================================================================================
2002
================================================================================
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, 2002.
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to ________________ 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 6,741,910 outstanding
shares of the issuer's only class of common equity, Common Stock, $.01 par
value, on April 30, 2002.
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 March 31,
2002 (unaudited) and December 31, 2001 3
Condensed Consolidated Statements of Operations For
the Three Months Ended March 31, 2002 and 2001
(unaudited) 4
Condensed Consolidated Statements of Cash Flows For
the Three Months Ended March 31, 2002 and 2001
(unaudited) 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 12
SIGNATURES
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2002 2001
------------ ------------
(UNAUDITED)
ASSETS
Current assets
- --------------
Cash and cash equivalents $ 4,363,245 $ 5,582,884
Accounts receivable, trade:
Amounts billed 3,218,064 3,422,525
Retainage 99,838 99,838
Unbilled costs 289,956 316,819
------------ ------------
3,607,858 3,839,182
Less allowance for doubtful accounts 170,000 152,000
------------ ------------
Net accounts receivable 3,437,858 3,687,182
------------ ------------
Inventories 1,319,413 1,224,451
Prepaid expenses and other current assets 338,628 333,145
------------ ------------
Total current assets 9,459,144 10,827,662
------------ ------------
Property and equipment 16,447,444 16,396,476
Less accumulated depreciation and amortization 13,425,586 13,243,038
------------ ------------
Net property and equipment 3,021,858 3,153,438
------------ ------------
Patents (less accumulated amortization, $492,922 in 2002
and $490,867 in 2001) 249,955 234,813
Other assets 587,403 598,732
------------ ------------
837,358 833,545
------------ ------------
$ 13,318,360 $ 14,814,645
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
- -------------------
Accounts payable $ 1,479,628 $ 1,422,332
Accrued liabilities 1,589,561 1,304,299
Notes payable -- 875,000
Advances on contracts in progress 107,362 466,513
------------ ------------
Total current liabilities 3,176,551 4,068,144
------------ ------------
Unearned purchase discount 1,478,102 1,478,102
Stockholders' equity
- --------------------
Common stock, $.01 par value; shares authorized 20,000,000;
issued 6,732,660 shares in 2002 and 6,732,660 shares in 2001 67,327 67,327
Additional paid-in capital 8,976,483 8,976,483
Retained earnings (deficit) (380,103) 224,589
------------ ------------
Total stockholders' equity 8,663,707 9,268,399
------------ ------------
$ 13,318,360 $ 14,814,645
============ ============
See accompanying notes to condensed consolidated financial statements.
3
SPIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
---------------------------------
2002 2001
------------ ------------
Net sales and revenues
- ----------------------
Contract research, service and license revenues $ 1,640,650 $ 1,251,200
Sales of goods 1,685,867 1,968,670
------------ ------------
Total sales and revenues 3,326,517 3,219,870
------------ ------------
Costs and expenses
- ------------------
Cost of contract research, services and licenses 1,185,394 786,811
Cost of goods sold 1,395,941 1,618,404
Selling, general and administrative expenses 1,296,694 1,394,252
Internal research and development 56,218 103,850
------------ ------------
Total costs and expenses 3,934,247 3,903,315
------------ ------------
Loss from operations (607,730) (683,445)
- -------------------- ------------ ------------
Interest income, net 3,038 79,953
------------ ------------
Loss before income taxes (604,692) (603,491)
------------ ------------
Net loss $ (604,692) $ (603,491)
- -------- ============ ============
Loss per share of common stock - basic $ (0.09) $ (0.09)
- -------------------------------------- ============ ============
Loss per share of common stock - diluted $ (0.09) $ (0.09)
- ---------------------------------------- ============ ============
Weighted average number of common and common
equivalent shares outstanding - basic 6,732,660 6,685,477
============ ============
Weighted average number of common and common
equivalent shares outstanding - diluted 6,732,660 6,685,477
============ ============
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,
-------------------------------
2002 2001
------------ ------------
Cash flows from operating activities:
Net loss $ (604,692) $ (603,491)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 197,631 120,735
Loss on sale and abandonment of assets -- 25,740
Changes in assets and liabilities (excluding the impact of assets sold):
Accounts receivable 249,324 547,355
Inventories (94,962) (98,492)
Prepaid expenses and other current assets (5,483) 60,614
Accounts payable and accrued liabilities 342,558 562,044
Advances on contracts in progress (359,151) (423,869)
------------ ------------
Net cash provided by (used in) operating activities (274,775) 190,636
------------ ------------
Cash flows from investing activities:
Additions to property and equipment (63,996) (98,709)
Increase in patent costs (17,197) (24,035)
Other assets 11,329 700
------------ ------------
Net cash used in investing activities (69,864) (122,044)
------------ ------------
Cash flows from financing activities:
Net (repayments) borrowings on short-term debt (875,000) 125,000
Exercise of stock options -- 7,672
------------ ------------
Net cash provided by (used in) financing activities (875,000) 132,672
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,219,639) 201,264
Cash and cash equivalents, beginning of period 5,582,884 7,463,382
------------ ------------
Cash and cash equivalents, end of period $ 4,363,245 $ 7,664,646
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 20,095 $ 18,443
============ ============
Income taxes $ -- $ 6,000
============ ============
See accompanying notes to condensed consolidated financial statements.
5
SPIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2002
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, 2002 and the results of
operations for the three months ended March 31, 2002 and 2001 and cash flows for
the three months ended March 31, 2002 and 2001. The results of operations for
the three months ended March 31, 2002 are not necessarily indicative of the
results to be expected for the fiscal year ending December 31, 2002.
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, 2001.
The financial statements, with the exception of the December 31, 2001
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,
2002 2001
------------ ------------
Raw materials $ 747,452 $ 859,114
Work in process 571,961 365,337
------------ ------------
$ 1,319,413 $ 1,224,451
============ ============
3. LOSS PER SHARE.
The following table provides a reconciliation of the denominators of the
Company's reported basic and diluted loss per share computations for the periods
ended:
Three Months Ended March 31,
-----------------------------
2002 2001
------------ ------------
Weighted average number of common
shares outstanding - basic 6,732,660 6,685,477
Add net additional common shares upon
exercise of common stock options -- --
------------ ------------
Adjusted weighted average common
shares outstanding - diluted 6,732,660 6,685,477
============ ============
At March 31, 2002 and 2001, 124,630 and 263,710 shares of common stock
issuable under stock options, respectively, were not included in the calculation
of diluted earnings per share because their 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 TOTAL
EQUIPMENT SYSTEMS DIVISION BIOPHOTONICS COMPANY
----------- ----------- ----------- ----------- -----------
For the Three Months Ended March 31, 2002
- -----------------------------------------
Net sales and revenues $ 1,155,869 $ 702,971 $ 1,254,987 $ 212,690 $ 3,326,517
Loss from operations (142,817) (290,565) (171,070) (3,278) (607,730)
For the Three Months Ended March 31, 2001
- -----------------------------------------
Net sales and revenues $ 2,112,956 $ 19,742 $ 883,855 $ 203,317 $ 3,219,870
Loss from operations (166,821) (211,301) (230,211) (75,111) (683,444)
5. OTHER INTANGIBLE ASSETS.
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets. The Company has adopted SFAS 142 as of January 1, 2002. SFAS
142 requires goodwill and intangible assets with indefinite lives to no longer
be amortized, but instead be tested for impairment at least annually. With the
adoption of SFAS 142, the Company reassessed the useful lives and residual
values of all acquired intangible assets to make any necessary amortization
period adjustments. Based on that assessment, no adjustments were made to the
amortization period or residual values of other intangible assets.
Other intangible assets amounted to $249,995 (net of accumulated
amortization of $492,922) and $234,813 (net of accumulated amortization of
$490,867) at March 31, 2002 and December 31, 2001, respectively. These
intangible assets primarily consist of patents that the Company had been awarded
and are amortized over their useful lives or their terms, principally five
years. There are no expected residual values related to these intangible assets.
Amortization expense for the three months ended March 31, 2002 was $2,055.
Estimated fiscal year amortization expense is as follows:
Year
------
2002 $ 8,390
2003 51,902
2004 51,731
2005 47,838
2006 45,421
7
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
ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2001.
Overview.
- --------
Spire Solar is a leading supplier of solar electric module manufacturing
equipment, turnkey production lines and solar energy businesses. The Company's
advanced module manufacturing equipment and turnkey production lines have been
installed in more than 140 factories in 39 countries.
Spire Biomedical, Inc., a wholly owned subsidiary of Spire Corporation,
provides premium medical products and biotechnology surface engineering services
for improving the performance of implantable 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,
----------------------
2002 2001
-------- --------
Net sales and revenues 100% 100%
Cost of sales and revenues 78 75
-------- --------
Gross profit 22 25
Selling, general and administrative expenses 39 43
Internal research and development 2 3
-------- --------
Loss from operations (18) (21)
Loss before income taxes (18) (19)
-------- --------
Net loss (18%) (19%)
======== ========
Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001.
- --------------------------------------------------------------------------------
NET SALES AND REVENUES
Net sales and revenues increased $107,000 or 3% for the three months ended
March 31, 2002 to $3,327,000, compared to $3,220,000 for the three months ended
March 31, 2001. Contract research, service and license revenues increased
$390,000 or 31% to $1,641,000 for the three months ended March 31, 2002 compared
to $1,251,000 for 2001. Sales of goods decreased $283,000 or 14% to $1,686,000
for 2002, compared to $1,969,000 for 2001.
The following table categorizes the Company's net sales and revenues for
the periods presented:
THREE MONTHS ENDED MARCH 31,
--------------------------------------
2002 2001 % CHANGE
---------- ---------- ----------
Contract research, service and license revenues $1,641,000 $1,251,000 31%
Sales of goods 1,686,000 1,969,000 (14%)
---------- ---------- ----------
Net sales and revenues $3,327,000 $3,220,000 3%
========== ========== ==========
The decrease in sales of goods for the three month period ended March 31,
2002 is primarily due to decreased sales of manufacturing equipment caused by
manufacturing cycles. The increase in contract research, service and license
8
revenues for the three month period ended March 31, 2002 is attributed to an
increase in the demand in the Company's biomedical processing services as well
as a growth in United States government research and development contracts.
COST OF SALES AND REVENUES
The cost of contract research, service and license revenues increased
$398,000 to $1,185,000, increasing to 72% of related revenues for the three
months ended March 31, 2002, compared to $787,000 or 63% of related revenues for
the three months ended March 31, 2001. The increase is due to a change in
product mix. Cost of goods sold decreased $222,000 to $1,396,000, but increased
to 83% of related sales, for the three months ended March 31, 2002, compared to
$1,618,000 or 82% of related sales for the three months ended March 31, 2001,
due to lower volume. The cost of sales and revenues increased $176,000 to
$2,581,000, and increased to 78% of net sales and revenues, for the quarter
ended March 31, 2002, compared to $2,405,000 or 75% of net cost of sales and
revenues for the quarter ended March 31, 2001.
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,
-------------------------------------------
2002 % 2001 %
------------ ----- ------------ -----
Cost of contract research, service and license revenues $ 1,185,000 72% $ 787,000 63%
Cost of goods sold 1,396,000 83% 1,618,000 82%
------------ ------------
Total cost of sales and revenues $ 2,581,000 78% $ 2,405,000 75%
============ ============
INTERNAL RESEARCH AND DEVELOPMENT
Internal research and development for the three months ended March 31, 2002
decreased $48,000 or 46% to $56,000, compared to $104,000 for the three months
ended March 31, 2001. The Company decreased spending on its catheter development
program, while waiting for FDA approval.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended
March 31, 2002 decreased $97,000 to $1,297,000, and decreased to 39% of sales
and revenues, compared to $1,394,000 or 43% of sales and revenues for the three
months ended March 31, 2001. 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, and lower selling cost.
INTEREST
The Company earned $23,000 of interest income for the quarter ended March
31, 2002, compared to $100,000 of interest income for the quarter ended March
31, 2001. The Company incurred interest expense of $20,000 for the quarter ended
March 31, 2002 of which none was capitalized, compared to $20,000 in the first
quarter of 2001 of which none was capitalized. The decline of interest income is
due to the Company's utilization of available cash to fund operations.
NET LOSS
The Company reported a net loss for the quarter ended March 31, 2002 of
$605,000, compared to a net loss of $603,000 for the quarter ended March 31,
2001. The loss for the quarter is attributed to the Company's investment in its
catheter product as well as manufacturing cycles in its photovoltaic equipment
business.
Liquidity and Capital Resources.
- -------------------------------
To date the Company has been able to fund its operating cash requirements
by using proceeds from sale of assets, operations and available lines of credit.
On July 25, 2000, the Company entered into a new revolving credit agreement with
the Silicon Valley Bank. The Agreement was amended in January 2002 due to the
Company's violation of certain financial covenants, and the line of credit was
extended until April 2002. The Company has negotiated an amendment to extend the
9
agreement until April 2003. The agreement provides for a $2 million revolving
credit facility, based upon eligible accounts receivable requirements. The line
of credit provides 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, 2002, interest on the line
was at the Bank's prime rate plus 1/2 percent. The line contains covenants
including provisions relating to profitability and net worth. Borrowings on the
line are classified as a current liability. As of March 31, 2002, the Company
had no outstanding debt 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
$1,220,000 to $4,363,000 at March 31, 2002 from $5,583,000 at December 31, 2001.
To date, there are no material commitments by the Company for capital
expenditures. At March 31, 2002, the Company's retained deficit was $380,000,
compared to retained earnings of $225,000 as of December 31, 2001. Working
capital as of March 31, 2002 decreased 7% to $6,283,000, from $6,759,000 as of
December 31, 2001.
Recent Accounting Pronouncements.
- --------------------------------
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, which requires that the purchase method of accounting be used for
business combinations initiated after June 30, 2001. The adoption of SFAS 141
did not have any impact on the results of operations and financial position of
the Company.
In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. The Company has adopted SFAS 142 as of January 1, 2002. SFAS 142
requires goodwill and intangible assets with indefinite lives to no longer be
amortized, but instead be tested for impairment at least annually. With the
adoption of SFAS 142, the Company reassessed the useful lives and residual
values of all acquired intangible assets to make any necessary amortization
period adjustments. Based on that assessment, no adjustments were made to the
amortization period or residual values of other intangible assets.
SFAS No. 143, "Accounting For Asset Retirement Obligations", 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.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets", 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 adoption of SFAS 144 did not 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 and solar systems 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.
Foreign Exchange Fluctuation.
- ----------------------------
The Company sells only in U.S. dollars, generally against an irrevocable
confirmed letter of credit through a major United States 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.
10
Related Party Transactions.
- --------------------------
The Company subleases 74,000 square feet in a building from Mykrolis
Corporation (a subsidiary of Millipore Corporation), which leases the building
from a Trust of which Roger G. Little, Chief Executive Officer, is sole trustee
and principal beneficiary. The Company believes that the terms of the sublease
are commercially reasonable. The 1985 sublease originally was for a period of
ten years, was extended for a five-year period expiring on November 30, 2000 and
was further extended for a five-year period expiring on November 30, 2005. The
agreement provides for minimum rental payments plus annual increases linked to
the consumer price index. Total rent expense under this sublease was $999,000 in
2001. This amount does not take into account rent received by the Company for
subleasing approximately 22,000 square feet of its 74,000 square feet to the
purchaser of the Company's optoelectronics business.
Critical Accounting Policy - Revenue Recognition.
- ------------------------------------------------
The Company derives its revenues from three primary sources: 1) sales of
solar energy manufacturing equipment and solar energy systems; 2) biomedical
processing services; and 3) U.S. government funded research and development
contracts.
The Company's OEM capital equipment solar energy business builds complex
customized machines to order for specific customers. Substantially all of these
orders are sold on a FOB Bedford, Massachusetts basis. It is the Company's
policy to recognize revenues for this equipment as the product is shipped to the
customer as customer acceptance is obtained prior to shipment and the equipment
is expected to operate the same in the customer's environment as it does in the
Company's. When an arrangement with the customer includes future obligations or
customer acceptance, revenue is recognized when those obligations are met or
customer acceptance has been achieved. The Company's solar energy systems
business installs solar energy systems on customer owned properties on a
contractual basis. Generally, revenue is recognized once the systems have been
installed and the title is passed to the customer. For arrangements with a
number of elements, the Company allocates fair value to each element based on
rates quoted in the contract and revenue is recognized upon delivery of the
element. The Company's biomedical subsidiary performs surface engineering
services to various medical device manufacturers on a contractual basis. The
Company recognizes revenue as the products are shipped back to the customer. The
Company recognizes revenues and estimated profits on long term government
contracts on a percentage of completion method of accounting using a cost to
cost methodology. Profit estimates are revised periodically based upon changes
and facts, and any losses on contracts are recognized immediately. Some of the
contracts include provisions to withhold a portion of the contract value as
retainage until such time as the U.S. Government performs an audit of the cost
incurred under the contract. The Company's policy is to take into revenue the
full value of the contract, including any retainage, as it performs against the
contract since the Company has not experienced any substantial losses as a
result of an audit performed by the Government.
Contractual Obligations and Commercial Commitments.
- --------------------------------------------------
The following table summarizes the Company's contractual obligations at
March 31, 2002 and the maturity periods and the effect that such obligations are
expected to have on its liquidity and cash flows in future periods:
PAYMENTS DUE BY PERIOD
------------------------------------------------------------------
LESS THAN AFTER
CONTRACTUAL OBLIGATION TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS 5 YEARS
------------------------------- ---------- ---------- ---------- ---------- ----------
Notes payable $ -- $ -- $ -- $ -- $ --
Non-cancelable operating leases 4,845,000 1,262,000 2,408,000 1,175,000 --
Standby letters of credit 61,750 61,750 -- -- --
---------- ---------- ---------- ---------- ----------
Total commercial commitments $4,906,750 $1,323,750 $2,408,000 $1,175,000 --
========== ========== ========== ========== ==========
On October 8, 1999, the Company entered into an Agreement with BP Solarex
("BPS") in which BPS agreed to purchase certain production equipment built by
the Company, for use in the Company's Chicago factory and in return the Company
agreed to purchase solar cells of a minimum of 2 megawatts per year over a
five-year term. BPS has the right to repossess the equipment should the Company
not purchase its committed quantity. The proceeds from the sale of the
production equipment purchased by BPS have been classified as an unearned
purchase discount in the accompanying balance sheet. The Company will amortize
this discount as a reduction to cost of sales as it purchases solar cells from
BPS which amounted to zero during the quarter ended March 31, 2002.
11
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
--------
No exhibits are filed herewith.
b. Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed by the Registrant in the quarter
ended March 31, 2002.
12
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 2002 By: /s/ Roger G. Little
- ----------------- ----------------------------------
Date Roger G. Little
President, Chief Executive Officer
and Chairman of the Board
15 May 2002 By: /s/ Richard S. Gregorio
- ----------------- ----------------------------------
Date Richard S. Gregorio
Vice President and Chief Financial
Officer, Treasurer, Clerk and
Principal Accounting Officer
13