2001 and $478,287 in 2000) 210,055 131,128 Other assets 17,197 5,567 ----------- ----------- 227,252 136,695 ----------- ----------- $16,450,927 $16,442,367 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities ------------------- Accounts payable $ 1,713,441 $ 1,230,607 Accrued liabilities 1,726,866 1,229,432 Deferred revenues 1,482,667 530,227 Notes payable 875,000 550,000 Advances on contracts in progress 802,421 1,570,683 ----------- ----------- Total current liabilities 6,600,395 5,110,949 ----------- ----------- Stockholders' equity -------------------- Common stock, $.01 par value; shares authorized 20,000,000; issued 6,730,410 shares in 2001 and 6,681,824 shares in 2000 67,304 66,818 Additional paid-in capital 8,973,560 8,877,019 Retained earnings 809,668 2,387,581 ----------- ----------- Total stockholders' equity 9,850,532 11,331,418 ----------- ----------- $16,450,927 $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 SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, ------------------------------ ------------------------------ 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Net sales and revenues - ---------------------- Contract research, service and license revenues $ 1,266,512 $ 1,927,350 $ 3,792,000 $ 6,239,303 Sales of goods 2,622,896 898,894 6,281,577 4,277,674 ------------ ------------ ------------ ------------ Total sales and revenues 3,889,408 2,826,244 10,073,577 10,516,977 ------------ ------------ ------------ ------------ Costs and expenses - ------------------ Cost of contract research, services and licenses 772,690 1,333,110 2,433,978 4,136,171 Cost of goods sold 2,001,154 689,419 5,020,814 3,156,462 Internal research and development 223,753 108,288 499,903 214,147 Selling, general and administrative expenses 1,205,819 1,241,162 3,953,456 3,797,738 ------------ ------------ ------------ ------------ Total costs and expenses 4,203,416 3,371,979 11,908,151 11,304,518 ------------ ------------ ------------ ------------ Loss from operations (314,008) (545,735) (1,834,574) (787,541) - -------------------- Interest income, net 36,712 119,719 176,663 362,323 ------------ ------------ ------------ ------------ Loss before income taxes (277,296) (426,016) (1,657,911) (425,218) Income tax benefit -- (298,619) (79,998) (298,619) ------------ ------------ ------------ ------------ Net loss $ (277,296) $ (127,397) $ (1,577,913) $ (126,599) - -------- ============ ============ ============ ============ Loss per share of common stock $ (0.04) $ (0.02) $ (0.24) $ (0.02) - ------------------------------ ============ ============ ============ ============ Weighted average number of common and common equivalent shares outstanding 6,741,865 6,636,634 6,691,473 6,615,486 ============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements. 4 SPIRE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, --------------------------------- 2001 2000 ------------ ------------ Cash flows from operating activities: Net loss $ (1,577,913) $ (126,599) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 403,335 332,863 Loss on sale and abandonment of assets 29,648 11,798 Changes in assets and liabilities: Accounts receivable (332,361) (667,223) Inventories 205,546 (179,974) Prepaid expenses and other current assets 49,182 (97,122) Deferred income taxes 200,000 (1,070,000) Accounts payable and accrued liabilities 980,268 (510,190) Deferred revenues 952,440 596,180 Advances on contracts in progress (768,262) 1,363,655) ------------ ------------ Net cash provided by (used in) operating activities 141,883 (3,073,922) ------------ ------------ Cash flows from investing activities: Additions to property and equipment (881,902) (463,130) Increase in patent costs (92,483) (18,170) Other assets (11,630) -- ------------ ------------ Net cash used in investing activities (986,015) (481,300) ------------ ------------ Cash flows from financing activities: Net borrowings on short-term debt 325,000 250,000 Exercise of stock options 97,028 221,735 ------------ ------------ Net cash provided by financing activities 422,028 471,735 ------------ ------------ Net decrease in cash and cash equivalents (422,104) (3,083,487) Cash and cash equivalents, beginning of period 7,463,382 10,709,370 ------------ ------------ Cash and cash equivalents, end of period $ 7,041,278 $ 7,625,883 ============ ============ Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 23,776 $ 27,453 ============ ============ Income taxes $ -- $ 949,307 ============ ============
See accompanying notes to condensed consolidated financial statements. 5 SPIRE CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 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 September 30, 2001 and the results of operations for the three and nine months ended September 30, 2001 and 2000 and cash flows for the nine months ended September 30, 2001 and 2000. The results of operations for the three and nine months ended September 30, 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: September 30, December 31, 2001 2000 ---------- ---------- Raw materials $1,203,361 $ 588,732 Work in process 873,812 1,951,842 Finished goods 676,121 418,266 ---------- ---------- $2,753,294 $2,958,840 ========== ========== 3. LOSS PER SHARE. The following table provides a reconciliation of the denominators of the basic and diluted loss per share computations for the Company's reported loss:
Three Months Ended September 30, Nine Months Ended September 30, -------------------------- -------------------------- 2001 2000 2001 2000 --------- --------- --------- --------- Weighted average number of shares outstanding - basic 6,741,865 6,636,634 6,691,473 6,615,486 Add net additional common shares upon exercise of common stock options -- -- -- -- --------- --------- --------- --------- Adjusted weighted average common shares outstanding - diluted 6,741,865 6,636,634 6,691,473 6,615,486 ========= ========= ========= =========
At September 30, 2001, 215,133 shares of common stock issuable under stock options were outstanding and 136,210 at September 30, 2000, but were not included in the calculation of diluted earnings per share because the Company incurred a net loss for the three and nine months ended September 30, 2001 and 2000, 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 September 30, 2001 - --------------------------------------------- Net sales and revenues $1,325,546 $1,475,528 $ 971,215 $ 117,119 $3,889,408 Loss from operations (76,766) (82,775) (104,715) (49,752) (314,008) For the Three Months Ended September 30, 2000 - --------------------------------------------- Net sales and revenues $ 837,977 $ 335,142 $ 955,092 $ 698,033 $2,826,244 Earnings (loss) from operations (233,033) (184,043) (223,241) 94,582 (545,735) For the Nine Months Ended September 30, 2001 - --------------------------------------------- Net sales and revenues $4,344,167 $2,431,791 $2,729,481 $ 568,138 $10,073,577 Loss from operations (422,720) (643,555) (664,830) (103,468) (1,834,573) For the Nine Months Ended September 30, 2000 - --------------------------------------------- Net sales and revenues $4,369,794 $599,197 $3,420,178 $2,127,808 $10,516,977 Earnings (loss) from operations (383,799) (447,049) (249,840) 293,147 (787,541)
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 Nine Months Ended September 30, September 30, ------------------------------------ ---------------------------------- 2001 2000 2001 2000 ---------------- ---------------- ---------------- -------------- Net sales and revenues 100% 100% 100% 100% Cost of sales and revenues 71 71 74 69 ---------------- ---------------- ---------------- -------------- Gross profit 29 29 26 31 Internal research and development 6 4 5 2 Selling, general and administrative expenses 31 44 39 36 ---------------- ---------------- ---------------- -------------- Loss from operations (8) (19) (18) (8) Loss before income taxes (7) (16) (16) (4) Income tax benefit -- (11) (1) (3) ---------------- ---------------- ---------------- -------------- Net loss (7%) (5%) (16%) (1%) ================ ================ ================ ==============
7 Three and Nine Months Ended September 30, 2001 Compared to Three and Nine Months - -------------------------------------------------------------------------------- Ended September 30, 2000. - ------------------------- NET SALES AND REVENUES Net sales and revenues increased $1,063,000 or 38% for the three months ended September 30, 2001 to $3,889,000, compared to $2,826,000 for the three months ended September 30, 2000. Contract research, service and license revenues decreased $661,000 or 34% to $1,266,000 for the three months ended September 30, 2001 compared to $1,927,000 for 2000. Sales of goods increased $1,724,000 or 192% to $2,623,000 for 2001, compared to $899,000 for 2000. The following table categorizes the Company's net sales and revenues for the periods presented:
Three Months Ended June 30, ------------------------------------------------------------- 2001 2000 % Change ----------------- ----------------- ----------------- Contract research, service and license revenues $1,266,000 $1,927,000 (34%) Sales of goods 2,623,000 899,000 192% ----------------- ----------------- Net sales and revenues $3,889,000 $2,826,000 38% ================= =================
Net sales and revenues decreased $443,000 or 4% for the nine months ended September 30, 2001 to $10,074,000, compared to $10,517,000 for the nine months ended September 30, 2000. Contract research, service and license revenues decreased $2,447,000 or 39% to $3,792,000 for the nine months ended September 30, 2001 compared to $6,239,000 for 2000. Sales of goods increased $2,004,000 or 47% to $6,282,000 for 2001, compared to $4,278,000 for 2000. The following table categorizes the Company's net sales and revenues for the periods presented:
Nine Months Ended September 30, ------------------------------------------------------------- 2001 2000 % Change ----------------- ----------------- ----------------- Contract research, service and license revenues $ 3,793,000 $ 6,239,000 (39%) Sales of goods 6,282,000 4,278,000 47% ----------------- ----------------- Net sales and revenues $10,074,000 $10,517,000 (4%) ================= =================
The increase in sales of goods for the three and nine month periods ended September 30, 2001 is primarily due to increased sales of systems in Chicago. The decline in contract research, service and license revenues for the three and nine month periods ended September 30, 2001 is primarily due to the sale of the Optoelectronics business, as well as delays in performance by a subcontractor, and a one time license payment in 2000. COST OF SALES AND REVENUES The cost of sales and revenues increased $751,000 to $2,774,000, and decreased to 71% of net sales and revenues, for the quarter ended September 30, 2001, compared to $2,023,000 or 72% of net sales and revenues for the quarter ended September 30, 2000. The cost of contract research, service and license revenues decreased $560,000 to $773,000, and decreased to 61% of related revenues, for the three months ended September 30, 2001, compared to $1,333,000 or 69% of related revenues for the three months ended September 30, 2000. The decreases are due to a change in product mix, and lower volume. Cost of goods sold increased $1,311,000 to $2,001,000, and decreased to 76% of related sales, for the three months ended September 30, 2001, compared to $690,000 or 77% of related sales, for the three months ended September 30, 2000. The increase in cost is due to higher volume, and the decrease as a percentage of sales is due to product mix. 8 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 September 30, -------------------------------------------------------------- 2001 % 2000 % ---------------- -------- ---------------- --------- Cost of contract research, service and license revenues $ 773,000 61% $1,333,000 69% Cost of goods sold 2,001,000 76% 690,000 77% ---------------- ---------------- Total cost of sales and revenues $2,774,000 71% $2,023,000 72% ================ ================
The cost of contract research, service and license revenues decreased $1,702,000 to $2,434,000, and decreased to 64% of related revenues, for the nine months ended September 30, 2001, compared to $4,136,000 or 66% of related revenues for the nine months ended September 30, 2000. The decrease in cost and decrease as a percentage of sales are due to staff reductions. Cost of manufacturing equipment sales increased $1,865,000 to $5,021,000, and increased to 80% of related sales, for the nine months ended September 30, 2001, compared to $3,156,000 or 74% of related sales, for the nine months ended September 30, 2000. The increase in cost is due to higher volume, and the increase as a percentage of sales is due to product mix. 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:
Nine Months Ended September 30, -------------------------------------------------------------- 2001 % 2000 % ---------------- -------- ---------------- --------- Cost of contract research, service and license revenues $2,434,000 64% $4,136,000 66% Cost of goods sold 5,021,000 80% 3,156,000 74% ---------------- ---------------- Total cost of sales and revenues $7,455,000 74% $7,292,000 69% ================ ================
INTERNAL RESEARCH AND DEVELOPMENT Internal research and development for the three months ended September 30, 2001 increased $116,000 or 107% to $224,000, compared to $108,000 for the three months ended September 30, 2000. Internal research and development for the nine months ended September 30, 2001 increased $286,000 or 134% to $500,000, compared to $214,000 for the nine months ended September 30, 2000. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the three months ended September 30, 2001 decreased $35,000 to $1,206,000, and decreased to 31% of sales and revenues, compared to $1,241,000 or 44% of sales and revenues for the three months ended September 30, 2000. The decrease in selling, general and administrative expenses and decrease as a percentage of sales and revenues are due to a decrease in administrative staff as part of a cost reduction implemented by the Company. Selling, general and administrative expenses for the nine months ended September 30, 2001 increased $155,000 to $3,953,000, and increased to 39% of sales and revenues, compared to $3,798,000 or 36% of sales and revenues for the nine months ended September 30, 2000. The increase in selling, general and administrative expenses and increase as a percentage of sales and revenues are due to severance packages for terminated staff as part of a cost reduction implemented by the Company. INTEREST The Company earned $60,000 of interest income for the quarter ended September 30, 2001, compared to $120,000 of interest income for the quarter ended September 30, 2000. The Company incurred interest expense of $23,000 for the quarter ended September 30, 2001 of which none was capitalized, compared to $1,000 in the third quarter of 2000 which was capitalized. The decline of interest income is due to the Company's utilization of available cash to fund operation. 9 INCOME TAXES The Company recorded no tax benefit for the three months ended September 30, 2001, compared to a tax benefit of $299,000 for the quarter ended September 30, 2000. The Company recorded a tax benefit of $80,000 for the nine months ended September 30, 2001 compared to a tax benefit of $299,000 for the nine months ended September 30, 2000. NET LOSS The Company reported a net loss for the quarter ended September 30, 2001 of $277,000, compared to a net loss of $127,000 for the quarter ended September 30, 2000. The Company reported a net loss of $1,578,000 for the nine months ended September 30, 2001, compared to a net loss of $127,000 for the same period of 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. In August 2001, 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 September 30, 2001, interest on the line was at the Bank's prime rate plus 1/2 percent (6.50%). The line contains covenants including provisions relating to profitability and net worth. The Company was in default of the covenants as of September 30, 2001, but subsequently the Company received a waiver. Borrowings on the line are classified as a current liability. As of September 30, 2001, the Company had $875,000 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 decreased $422,000 to $7,041,000 at September 30, 2001 from $7,463,000 at December 31, 2000. To date, there are no material commitments by the Company for capital expenditures. At September 30, 2001, the Company's retained earnings were $810,000, compared to retained earnings of $2,388,000 as of December 31, 2000. Working capital as of September 30, 2001 decreased 23% to $6,990,000, compared to $9,025,000 as of December 31, 2000. Recent Accounting Pronouncements. - -------------------------------- Statement of Financial Accounting Standards No. 143, "Accounting For Asset Retirement Obligations", ("SFAS 143"), issued in August 2001, addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and for the associated retirement costs. SFAS 143 which applies to all entities that have a legal obligation associated with the retirement of a tangible long-lived asset is effective for fiscal years beginning after June 15, 2001. The Company does not expect the implementation of SFAS 143 to have a material impact on its financial condition or results of operations. Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", ("SFAS 144"), issued in October 2001, addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS 144, which applies to all entities, is effective for fiscal years beginning after December 15, 2001. The Company does not expect the implementation of SFAS 144 to have a material impact on its financial condition or results of operations. 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. 10 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 September 30, 2001. 11 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 14 November 2001 By: /s/ Roger G. Little - -------------------------- --------------------------------------------- Date Roger G. Little President, Chief Executive Officer and Chairman of the Board 14 November 2001 By: /s/ Richard S. Gregorio - -------------------------- --------------------------------------------- Date Richard S. Gregorio Vice President and Chief Financial Officer, Treasurer, Clerk and Principal Accounting Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----