2001
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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|
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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