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