================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


          |X|  Quarterly Report Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934
               For the quarterly period ended September 30, 2008; 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
--------------------------------------------------------------------------------
             (Exact name of registrant 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
-----------------------------------------                      ----------
(Address of principal executive offices)                       (Zip Code)


                                  781-275-6000
               ---------------------------------------------------
               (Registrant's telephone number including area code)




       Indicate by "X" whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [_]

       Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

       Large accelerated filer  [_]             Accelerated filer         [_]
       Non-accelerated filer    [_]             Smaller reporting company [X]
       (Do not check if a smaller
       reporting company)

       Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).  Yes [_]    No [X]

       The number of shares of the registrant's common stock outstanding as of
November 5, 2008 was 8,330,688.

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<PAGE>
                                TABLE OF CONTENTS


<TABLE><CAPTION>
<S>                                                                                                     <C>
                                                                                                        Page
                                                                                                        ----

Explanatory Note  .....................................................................................    1


PART I.    FINANCIAL INFORMATION

Item 1.    Unaudited Condensed Consolidated Financial Statements:

           Unaudited Condensed Consolidated Balance Sheets as of September 30, 2008 and
           December 31, 2007 (as restated)  ...........................................................    2

           Unaudited Condensed Consolidated Statements of Operations for the Three and Nine
           Months Ended September 30, 2008 and 2007  ..................................................    3

           Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
           September 30, 2008 and 2007  ...............................................................    4

           Notes to Unaudited Condensed Consolidated Financial Statements  ............................    5

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations  ......  15

Item 3.    Quantitative and Qualitative Disclosures About Market Risk  .................................  25

Item 4T.   Controls and Procedures  ....................................................................  26



PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings  ..........................................................................  28

Item 1A.   Risk Factors ................................................................................  28

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds   ...............................  29

Item 3.    Defaults Upon Senior Securities  ............................................................  29

Item 4.    Submission of Matters to a Vote of Security Holders  ........................................  29

Item 5.    Other Information  ..........................................................................  29

Item 6.    Exhibits  ...................................................................................  29

           Signatures  .................................................................................  30
</TABLE>


<PAGE>
                                EXPLANATORY NOTE

      In November 2008, our management notified the Audit Committee of the Board
of Directors over a concern  relating to the timing of revenue  recognition with
respect to a single  contract  with one  customer  that we  recognized  in prior
periods.  Management  determined  that this  customer was provided a concession,
which was  previously  undisclosed  and  undocumented,  with  respect to upgrade
rights to a specific tool sold in  conjunction  with a module line  delivered to
this  customer.  As the  upgrade  was not  available  for sale at the time  when
certain  elements of the contract were  recognized,  management  determined that
revenue for the entire  contract should have been deferred until the upgrade was
provided to the customer.  Management  informed both the Audit Committee and our
independent   registered   public   accounting  firm  when  the  concession  was
discovered. Management in concert with the Audit Committee initiated an internal
review of other solar equipment  contracts to determine if other  concessions or
side  arrangements  were timely  conveyed,  such that revenue was  appropriately
recognized.  The review revealed that,  except for the one contract in question,
all customer  concessions and modifications  were conveyed on a timely basis and
revenue was  appropriately  recorded in all other cases  during the period under
review.

      On  November  18,  2008,  as a result of these  investigations,  the Audit
Committee  concluded,  in  consultation  with  and upon  the  recommendation  of
management,  that the  previously  issued  financial  statements  for the fourth
quarter  and fiscal  2007  included  in our  Annual  Report on Form 10-K for the
fiscal year ended December 31, 2007 and previously  issued financial  statements
included in our  Quarterly  Reports on Form 10-Q for the fiscal  quarters  ended
March 31, 2008 and June 30, 2008 and the related  earnings  releases and similar
communications  relating to all such fiscal periods,  should no longer be relied
upon. Specifically,  adjustments needed to be made in the fourth quarter of 2007
and the first quarter of 2008.

      We have recorded adjustments affecting our  previously-reported  financial
statements  for the fourth  quarter  of 2007 and for the first  quarter of 2008.
This Quarterly  Report on Form 10-Q is inclusive of all  adjustments  related to
the restatements in the fourth quarter of 2007 and first quarter of 2008.

      We are recording adjustments affecting our  previously-reported  financial
statements for the fourth quarter of 2007 and for the first quarter of 2008, the
cumulative effects of which are summarized in the table below.


CUMULATIVE EFFECT OF ADJUSTMENTS ON ACCUMULATED DEFICIT

      The  following  table  presents  the  cumulative   effect  of  adjustments
resulting from the reviews described above for the periods shown.


                                                   Year Ended      Quarter Ended
                                                  December 31,       March 31,
                                                      2007             2008
                                                  ------------     ------------
                                                         As Restated (1)
                                                  -----------------------------
      Net loss as originally reported             $ (1,686,000)    $   (508,000)
      Adjustments related to:
          Revenue recognition                       (1,355,000)        (380,000)
          Cost of goods sold                         1,108,000          365,000
                                                  ------------     ------------
      Net adjustments                                 (247,000)         (15,000)
                                                  ------------     ------------
      Net loss as restated                        $ (1,933,000)    $   (523,000)
                                                  ============     ============
      Cumulative effect to accumulated deficit    $    247,000     $    262,000
                                                  ============     ============

(1) See Note 2, to the Unaudited Condensed Consolidated Financial Statements
included in Part I, Item 1.


                                        1
<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.   UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SPIRE CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE><CAPTION>
                                                                    September 30,     December 31,
                                                                        2008              2007
                                                                                     As Restated (1)
                                                                    ------------      ------------
<S>                                                                 <C>               <C>
                                       ASSETS

Current assets
--------------
   Cash and cash equivalents                                        $  2,309,000      $  2,372,000
   Restricted cash - current portion                                     161,000           391,000
                                                                    ------------      ------------
                                                                       2,470,000         2,763,000

   Accounts receivable - trade, net                                   16,399,000        11,865,000
   Inventories, net                                                   15,900,000        11,570,000
   Deferred cost of goods sold                                        18,788,000         8,044,000
   Deposits on equipment for inventory                                 1,603,000         2,475,000
   Prepaid expenses and other current assets                             456,000           542,000
                                                                    ------------      ------------
       Total current assets                                           55,616,000        37,259,000

Property and equipment, net                                            6,175,000         6,209,000

Intangible and other assets, net                                         873,000           851,000
Available-for-sale investments, at quoted market value
   (cost of $1,637,000 and $1,696,000 at 9/30/08 and
   12/31/07, respectively)                                             1,454,000         1,800,000
Equity investment in joint venture                                     1,866,000         2,264,000
Deposit - related party                                                  300,000           304,000
                                                                    ------------      ------------
       Total other assets                                              4,493,000         5,219,000
                                                                    ------------      ------------
       Total assets                                                 $ 66,284,000      $ 48,687,000
                                                                    ============      ============



                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
-------------------
   Current portion of capital lease obligation - related party      $         --      $    486,000
   Current portion of equipment line of credit                         1,167,000         1,167,000
   Accounts payable                                                    6,009,000         2,909,000
   Accrued liabilities                                                 6,978,000         6,057,000
   Current portion of advances on contracts in progress               39,845,000        24,053,000
                                                                    ------------      ------------
       Total current liabilities                                      53,999,000        34,672,000

Long-term portion of equipment line of credit                            875,000         1,750,000
Long-term portion of advances on contracts in progress                 1,281,000         1,950,000
Deferred compensation                                                  1,454,000         1,800,000
Other long-term liabilities                                              197,000            60,000
                                                                    ------------      ------------
   Total long-term liabilities                                         3,807,000         5,560,000
                                                                    ------------      ------------
       Total liabilities                                              57,806,000        40,232,000
                                                                    ------------      ------------

Stockholders' equity
--------------------
   Common stock, $0.01 par value; 20,000,000 shares authorized;
       8,330,688 and 8,321,188 shares issued and outstanding at
       September 30, 2008 and December 31, 2007, respectively             83,000            83,000
   Additional paid-in capital                                         20,614,000        19,999,000
   Accumulated deficit                                               (12,036,000)      (11,689,000)
   Accumulated other comprehensive income (loss), net                   (183,000)           62,000
                                                                    ------------      ------------
       Total stockholders' equity                                      8,478,000         8,455,000
                                                                    ------------      ------------
       Total liabilities and stockholders' equity                   $ 66,284,000      $ 48,687,000
                                                                    ============      ============
</TABLE>
----------------
(1) See Note 2.

                       See accompanying notes to unaudited
                  condensed consolidated financial statements.

                                        2
<PAGE>
                       SPIRE CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE><CAPTION>
                                                              THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                       SEPTEMBER 30,
                                                        ------------------------------      ------------------------------
                                                            2008              2007              2008              2007
                                                        ------------      ------------      ------------      ------------
<S>                                                     <C>               <C>               <C>               <C>
Net sales and revenues
----------------------
   Sales of goods                                       $ 13,697,000      $  6,343,000      $ 38,202,000      $ 16,782,000
   Contract research, service and license revenues         3,839,000         3,502,000        10,757,000         8,639,000
                                                        ------------      ------------      ------------      ------------
       Total net sales and revenues                       17,536,000         9,845,000        48,959,000        25,421,000
                                                        ------------      ------------      ------------      ------------

Costs of sales and revenues
---------------------------
   Cost of goods sold                                      8,777,000         6,062,000        26,339,000        14,801,000
   Cost of contract research, services and licenses        2,794,000         2,363,000         7,510,000         6,813,000
                                                        ------------      ------------      ------------      ------------
       Total cost of sales and revenues                   11,571,000         8,425,000        33,849,000        21,614,000

Gross margin                                               5,965,000         1,420,000        15,110,000         3,807,000

Operating expenses
------------------
   Selling, general and administrative expenses            5,242,000         3,388,000        14,017,000         9,252,000
   Internal research and development expenses                200,000            96,000           482,000           219,000
                                                        ------------      ------------      ------------      ------------
       Total operating expenses                            5,442,000         3,484,000        14,499,000         9,471,000
                                                        ------------      ------------      ------------      ------------
Gain on sale of trademark                                         --         2,707,000                --         2,707,000
                                                        ------------      ------------      ------------      ------------

Income (loss) from operations                                523,000           643,000           611,000        (2,957,000)
-----------------------------

Interest income (expense), net                               (49,000)          (83,000)         (157,000)          (80,000)
Loss on equity investment in joint venture                   (45,000)               --          (409,000)               --
Foreign exchange gain (loss)                                  16,000                --          (392,000)          (14,000)
                                                        ------------      ------------      ------------      ------------
Other income (expense), net                                  (78,000)          (83,000)         (958,000)          (94,000)
                                                        ------------      ------------      ------------      ------------
Income (loss) before income taxes and
-------------------------------------
  extraordinary gain                                         445,000           560,000          (347,000)       (3,051,000)
  ------------------

Income tax benefit                                                --           884,000                --           884,000
                                                        ------------      ------------      ------------      ------------
Income (loss) before extraordinary gain                      445,000         1,444,000          (347,000)       (2,167,000)
---------------------------------------

Extraordinary gain on equity investment in
   joint venture, net of tax                                      --         1,311,000                --         1,311,000
                                                        ------------      ------------      ------------      ------------
Net income (loss)                                       $    445,000      $  2,755,000      $   (347,000)     $   (856,000)
-----------------                                       ============      ============      ============      ============

Basic income (loss) per share:
   From continuing operations after income taxes        $       0.05      $       0.17      $      (0.04)     $      (0.26)
   From extraordinary gain, net of tax                            --              0.16                --              0.16
                                                        ------------      ------------      ------------      ------------
   Basic income (loss) per share                        $       0.05      $       0.33      $      (0.04)     $      (0.10)
   -----------------------------                        ============      ============      ============      ============

Diluted income (loss) per share:
   From continuing operations after income taxes        $       0.05      $       0.17      $      (0.04)     $      (0.26)
   From extraordinary gain, net of tax                            --              0.16                --              0.16
                                                        ------------      ------------      ------------      ------------
   Diluted income (loss) per share                      $       0.05      $       0.33      $      (0.04)     $      (0.10)
   -------------------------------                      ============      ============      ============      ============

Weighted average number of common and common
   equivalent shares outstanding - basic                   8,330,688         8,272,543         8,327,889         8,261,030
                                                        ============      ============      ============      ============
Weighted average number of common and common
   equivalent shares outstanding - diluted                 8,425,059         8,341,642         8,327,889         8,261,030
                                                        ============      ============      ============      ============
</TABLE>

                       See accompanying notes to unaudited
                  condensed consolidated financial statements.

                                        3
<PAGE>
                       SPIRE CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>
                                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                                                ------------------------------
                                                                                    2008              2007
                                                                                ------------      ------------
<S>                                                                             <C>               <C>
Cash flows from operating activities:
-------------------------------------
   Net loss                                                                     $   (347,000)     $   (856,000)
   Adjustments to reconcile net loss to net cash provided by
  (used in) operating activities:
       Depreciation and amortization                                               1,490,000         1,534,000
       Loss on impairment of capital equipment                                            --            78,000
       Loss on equity investment in joint venture                                    409,000                --
       Gain on sale of trademark                                                          --        (2,707,000)
       Gain on sale of asset                                                         (60,000)               --
       Deferred taxes benefit                                                             --          (884,000)
       Extraordinary gain on equity investment in joint venture, net of tax               --        (1,311,000)
       Deferred compensation                                                        (245,000)           67,000
       Stock-based compensation                                                      594,000           389,000
       Increase (decrease)  in accounts receivable reserves                          215,000           (42,000)
       Decrease in inventory reserves                                               (103,000)         (134,000)
       Changes in assets and liabilities:
         Restricted cash                                                             230,000          (122,000)
         Accounts receivable                                                      (4,749,000)       (7,558,000)
         Inventories                                                              (4,238,000)      (13,423,000)
         Deferred cost of goods sold                                             (10,744,000)         (638,000)
         Deposits, prepaid expenses and other current assets                         958,000        (2,196,000)
         Accounts payable, accrued liabilities and other liabilities               4,158,000         5,721,000
         Deposit - related party                                                       4,000           (67,000)
         Advances on contracts in progress                                        15,123,000        15,980,000
                                                                                ------------      ------------
           Net cash provided by (used in) operating activities                     2,695,000        (6,169,000)
                                                                                ------------      ------------

Cash flows from investing activities:
-------------------------------------
   Proceeds from maturity of short-term investments                                       --         5,000,000
   Proceeds from sale of trademark                                                        --         2,707,000
   Proceeds from sale of asset                                                        61,000                --
   Purchase of property and equipment                                             (1,385,000)         (822,000)
   Increase in intangible and other assets                                           (94,000)         (107,000)
                                                                                ------------      ------------
           Net cash (used in) provided by investing activities                    (1,418,000)        6,778,000
                                                                                ------------      ------------

Cash flows from financing activities:
-------------------------------------
   Principal payments on capital lease obligations - related parties                (486,000)         (734,000)
   Borrowings from (principal payments on) equipment line of credit, net            (875,000)        3,209,000
   Proceeds from exercise of stock options                                            21,000           184,000
                                                                                ------------      ------------
           Net cash (used in) provided by financing activities                    (1,340,000)        2,659,000
                                                                                ------------      ------------

Net (decrease) increase in cash and cash equivalents                                 (63,000)        3,268,000
Cash and cash equivalents, beginning of period                                     2,372,000         1,536,000
                                                                                ------------      ------------
Cash and cash equivalents, end of period                                        $  2,309,000      $  4,804,000
                                                                                ============      ============

Supplemental disclosures of cash flow information:
--------------------------------------------------
   Interest received                                                            $     12,000      $     58,000
                                                                                ============      ============
   Interest paid                                                                $    161,000      $     74,000
                                                                                ============      ============
   Interest paid - related party                                                $      8,000      $     64,000
                                                                                ============      ============
   Income taxes paid                                                            $         --      $      7,000
                                                                                ============      ============
</TABLE>
                       See accompanying notes to unaudited
                  condensed consolidated financial statements.

                                        4
<PAGE>
                       SPIRE CORPORATION AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2008 AND 2007


1.       DESCRIPTION OF THE BUSINESS

         Spire  Corporation  ("Spire"  or  the  "Company")  is  a  Massachusetts
corporation incorporated in 1969. The Company's principal offices are located at
One  Patriots  Park,  Bedford,  Massachusetts,  and its  phone  number  is (781)
275-6000.   The  Company's  SEC  filings  are  available  through  its  website,
www.spirecorp.com. The Company's common stock trades on the Nasdaq Global Market
under the symbol "SPIR".

         The Company principally  develops,  manufactures and markets customized
turnkey solutions for the solar industry,  including manufacturing equipment and
full turnkey lines for cell and module production and testing.  The Company also
offers  through  its  subsidiary  Spire  Semiconductor   concentrator  cell  and
light-emitting diode ("LED") fabrication services and through its joint venture,
Gloria Spire Solar, photovoltaic ("PV") system integration services. The Company
also  operates  a  line  of  business   associated   with  advanced   biomedical
applications.  The foundation for the Company's business is its industry-leading
expertise in materials  technologies  and surface  treatments;  this proprietary
knowledge  enables  the  Company  to  further  develop  its  offerings  in solar
equipment, optoelectronics and biomedical products and services.

         In the PV solar area, the Company  develops,  manufactures  and markets
specialized  equipment for the  production of terrestrial  photovoltaic  modules
from solar cells.  The Company's  equipment has been installed in  approximately
190 factories in 50 countries.

         In addition to the Company's cell and module  manufacturing  solutions,
it has a device fabrication facility where it produces,  under contract with its
customers,  gallium  arsenide (GaAs)  concentrator  cells.  Under the name Spire
Semiconductor,  this division produces GaAs concentrator cells, high performance
LEDs,  and  other  custom  semiconductor  foundry  services  for  the  Company's
customers.

         In the  biomedical  area,  the  Company  provides  value-added  surface
treatments to manufacturers of orthopedic and other medical devices that enhance
the durability,  antimicrobial characteristics or other material characteristics
of their  products;  develops  and  markets  coated  and  uncoated  hemodialysis
catheters and related devices for the treatment of chronic kidney  disease;  and
performs  sponsored  research  programs into practical  applications of advanced
biomedical and biophotonic technologies.

         In July 2007,  the Company  entered  into a joint  venture  with Gloria
Solar Co., Ltd., a leading module manufacturer in Taiwan,  which designs,  sells
and manages  installations of photovoltaic  systems. The Company's 45% ownership
stake in the joint venture,  Gloria Spire Solar,  LLC, was obtained  through the
contribution  of its  integrated  photovoltaic  business to Gloria  Solar.  This
transaction  has allowed the Company to focus more of its  attention on its core
solar  business,  while  continuing  to  expand  the  Spire  brand  name  in the
marketplace.

         The  Company has been in the solar  business  for over 30 years and has
been active in  research  and  development  in the solar  space,  with over $100
million of research and  development  conducted which has led to over 60 patents
granted to date, as well as cell and module production, having been a pioneer in
the early  development  of solar  technology.  This  expertise  has provided the
platform and expertise for the Company's manufacturing equipment.

         Operating  results  depend upon revenue growth and product mix, as well
as the timing of shipments of higher priced  products  from the Company's  solar
equipment  line.  Export sales,  which amounted to 60% of net sales and revenues
for the quarter ended  September 30, 2008,  continue to constitute a significant
portion of the Company's net sales and revenues.

         The Company has incurred significant operating losses in 2007 and 2006.
Loss from operations,  before gain on sales of trademarks,were  $6.7 million and
$8.3 million in 2007 and 2006, respectively. Income from operations for the nine
months ended  September 30, 2008 was $611,000.  Previous  losses from operations
have resulted in cash losses (loss from  operations  excluding  gain on sales of
trademark plus or minus non-cash  adjustments) of approximately $6.1 million and
$5.4 million in 2007 and 2006,  respectively.  The Company has funded these cash
losses  from cash  receipts of $4.0  million  from the sale of a solar PV module
line along with the transfer of  technology  and rights to mark the modules with
the  Company's  trademark to the joint venture in 2007 and $7.7 million from the
sale of equity in 2006.  For the nine months ended  September 30, 2008, the cash
gain (income from operations plus or minus non-cash adjustments) was $2,971,000.
As of September 30, 2008, the Company had unrestricted cash and cash equivalents
of $2.3  million  compared to  unrestricted  cash and cash  equivalents  of $2.4
million as of December  31, 2007.  While the Company has had positive  cash flow
from  operations for the past four quarters,  the Company has a net loss for the
nine months ended September 30, 2008.  While the Company has numerous options on
how to fund these  losses,  including  but not limited to sales of equity or the
sale or license of assets and technology, just as it has done the past; however,
there are no assurances that the Company would be able to sell equity or sell or
license those assets on a timely basis and at  appropriate  values.  The Company
has developed  several plans to mitigate cash losses  primarily  from  increased
revenues  and,  if  required,  potential  cost  reduction  efforts  and  outside
financing.  As a result,  the Company  believes it has  sufficient  resources to
continue as a going concern through at least September 30, 2009.

                                        5
<PAGE>
2.       RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

BACKGROUND OF THE RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND
REMEDIAL MEASURES.

REVIEW OF ACCOUNTING FOR PHOTOVOLTAIC MODULE EQUIPMENT TRANSACTIONS

         In November  2008,  management,  in concert  with the Audit  Committee,
commenced a review of the revenue  recognized  during the fourth quarter of 2007
and the first  quarter  of 2008 with  respect  to a single  contract  due to the
existence of a previously  undisclosed  and  undocumented  side  agreement.  The
Company also conducted an internal review of other solar equipment  contracts to
determine if other  concessions or side  agreements  were granted and not timely
conveyed such that revenue could be appropriately recognized.

         The  Company  conducted  a review  of the solar  equipment  contracting
process  and  order  management   activity,   including  a  review  of  contract
modifications.  The results of this review  revealed that during the fulfillment
of several customer orders,  concessions and contract modifications were made in
the ordinary course of business to reflect changing facts and  circumstances but
that  these  changes  were  appropriately  communicated  and  recorded.  It  was
determined  that the  identified  contract was the only  instance  where revenue
recognition  requirements  were  not  met  at the  time  revenue  was  initially
recognized. As a result, the Company has recorded adjustments to both the fourth
quarter  of 2007  and the  first  quarter  of 2008,  by  reversing  the  revenue
recognized  and  associated  costs of goods sold  previously  recorded  in those
periods.  The revenue  associated  with this contract will be deferred until the
remaining undelivered element is supplied to the customer. These adjustments are
summarized below, and generally have the effect of deferring revenue and related
cost of goods sold, previously recognized until later periods.

CUMULATIVE EFFECT OF ADJUSTMENTS ON ACCUMULATED DEFICIT

         The  following  table  presents the  cumulative  effect of  adjustments
resulting from the reviews described above for the periods shown.

                                                     Year Ended   Quarter Ended
                                                    December 31,     March 31,
                                                        2007           2008
                                                    ------------   ------------
                                                            As Restated
                                                    ---------------------------

         Net loss as originally reported            $ (1,686,000)  $   (508,000)
         Adjustments related to:
             Revenue recognition                      (1,355,000)      (380,000)
             Cost of goods sold                        1,108,000        365,000
                                                    ------------   ------------
         Net adjustments                                (247,000)       (15,000)
                                                    ------------   ------------
         Net loss as restated                       $ (1,933,000)  $   (523,000)
                                                    ============   ============
         Cumulative effect to accumulated deficit   $    247,000   $    262,000
                                                    ============   ============






                                        6
<PAGE>
         The tables below set forth the effect of the adjustments as of December
31, 2007, as applicable:

                       SPIRE CORPORATION AND SUBSIDIARIES
                      RESTATED CONSOLIDATED BALANCE SHEETS
<TABLE><CAPTION>
                                                                             December 31, 2007
                                                                       ------------------------------
                                                                        As Reported       As Restated
                                                                       ------------      ------------
<S>                                                                    <C>               <C>
                                         ASSETS
Current assets
--------------
   Cash and cash equivalents                                           $  2,372,000      $  2,372,000
   Restricted cash - current portion                                        391,000           391,000
                                                                       ------------      ------------
                                                                          2,763,000         2,763,000

   Accounts receivable - trade, net                                      12,766,000        11,865,000
   Inventories, net                                                      18,506,000        11,570,000
   Deferred cost of goods sold                                                   --         8,044,000
   Deposits on equipment for inventory                                    2,475,000         2,475,000
   Prepaid expenses and other current assets                                542,000           542,000
                                                                       ------------      ------------
       Total current assets                                              37,052,000        37,259,000

Property and equipment, net                                               6,209,000         6,209,000

Intangible and other assets, net                                            851,000           851,000
Available-for-sale investments, at quoted market value (cost of
   $1,696,000 at 12/31/07)                                                1,800,000         1,800,000
Equity investment in joint venture                                        2,264,000         2,264,000
Deposit - related party                                                     304,000           304,000
                                                                       ------------      ------------
       Total other assets                                                 5,219,000         5,219,000
                                                                       ------------      ------------
       Total assets                                                    $ 48,480,000      $ 48,687,000
                                                                       ============      ============


                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
-------------------
   Current portion of capital lease obligation - related party         $    486,000      $    486,000
   Current portion of equipment line of credit                            1,167,000         1,167,000
   Accounts payable                                                       2,909,000         2,909,000
   Accrued liabilities                                                    6,057,000         6,057,000
   Current portion of advances on contracts in progress                  23,599,000        24,053,000
                                                                       ------------      ------------
       Total current liabilities                                         34,218,000        34,672,000

Long-term portion of equipment line of credit                             1,750,000         1,750,000
Long-term portion of advances on contracts in progress                    1,950,000         1,950,000
Deferred compensation                                                     1,800,000         1,800,000
Other long-term liabilities                                                  60,000            60,000
                                                                       ------------      ------------
       Total long-term liabilities                                        5,560,000         5,560,000
                                                                       ------------      ------------
       Total liabilities                                                 39,778,000        40,232,000
                                                                       ------------      ------------

Stockholders' equity
--------------------
   Common stock, $0.01 par value; 20,000,000 shares authorized;
      8,321,188 shares issued and outstanding on December 31, 2007           83,000            83,000
   Additional paid-in capital                                            19,999,000        19,999,000
   Accumulated deficit                                                  (11,442,000)      (11,689,000)
   Accumulated other comprehensive income, net                               62,000            62,000
                                                                       ------------      ------------
       Total stockholders' equity                                         8,702,000         8,455,000
                                                                       ------------      ------------
       Total liabilities and stockholders' equity                      $ 48,480,000      $ 48,687,000
                                                                       ============      ============
</TABLE>

                                        7
<PAGE>
3.       INTERIM FINANCIAL STATEMENTS

         The accompanying  unaudited condensed consolidated financial statements
have  been  prepared  in  accordance  with  the  rules  and  regulations  of the
Securities  and  Exchange  Commission  regarding  interim  financial  reporting.
Certain information and footnote  disclosures  normally included in consolidated
financial statements prepared in accordance with accounting principles generally
accepted  in the United  States of  America  have been  condensed  or omitted in
accordance  with  such  rules  and   regulations.   These  unaudited   condensed
consolidated  financial statements should be read in conjunction with the annual
audited  consolidated  financial statements and notes thereto for the year ended
December 31, 2007,  included in the  Company's  Annual Report on Form 10-K filed
with the Securities and Exchange Commission.

         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, 2008 and December
31, 2007 and the results of its operations and cash flows for the three and nine
months ended  September  30, 2008 and 2007.  The results of  operations  for the
three and nine months ended September 30, 2008 are not necessarily indicative of
the results to be expected for the fiscal year ending  December  31,  2008.  The
condensed  consolidated  balance  sheet as of December 31, 2007 has been derived
from audited financial statements as of that date.

         The  accounting  policies  followed  by the  Company  are set  forth in
Footnote 3 to the  Company's  consolidated  financial  statements  in its Annual
Report on Form 10-K/A for the year ended December 31, 2007.

New Accounting Pronouncements
-----------------------------

         In December 2007,  the Financial  Accounting  Standards  Board ("FASB")
issued  Statement  of  Financial  Accounting  Standards  ("SFAS") No. 141R ("FAS
141R"),  BUSINESS  COMBINATIONS,  which  revises  FAS 141 and  changes  multiple
aspects of the accounting for business  combinations.  Under the guidance in FAS
141R,  the  acquisition  method must be used,  which  requires  the  acquirer to
recognize  most  identifiable   assets  acquired,   liabilities   assumed,   and
non-controlling  interests  in the  acquiree  at their  full  fair  value on the
acquisition   date.   Goodwill  is  to  be  recognized  as  the  excess  of  the
consideration  transferred plus the fair value of the  non-controlling  interest
over the fair values of the identifiable net assets acquired. Subsequent changes
in the fair value of contingent  consideration  classified as a liability are to
be recognized in earnings,  while contingent  consideration classified as equity
is not to be  re-measured.  Costs such as  transaction  costs are to be excluded
from acquisition  accounting,  generally  leading to recognizing  expense,  and,
additionally,   restructuring  costs  that  do  not  meet  certain  criteria  at
acquisition date are to be subsequently  recognized as  post-acquisition  costs.
FAS 141R is effective for business  combinations  for which the acquisition date
is on or after the beginning of the first annual  reporting  period beginning on
or after December 15, 2008. The Company is currently  evaluating the impact,  if
any,  that this  standard  will have on its  financial  position  and results of
operations.

         In  December   2007,   the  FASB  issued  SFAS  No.  160  ("FAS  160"),
NON-CONTROLLING  INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS - AN AMENDMENT OF
ARB NO. 151. FAS 160 requires  that a  non-controlling  interest in a subsidiary
(i.e.  minority interest) be reported in the equity section of the balance sheet
instead of being  reported as a liability or in the  mezzanine  section  between
debt and equity. It also requires that the consolidated income statement include
consolidated  net income  attributable  to both the  parent and  non-controlling
interest of a consolidated  subsidiary. A disclosure must be made on the face of
the consolidated  income statement of the net income  attributable to the parent
and to the  non-controlling  interest.  Also,  regardless  of whether the parent
purchases  additional  ownership  interest,  sells a  portion  of its  ownership
interest in a subsidiary or the subsidiary  participates  in a transaction  that
changes  the  parent's  ownership  interest,  as  long  as  the  parent  retains
controlling interest,  the transaction is considered an equity transaction.  FAS
160 is effective  for annual  periods  beginning  after  December 15, 2008.  The
Company is currently evaluating the impact, if any, that this standard will have
on its financial position and results of operations.

         In March 2008,  the FASB issued SFAS No. 161 ("FAS  161"),  DISCLOSURES
ABOUT  DERIVATIVE  INSTRUMENTS  AND  HEDGING  ACTIVITIES--AN  AMENDMENT  OF FASB
STATEMENT  NO. 133.  FAS 161  requires  enhanced  disclosures  about an entity's
derivative  and hedging  activities.  Entities are required to provide  enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative  instruments  and  related  hedged  items  are  accounted  for  under
Statement  No.  133  and its  related  interpretations,  and (c) how  derivative
instruments  and related  hedged  items affect an entity's  financial  position,
financial  performance,  and cash  flows.  FAS 161 is  effective  for  financial
statements  issued for fiscal years and interim periods beginning after November
15, 2008, with early application  encouraged.  FAS 161 encourages,  but does not
require,  comparative  disclosures for earlier periods at initial adoption.  The
Company is currently evaluating the impact, if any, that this standard will have
on its financial position and results of operations.

                                        8
<PAGE>
4.       ACCOUNTS RECEIVABLE/ADVANCES ON CONTRACTS IN PROGRESS

         Net accounts receivable, trade consists of the following:

                                               September 30,     December 31,
                                                   2008              2007
                                                                 As Restated
                                               ------------      ------------
         Amounts billed                        $ 14,592,000      $ 11,142,000
         Retainage                                    8,000             8,000
         Accrued revenue                          2,244,000           945,000
                                               ------------      ------------
                                                 16,844,000        12,095,000
         Less: Allowance for sales returns
               and doubtful accounts               (445,000)         (230,000)
                                               ------------      ------------
         Net accounts receivable, trade        $ 16,399,000      $ 11,865,000
                                               ============      ============
         Advances on contracts in progress     $ 41,126,000      $ 26,003,000
                                               ============      ============

         Retainage  represents  revenues  on certain  United  States  government
sponsored  research and  development  contracts.  These  amounts,  which usually
represent 15% of the Company's research fee on each applicable contract, are not
collectible until a final cost review has been performed by government auditors.
The government's  most recent audit was as of December 31, 2006, with no adverse
impact.

         Accrued revenue represents  revenues  recognized on contracts for which
billings  have not been  presented to  customers  as of the balance  sheet date.
These amounts are billed and generally collected within one year.

         The Company  maintains  allowances for doubtful  accounts for estimated
losses  resulting  from the  inability of its  customers to pay amounts due. The
Company actively pursues collection of past due receivables as the circumstances
warrant.  Customers  are contacted to determine the status of payment and senior
accounting and operations  management are included in these efforts as is deemed
necessary.  A specific reserve will be established for past due accounts when it
is  probable  that a loss has  been  incurred  and the  Company  can  reasonably
estimate the amount of the loss.  The Company  does not record an allowance  for
government   receivables   and   invoices   backed  by   letters  of  credit  as
realizeability  is  reasonably  assured.  Bad debts are  written off against the
allowance  when  identified.  There is no dollar  threshold for account  balance
write-offs. While rare, a write-off is only recorded when all efforts to collect
the receivable have been exhausted and only in consultation with the appropriate
business line manager.  The Company has  increased its  allowances  for doubtful
accounts reserve for the quarter ended September 30, 2008, primarily as a result
of a customer's failure to make timely facility availability payments related to
a manufacturing agreement.

         In addition,  the Company  maintains an allowance for potential  future
product  returns and rebates  related to current  period  revenues.  The Company
analyzes  the rate of  historical  returns when  evaluating  the adequacy of the
allowance  for sales  returns  and  allowances.  Returns and rebates are charged
against the allowance when incurred.

         Advances  on  contracts  in  progress  represent  contracts  for  which
billings  have been  presented to the  customer,  either as deposits or progress
payments against future shipments, but revenue has not been recognized.


5.       INVENTORIES AND DEFERRED COSTS OF GOODS SOLD

         Inventories,  net of $251,000 and $354,000 of reserves at September 30,
2008 and December 31, 2007, respectively, consist of the following at:

                                               September 30,     December 31,
                                                   2008              2007
                                                                 As Restated
                                               ------------      ------------
         Raw materials                         $  5,072,000      $  4,989,000
         Work in process                          6,851,000         4,663,000
         Finished goods                           3,977,000         1,918,000
                                               ------------      ------------
         Net Inventory                         $ 15,900,000      $ 11,570,000
                                               ============      ============
         Deferred cost of goods sold           $ 18,788,000      $  8,044,000
                                               ============      ============

         Deferred  costs of goods sold  represents  costs on equipment  that has
shipped to the  customer  and title has passed.  The Company  defers these costs
until related revenue is recognized.


6.       INCOME (LOSS) PER SHARE

         The following table provides a  reconciliation  of the  denominators of
the Company's  reported basic and diluted  income (loss) per share  computations
for the periods ended:

                                        9
<PAGE>
<TABLE><CAPTION>
                                                           Three Months Ended                 Nine Months Ended
                                                              September 30,                     September 30,
                                                      -----------------------------     -----------------------------
                                                          2008             2007             2008             2007
                                                      ------------     ------------     ------------     ------------
<S>                                                   <C>              <C>              <C>              <C>
Weighted average number of common and common
  equivalent shares outstanding - basic                  8,330,688        8,272,543        8,327,889        8,261,030
Add:  Net additional common shares upon assumed
  exercise of common stock options                          94,371           69,099               --               --
                                                      ------------     ------------     ------------     ------------
Adjusted weighted average number of common and
  common equivalents shares outstanding - diluted        8,425,059        8,341,642        8,327,889        8,261,030
                                                      ============     ============     ============     ============
</TABLE>

         For the nine months  ended  September  30,  2008 and 2007,  541,677 and
505,453  shares of common stock  related to stock  options,  respectively,  were
excluded from the  calculation of dilutive  shares because the inclusion of such
shares would be anti-dilutive due to the Company's net loss position.

         In addition,  for the three and nine months ended  September  30, 2008,
64,500 and 39,500 shares,  respectively,  and for both the three and nine months
ended  September  30, 2007,  6,250 shares of common stock  issuable  relative to
stock options were excluded from the calculation of diluted shares because their
inclusion would have been anti-dilutive,  due to their exercise prices exceeding
the average market price of the stock for the periods.

7.       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."
<TABLE><CAPTION>
                                                                                                        Total
                                                     Solar          Biomedical    Optoelectronics      Company
                                                  ------------     ------------     ------------     ------------
<S>                                               <C>              <C>              <C>              <C>
For the three months ended September 30, 2008
---------------------------------------------
Net sales and revenues                            $ 13,138,000     $  3,025,000     $  1,373,000     $ 17,536,000
Income (loss) from operations                     $  1,490,000     $   (139,000)    $   (828,000)    $    523,000

For the three months ended September 30, 2007
---------------------------------------------
Net sales and revenues                            $  6,208,000     $  2,594,000     $  1,043,000     $  9,845,000
Income (loss) from operations                     $  1,931,000     $   (362,000)    $   (926,000)    $    643,000

For the nine months ended September 30, 2008
--------------------------------------------
Net sales and revenues                            $ 36,078,000     $  8,691,000     $  4,190,000     $ 48,959,000
Income (loss) from operations                     $  2,930,000     $   (496,000)    $ (1,823,000)    $    611,000

For the nine months ended September 30, 2007
--------------------------------------------
Net sales and revenues                            $ 14,776,000     $  7,948,000     $  2,697,000     $ 25,421,000
Income (loss) from operations                     $    623,000     $ (1,088,000)    $ (2,492,000)    $ (2,957,000)
</TABLE>

The following table shows net sales and revenues by geographic area (based on
customer location):
<TABLE><CAPTION>
                              Three Months Ended September 30,                     Nine Months Ended September 30,
                    --------------------------------------------------    --------------------------------------------------
                        2008           %           2007           %           2008           %           2007           %
                    ------------    -------    ------------    -------    ------------    -------    ------------    -------
<S>                 <C>             <C>        <C>             <C>        <C>             <C>        <C>             <C>
United States       $  7,657,000         44%   $  4,023,000         41%   $ 19,659,000         40%   $ 12,135,000         48%
Europe/Africa          3,029,000         17       4,158,000         42      11,352,000         23       7,907,000         31
Asia                   6,616,000         38       1,462,000         15      17,363,000         36       4,884,000         19
Rest of the world        234,000          1         202,000          2         585,000          1         495,000          2
                    ------------               ------------               ------------               ------------
                    $ 17,536,000        100%   $  9,845,000        100%   $ 48,959,000        100%   $ 25,421,000        100%
                    ============               ============               ============               ============
</TABLE>

         Revenues from contracts with United States government  agencies for the
three months ended September 30, 2008 and 2007 were approximately $2,473,000 and
$287,000, or 14% and 3% of consolidated net sales and revenues, respectively.

         Revenues from contracts with United States government  agencies for the
nine months ended September 30, 2008 and 2007 were approximately  $3,226,000 and
$724,000, or 7% and 3% of consolidated net sales and revenues, respectively.

         Two  customers  accounted  for  approximately  22%  and  two  customers
accounted for  approximately  37% of the Company's  gross sales during the three
months ended September 30, 2008 and 2007,  respectively.  One customer accounted

                                       10
<PAGE>
for  approximately  10% and one customer  accounted for approximately 22% of the
Company's  gross sales during the nine months ended September 30, 2008 and 2007,
respectively.  Three customers  represented 51% of trade account  receivables at
September  30,  2008  and  two  customers   represented  46%  of  trade  account
receivables at December 31, 2007.

8.       INTANGIBLE AND OTHER ASSETS

         Patents  amounted  to  $104,000,  net of  accumulated  amortization  of
$726,000,   at  September  30,  2008.  Licenses  amounted  to  $75,000,  net  of
accumulated  amortization  of $250,000,  at September  30, 2008.  Patent cost is
primarily composed of cost associated with securing and registering patents that
the Company  has been  awarded or that have been  submitted  to, and the Company
believes  will be approved by, the  government.  License cost is composed of the
cost to acquire rights to the underlying technology or know-how. These costs are
capitalized  and  amortized  over their useful lives or terms,  ordinarily  five
years,  using the  straight-line  method.  There are no expected residual values
related to these patents or licenses.  For disclosure purposes,  the table below
includes  future  amortization  expense for  licenses  and patents  owned by the
Company as well as $682,000  of  estimated  amortization  expense on a five-year
straight-line  basis  related to patents  that remain  pending as of the balance
sheet date.

         Estimated  amortization  expense for the periods ending December 31, is
as follows:

                                  Year            Amortization Expense
                       -----------------------    --------------------
                       2008 remaining 3 months           $53,000
                       2009                              187,000
                       2010                              181,000
                       2011                              175,000
                       2012 and beyond                   265,000
                                                  --------------------
                                                        $861,000
                                                  ====================

         Also included in other assets at September  30, 2008 are  approximately
$12,000 of unamortized expenses that were prepaid.


9.       AVAILABLE-FOR-SALE INVESTMENTS

         Available-for-sale  securities  consist of the following assets held as
part of the Spire Corporation Non-Qualified Deferred Compensation Plan:

                                               September 30,     December 31,
                                                   2008              2007
                                               ------------      ------------
         Equity investments                    $  1,206,000      $  1,411,000
         Government bonds                           216,000           303,000
         Cash and money market funds                 32,000            86,000
                                               ------------      ------------
                                               $  1,454,000      $  1,800,000
                                               ============      ============

         These   investments   have  been   classified   as   available-for-sale
investments  and are reported at fair value,  with  unrealized  gains and losses
included in accumulated other  comprehensive loss. As of September 30, 2008, the
unrealized loss on these  marketable  securities was $183,000 and as of December
31, 2007, the unrealized gain on these marketable securities was $62,000.

         Effective  January 1, 2008,  the Company  adopted  SFAS No. 157,  "Fair
Value  Measurements"  ("FAS 157").  In February 2008, the FASB issued FASB Staff
Position  No. FAS 157-2,  "Effective  Date of FASB  Statement  No.  157,"  which
provides a one year deferral of the effective date of FAS 157 for  non-financial
assets  and  non-financial  liabilities,  except  those that are  recognized  or
disclosed  in  the  financial  statements  at  fair  value  at  least  annually.
Therefore, the Company has adopted the provisions of FAS 157 with respect to its
financial assets and liabilities only. FAS 157 defines fair value, establishes a
framework for measuring  fair value,  and expands  disclosures  about fair value
measurements.  The new standard  provides a consistent  definition of fair value
which focuses on an exit price which is the price that would be received to sell
an asset or paid to  transfer  a  liability  in an orderly  transaction  between
market  participants  at the  measurement  date. The standard also  prioritizes,
within the measurement of fair value,  the use of market-based  information over
entity specific  information  and  establishes a three-level  hierarchy for fair
value  measurements  based on the nature of inputs used in the  valuation  of an
asset or liability as of the measurement date.

         The hierarchy  established  under FAS 157 gives the highest priority to
unadjusted  quoted prices in active markets for identical  assets or liabilities
(Level 1) and the lowest priority to unobservable  inputs (Level 3). As required
by FAS 157, the Company's  available for sale investments are classified  within
the fair value  hierarchy based on the lowest level of input that is significant
to the fair value  measurement.  The three  levels of the fair  value  hierarchy
under  FAS  157,  and its  applicability  to the  Company's  available  for sale
investments, are described below:

                                       11
<PAGE>
         Level 1 - Pricing inputs are quoted prices available in active markets
         for identical investments as of the reporting date. As required by FAS
         157, the Company does not adjust the quoted price for these
         investments, even in situations where the Company holds a large
         position and a sale could reasonably impact the quoted price.

         Level 2 - Pricing inputs are quoted prices for similar investments, or
         inputs that are observable, either directly or indirectly, for
         substantially the full term through corroboration with observable
         market data. Level 2 includes investments valued at quoted prices
         adjusted for legal or contractual restrictions specific to these
         investments.

         Level 3 - Pricing inputs are unobservable for the investment, that is,
         inputs that reflect the reporting entity's own assumptions about the
         assumptions market participants would use in pricing the asset or
         liability. Level 3 includes investments that are supported by little or
         no market activity.

         The following table presents the financial instruments carried at fair
value as of September 30, 2008 by FAS 157 valuation hierarchy (as defined
above).
                                   Level 1     Level 2     Level 3      Total
                                 ----------  ----------  ----------  ----------
Available for sale investments   $  792,000  $  662,000          --  $1,454,000
Percent of total                        54%         46%          --        100%


10.      NOTES PAYABLE AND CREDIT ARRANGEMENTS

         The Company had a  $2,000,000  Loan  Agreement  with  Citizens  Bank of
Massachusetts  which expired on June 26, 2007. On May 25, 2007,  the Company and
its wholly-owned subsidiary,  Spire Semiconductor,  LLC, entered into a Loan and
Security  Agreement (the "Equipment  Credit  Facility") with Silicon Valley Bank
(the "Bank").  Under the Equipment Credit Facility,  for a one-year period,  the
Company and Spire  Semiconductor  could borrow up to $3,500,000 in the aggregate
to finance  certain  equipment  purchases  (including  reimbursement  of certain
previously-made  purchases).  Advances made under the Equipment  Credit Facility
would bear  interest at the Bank's  prime  rate,  as  determined,  plus 0.5% and
payable in thirty-six (36) consecutive  monthly  payments  following the funding
date of that advance.

         On March 31, 2008, the Company  entered into a second Loan and Security
Agreement (the "Revolving  Credit  Facility") with the Bank.  Under the terms of
the  Revolving  Credit  Facility,  the Bank agreed to provide the Company with a
credit line up to  $5,000,000.  The  Company's  obligations  under the Equipment
Credit  Facility  are secured by  substantially  all of its assets and  advances
under the Revolving  Credit Facility are limited to 80% of eligible  receivables
and the lesser of 25% of the value of its  eligible  inventory,  as defined,  or
$2,500,000 if the inventory is backed by a customer  letter of credit.  Interest
on  outstanding  borrowings  accrues at a rate per annum equal to the greater of
Prime Rate plus one percent  (1.0%) or seven  percent  (7%).  In  addition,  the
Company agreed to pay to the Bank a collateral  monitoring fee of $750 per month
in the event the  Company  is in  default  of its  covenants  and  agreed to the
following  additional terms: (i) $50,000 commitment fee; (ii) an unused line fee
in the amount of 0.75% per annum of the average  unused portion of the revolving
line; and (iii) an early termination fee of 0.5% of the total credit line if the
Company  terminates  the Revolving  Credit  Facility prior to 12 months from the
Revolving Credit  Facility's  effective date. The Revolving Credit Facility,  if
not sooner  terminated in accordance with its terms,  expires on March 30, 2009.
In addition,  on March 31, 2008 the Company's existing Equipment Credit Facility
was amended whereby the Bank granted a waiver for the Company's defaults for not
meeting its December 31, 2007 quarter liquidity and profit covenants and for not
meeting  its  January  and  February  2008  liquidity  covenants.  Further,  the
covenants  were amended to match the covenants as discussed  below  contained in
the Revolving Credit Facility.  The Company's  interest rate under the Equipment
Credit  Facility was also  modified from Bank Prime plus one half percent to the
greater of Bank Prime plus one percent (1%) or seven percent (7%).

         On May 13, 2008, the Bank amended the Equipment Credit Facility and the
Revolving  Credit  Facility,  modifying the  Company's net income  profitability
covenant  requirements in exchange for a three quarters percent (0.75%) increase
in the  Company's  interest  rate  (7.75% at  September  30,  2008)  and  waiver
restructuring fee equal to one half percent (0.5%) of amounts  outstanding under
the Equipment Credit Facility and committed under the Revolving Credit Facility.
In  addition,  the  Company's  term  loan  balance  will  be  factored  in  when
calculating the Company's borrowing base under the Revolving Credit Facility.

         Under  the  amended  terms of both  credit  facilities,  as long as any
commitment  remains  outstanding  under the facilities,  the Company must comply
with an adjusted quick ratio covenant and a minimum monthly net income covenant.
In addition,  until all amounts  under the credit  facilities  with the Bank are
repaid,  covenants  under  the  credit  facilities  impose  restrictions  on the
Company's ability to, among other things, incur additional indebtedness,  create
or permit liens on the Company's assets, merge, consolidate or dispose of assets
(other  than in the  ordinary  course  of  business),  make  dividend  and other
restricted  payments,  make  certain  debt or equity  investments,  make certain
acquisitions,  engage in  certain  transactions  with  affiliates  or change the
business  conducted  by the  Company  and its  subsidiaries.  Any failure by the
Company to comply with the covenants and obligations under the credit facilities
could  result in an event of default,  in which case the Bank may be entitled to
declare  all  amounts  owed to be due and  payable  immediately.  The  Company's
obligations  under the credit facilities are secured by substantially all of its
assets.

                                       12
<PAGE>
         At September 30, 2008, the Company's  outstanding  borrowings  from the
Equipment  Credit  Facility  amounted to $2,042,000 and there were no borrowings
from the  Revolving  Credit  Facility.  The Company was in  compliance  with its
covenants as of September 30, 2008.


11.      STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

         On January 1, 2006,  the  Company  adopted  the fair value  recognition
provisions  of  FASB  Statement  No.  123(R),  Share-Based  Payment  ("Statement
123(R)")  using the  modified  prospective  method.  Based on an analysis of the
Company's  historical  data,  for the three months ended  September 30, 2008 and
2007, the Company applied 7% and 11% forfeiture  rates,  respectively,  to stock
options outstanding in determining its Statement 123(R) stock-based compensation
expense which it believes are reasonable  forfeiture  estimates for the periods.
The impact of Statement 123(R) on the Company's  results of operations  resulted
in recognition of stock-based compensation expense of approximately $185,000 and
$181,000 for the three months ended  September 30, 2008 and 2007,  respectively,
and approximately  $594,000 and $389,000 for the nine months ended September 30,
2008 and  2007,  respectively.  The  total  non-cash,  stock-based  compensation
expense included in the condensed  consolidated  statement of operations for the
periods presented is included in the following expense categories:
<TABLE><CAPTION>
                                                        Three Months Ended             Nine Months Ended
                                                            September 30,                 September 30,
                                                     -------------------------     -------------------------
                                                        2008           2007           2008           2007
                                                     ----------     ----------     ----------     ----------
<S>                                                  <C>            <C>            <C>            <C>
Cost of contract research, services and licenses     $   12,000     $   12,000     $   39,000     $   31,000
Cost of goods sold                                       36,000         14,000        104,000         22,000
Selling, general and administrative                     137,000        155,000        451,000        336,000
                                                     ----------     ----------     ----------     ----------
      Total stock-based compensation                 $  185,000     $  181,000     $  594,000     $  389,000
                                                     ==========     ==========     ==========     ==========
</TABLE>

         At September  30, 2008 the Company had  outstanding  options  under two
stock option  plans:  the 1996 Equity  Incentive  Plan (the "1996 Plan") and the
2007  Stock  Equity  Plan  (the  "2007  Plan").  Both  plans  were  approved  by
stockholders  and  provided  that the Board of  Directors  may grant  options to
purchase  the  Company's  common  stock to key  employees  and  directors of the
Company.  Incentive  and  non-qualified  options must be granted at least at the
fair market value of the common stock or, in the case of certain  optionees,  at
110% of such  fair  market  value  at the  time of  grant.  The  options  may be
exercised, subject to certain vesting requirements,  for periods up to ten years
from the date of issue.  The 1996 Plan  expired  with respect to the issuance of
new grants as of December 10, 2006. Accordingly,  future grants may be made only
under the 2007 Plan.

         A summary of options  outstanding  under the 2007 Plan and 1996 Plan as
of September 30, 2008 and changes during the nine-month period is as follows:

<TABLE><CAPTION>
                                                                                    Average
                                                                  Weighted-        Remaining       Aggregate
                                                Number of          Average        Contractual      Intrinsic
                                                 Shares        Exercise Price    Life (Years)        Value
                                              ------------      ------------     ------------     ------------
<S>                                           <C>               <C>              <C>              <C>
Options Outstanding at December 31, 2007           495,177      $       7.10
Granted                                             70,500      $      12.06
Exercised                                           (9,500)     $       2.22
Cancelled/expired                                  (14,500)     $       9.49
                                              ------------      ------------
Options Outstanding at September 30, 2008          541,677      $       7.77             7.20     $  3,528,010
                                              ============      ============

Options Exercisable at September 30, 2008          295,037      $       6.72             6.22     $  2,231,051
                                              ============      ============
</TABLE>

         The  per-share  weighted-average  fair value of stock  options  granted
during the three and nine months ended  September  30, 2008 was $5.68 and $6.97,
respectively,  and during the three and nine months ended September 30, 2007 was
$6.08 and  $6.29,  respectively,  on the date of grant  using the  Black-Scholes
option-pricing model with the following weighted-average assumptions:

                     Expected        Risk-Free     Expected        Expected
           Year    Dividend Yield  Interest Rate  Option Life  Volatility Factor
         --------  --------------  -------------  -----------  -----------------
           2008          --            2.88%       4.5 years        71.2%

         The risk free interest rate reflects  treasury yields rates over a term
that  approximates  the  expected  option  life.  The  expected  option  life is
calculated  based on historical  lives of all options issued under the plan. The
expected  volatility  factor is  determined  by measuring the actual stock price
volatility over a term equal to the expected useful life of the options granted.


                                       13
<PAGE>
12.      COMPREHENSIVE LOSS

         Comprehensive loss includes certain changes in equity that are excluded
from net loss and consists of the following:
<TABLE><CAPTION>
                                               --------------------------     --------------------------
                                               For the Three Months Ended     For the Nine Months Ended
                                                      September 30,                 September 30,
                                               --------------------------     --------------------------
                                                  2008            2007           2008            2007
                                               ----------      ----------     ----------      ----------
<S>                                            <C>             <C>            <C>             <C>
Net income (loss)                              $  445,000      $2,755,000     $ (347,000)     $ (856,000)
Other comprehensive income (loss):
   Unrealized gain (loss) on available for
   sale marketable securities, net of tax        (124,000)         20,000       (245,000)         67,000
                                               ----------      ----------     ----------      ----------
Total comprehensive income (loss)              $  321,000      $2,775,000     $ (592,000)     $ (789,000)
                                               ==========      ==========     ==========      ==========
</TABLE>

























                                       14
<PAGE>
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 WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), WHICH
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS RELATE TO OUR
FUTURE PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THESE STATEMENTS MAY BE
IDENTIFIED BY THE USE OF WORDS SUCH AS "MAY", "COULD", "WOULD", "SHOULD",
"WILL", "EXPECTS", "ANTICIPATES", "INTENDS", "PLANS", "BELIEVES", "ESTIMATES",
AND SIMILAR EXPRESSIONS. OUR ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY
DIFFER SIGNIFICANTLY FROM THE RESULTS AND TIMING DESCRIBED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE FACTORS DISCUSSED OR REFERRED
TO IN THIS REPORT AND IN THE ANNUAL REPORT ON FORM 10-K/A FOR THE YEAR ENDED
DECEMBER 31, 2007. THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS SHOULD BE READ IN LIGHT OF THOSE FACTORS AND
IN CONJUNCTION WITH OUR ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO.

OVERVIEW

         We  principally  develop,  manufacture  and market  customized  turnkey
solutions for the solar  industry,  including  manufacturing  equipment and full
turnkey lines for cell and module production and testing.  We also offer through
our subsidiary Spire  Semiconductor  concentrator cell and light-emitting  diode
("LED")  fabrication  services and through our joint venture  Gloria Spire Solar
photovoltaic  ("PV")  system  integration  services.  We also  operate a line of
business  associated with advanced biomedical  applications.  The foundation for
our business is our  industry-leading  expertise in materials  technologies  and
surface treatments; this proprietary knowledge enables us to further develop our
offerings  in solar  equipment,  optoelectronics  and  biomedical  products  and
services.

         Our initial focus on high-energy  physics led to the development of our
first product,  the SPI-PULSE  electron beam generator,  to support  research in
radiation  effects  testing.  We moved into the space solar cell business  after
signing a contract to develop solar cell coverslip for radiation  hardening.  In
addition,  we began to develop a new technology  based on ion  implantation  and
pulsed electron beam annealing of silicon solar cells. As a result of the energy
crisis  in  the  early  1980s,  which  forced  the  United  States  to  consider
photovoltaics  for terrestrial  applications,  we received our first terrestrial
solar  cell  contract  for  low  cost  production  using  our  ion  implantation
technology.   We  leveraged  this  knowledge  to  develop  our  state-of-the-art
manufacturing equipment, in addition to our offerings in the optoelectronics and
biomaterials industries.

         As  photovoltaic  cell and module  manufacturers  ramp up production to
meet increasing  demand,  they will first need to acquire greater  quantities of
turnkey  equipment in order to produce more photovoltaic  cells and modules.  We
believe that we are one of the world's  leading  suppliers of the  manufacturing
equipment and technology needed to produce solar photovoltaic power systems. Our
individual  manufacturing  equipment  products  and  our  SPI-LINETM  integrated
turnkey cell and module production lines can be highly scaled,  customized,  and
automated with high throughput.  These systems are designed to meet the needs of
a broad range of customers ranging from  manufacturers  relying on mostly manual
processes,  to some of the largest photovoltaic  manufacturing  companies in the
world.

         In addition to our cell and module manufacturing  solutions,  we have a
device fabrication facility where we produce, under contract with our customers,
gallium arsenide (GaAs) concentrator cells. The  state-of-the-art  semiconductor
fabrication  and foundry  facility is the  foundation  of our solar cell process
technology  for silicon,  polysilicon,  thin film and GaAs  concentrator  cells.
Under the name Spire  Semiconductor,  this division  produces GaAs  concentrator
cells,  high performance LEDs, and other custom  semiconductor  foundry services
for our customers.

         In July 2007,  we entered  into a joint  venture with Gloria Solar Co.,
Ltd., a leading module manufacturer in Taiwan, which designs,  sells and manages
installations  of  photovoltaic  systems.  Our 45% ownership  stake in the joint
venture,  Gloria Spire Solar,  LLC, was obtained through the contribution of our
integrated  photovoltaic  business to Gloria Solar. This transaction has allowed
us to focus more of our attention on our core solar business,  while  continuing
to expand the Spire brand name in the marketplace.

         Capitalizing  on our  expertise in surface  treatments,  we also have a
biomedical  division which  manufactures  medical devices and provides  advanced
medical device surface treatment processes to our customers.  Our medical device
business  develops,  manufactures and sells premium products for vascular access
in chronic kidney disease patients.  Our surface treatment business modifies the
surfaces of medical devices to improve their performance.

         We have  been in the  solar  business  for over 30 years  and have been
active in  research  and  development  in the space,  with over $100  million of
research and  development  conducted which has led to over 60 patents granted to
date, as well as cell and module production,  having been a pioneer in the early
development  of solar  technology.  This expertise has provided the platform and
expertise  for our  manufacturing  equipment.  We  have  equipment  deployed  in
approximately 50 countries.

         Operating  results will depend upon revenue  growth and product mix, as
well as the  timing  of  shipments  of  higher  priced  products  from our solar
equipment  line.  Export sales,  which amounted to 60% of net sales and revenues
for the  nine  months  ended  September  30,  2008,  continue  to  constitute  a
significant portion of our net sales and revenues.

                                       15
<PAGE>
Restatements
------------

         We restated our previously issued consolidated  financial statements as
of and for the year ended December 31, 2007 and as of and for the quarters ended
March 31,  2008 and June 30, 2008 to correct  errors  under  generally  accepted
accounting  principles ("GAAP") in the United States relating to the recognition
of revenue. We determined that a single customer of our solar equipment business
unit  was  provided  certain  upgrade  rights  in  connection  with  the sale of
products,  as a result of which the revenue  associated  with those sales should
not have been  recognized  upon shipment of the products to the customers  under
GAAP because the upgrade was not  available  at that time.  We  determined  that
revenue for the entire  contract should have been deferred until the upgrade was
provided to the customer.  These orders  resulted in aggregate gross revenues of
approximately $1.4 million during the fourth quarter of 2007 and $380,000 during
the first quarter of 2008.  To correct this error,  we reversed this revenue and
the associated cost of goods sold in each of those  quarters.  See Note 2 to the
unaudited condensed consolidated financial statements.

Results of Operations
---------------------

         The  following  table sets forth  certain  items as a percentage of net
sales and revenues for the periods presented:
<TABLE><CAPTION>
                                                            Three Months Ended              Nine Months Ended
                                                               September 30,                   September 30,
                                                      ----------------------------    ----------------------------
                                                          2008            2007            2008            2007
                                                      ------------    ------------    ------------    ------------
<S>                                                   <C>             <C>             <C>             <C>
Net sales and revenues                                      100%            100%            100%            100%
Cost of sales and revenues                                   66              86              69              85
                                                      ------------    ------------    ------------    ------------
    Gross profit                                             34              14              31              15
Selling, general and administrative expenses                 30              34              29              36
Internal research and development expenses                    1               1               1               1
                                                      ------------    ------------    ------------    ------------
Gain on sale of trademark                                     0              27               0              10
                                                      ------------    ------------    ------------    ------------
    Income (loss) from operations                             3               6               1             (12)
Other income (loss), net                                      0               0              (2)              0
                                                      ------------    ------------    ------------    ------------
    Income (loss) before income tax benefit                   3               6              (1)            (12)
Income tax benefit                                            0               9               0               3
                                                      ------------    ------------    ------------    ------------
    Net income (loss)                                         3              15              (1)             (9)
                                                      ============    ============    ============    ============
Extraordinary gain                                            0              13               0               5
                                                      ============    ============    ============    ============
    Net income (loss) after extraordinary gain                3%             28%             (1%)            (4%)
                                                      ============    ============    ============    ============
</TABLE>

OVERALL

         Our total net sales and revenues  for the nine months  ended  September
30, 2008 were  $48,959,000 as compared to $25,421,000  for the nine months ended
September  30, 2007,  which  represents an increase of  $23,538,000  or 93%. The
increase was primarily attributable to a $21,302,000 increase in solar sales and
a $1,493,000 increase in optoelectronics sales.

SOLAR BUSINESS UNIT

         Sales in our solar  business unit increased 144% during the nine months
ended  September 30, 2008 to  $36,078,000 as compared to $14,776,000 in the nine
months  ended  September  30,  2007.  The increase is the result of shipments of
solar equipment  reflecting the overall  increase in activity in the solar power
industry.  We have  focused  our sales and  marketing  efforts  on  establishing
ourselves  as one of the  premier  suppliers  of  equipment  to the solar  power
industry for the manufacture of photovoltaic power modules.

BIOMEDICAL BUSINESS UNIT

         Revenues of our  biomedical  business unit increased 9% during the nine
months ended  September  30, 2008 to $8,691,000 as compared to $7,948,000 in the
nine months ended September 30, 2007. The increase reflects  increased  revenues
from our research and development  contracts and orthopedics  coatings  services
offset by reduced revenues from catheter products.

OPTOELECTRONICS BUSINESS UNIT

         Revenues  in  our  optoelectronics   business  unit  increased  55%  to
$4,190,000  during the nine  months  ended  September  30,  2008 as  compared to
$2,697,000 in the nine months ended September 30, 2007. The increase reflects an
overall  increase  in  optoelectronics  activities  attributable  to a shift  in
product mix to larger  scale  commercial  orders  compared  with  smaller  sized
research and development projects.

                                       16
<PAGE>
Three and Nine Months Ended September 30, 2008 Compared to Three and Nine Months
--------------------------------------------------------------------------------
Ended September 30, 2007
------------------------

NET SALES AND REVENUES

         The  following  table  categorizes  our net sales and  revenues for the
periods presented:
<TABLE><CAPTION>
                                                                  Three Months Ended
                                                                      September 30,                      Increase
                                                              -----------------------------     -----------------------------
                                                                  2008             2007              $                 %
                                                              ------------     ------------     ------------     ------------
         <S>                                                  <C>              <C>              <C>                   <C>
         Sales of goods                                       $ 13,697,000     $  6,343,000     $  7,354,000          116%
         Contract research, services and license revenues        3,839,000        3,502,000          337,000           10%
                                                              ------------     ------------     ------------
           Net sales and revenues                             $ 17,536,000     $  9,845,000     $  7,691,000           78%
                                                              ============     ============     ============
</TABLE>

         The  116%  increase  in  sales  of goods  for the  three  months  ended
September 30, 2008 as compared to the three months ended  September 30, 2007 was
primarily  due to an  increase  in solar  equipment  revenues  and,  to a lesser
extent, an increase in catheter products sales.  Solar equipment sales increased
141% in 2008 as compared to 2007  primarily due to an overall  increase in solar
power industry activity. Sales of catheters increased approximately 7%.

         The 10% increase in contract  research,  services and license  revenues
for the three  months ended  September  30, 2008 as compared to the three months
ended September 30, 2007 is primarily  attributable to an increase in royalties,
optoelectronics,   research  and  development  activities  and  in  orthopedics,
partially offset by $708,000 in additional  service revenue  associated with the
sale of  technology  services  delivered  to Gloria  Solar in the  fiscal  third
quarter of 2007. Revenue from royalties  increased 412% in 2008 compared to 2007
as a  result  of an  increase  in  royalties  from  Nisshinbo  Industries,  Inc.
("Nisshinbo")  along with an acceleration of deferred royalty revenue related to
the Development,  Manufacturing  and Sales Consortium  Agreement (the "Nisshinbo
Agreement")  with Nisshinbo that is now scheduled to terminate in February 2009,
as a result  of early  termination  by  Nisshinbo  (see  Liquidity  and  Capital
Resources).   Revenue  from  our  optoelectronics   processing  services  (Spire
Semiconductor)  increased 32% in 2008 compared to 2007 as a result of an overall
increase in optoelectronics activities attributable to a shift in product mix to
larger  scale  commercial  orders  compared  with  smaller  sized  research  and
development  projects.  Revenues  from our research and  development  activities
increased  38% in 2008 as compared to 2007  primarily  due to an increase in the
number and value of contracts  associated with funded research and  development.
Revenues  from our  orthopedic  activities  increased 17% in 2008 as compared to
2007.

         The following table  categorizes the our net sales and revenues for the
periods presented:
<TABLE><CAPTION>
                                                                   Nine Months Ended
                                                                      September 30,                      Increase
                                                              -----------------------------     -----------------------------
                                                                  2008             2007              $                 %
                                                              ------------     ------------     ------------     ------------
         <S>                                                  <C>              <C>              <C>                   <C>
         Sales of goods                                       $ 38,202,000     $ 16,782,000     $ 21,420,000          128%
         Contract research, services and license revenues       10,757,000        8,639,000        2,118,000           25%
                                                              ------------     ------------     ------------
            Net sales and revenues                            $ 48,959,000     $ 25,421,000     $ 23,538,000           93%
                                                              ============     ============     ============
</TABLE>

         The 128% increase in sales of goods for the nine months ended September
30, 2008 as compared to the nine months ended  September  30, 2007 was primarily
due to an  increase  in  solar  equipment  revenues,  partially  offset  by a 6%
decrease in catheter  products  sales.  Solar  equipment sales increased 159% in
2008 as compared  to 2007  primarily  due to an overall  increase in solar power
industry activity.

         The 25% increase in contract  research,  services and license  revenues
for the nine  months  ended  September  30,  2008 as compared to the nine months
ended September 30, 2007 is primarily  attributable to an increase in royalties,
optoelectronics,   research  and  development  activities  and  in  orthopedics,
partially offset by $708,000 in additional  service revenue  associated with the
sale of  technology  services  delivered  to Gloria  Solar in the  fiscal  third
quarter of 2007. Revenue from royalties  increased 171% in 2008 compared to 2007
as  a  result  of  an  increase  in  royalties  from  Nisshinbo  along  with  an
acceleration of deferred royalty revenue related to the Nisshinbo Agreement that
is now scheduled to terminate in February 2009, as a result of early termination
by  Nisshinbo   (see  Liquidity  and  Capital   Resources).   Revenue  from  our
optoelectronics  processing services (Spire Semiconductor) increased 55% in 2008
compared  to  2007  as a  result  of  an  overall  increase  in  optoelectronics
activities  attributable  to a shift in product mix to larger  scale  commercial
orders compared with smaller sized research and development  projects.  Revenues
from our research and development  activities  increased 66% in 2008 as compared
to 2007  primarily  due to an  increase  in the  number  and value of  contracts
associated  with funded research and  development.  Revenues from our orthopedic
activities increased 8% in 2008 as compared to 2007.

                                       17
<PAGE>
COST OF SALES AND REVENUES

         The following table  categorizes our cost of sales and revenues for the
periods  presented,  stated in dollars and as a percentage  of related sales and
revenues:
<TABLE><CAPTION>
                                                 Three Months Ended September 30,                     Increase
                                        --------------------------------------------------    -----------------------
                                            2008           %           2007           %            $             %
                                        ------------    -------    ------------    -------    ------------    -------
<S>                                     <C>             <C>        <C>             <C>        <C>             <C>
Cost of goods sold                      $  8,777,000      64%      $  6,062,000      96%      $  2,715,000      45%
Cost of contract research, services
   and licenses                            2,794,000      73%         2,363,000      67%           431,000      18%
                                        ------------               ------------               ------------
   Net cost of sales and revenues       $ 11,571,000      66%      $  8,425,000      86%      $  3,146,000      37%
                                        ============               ============               ============
</TABLE>

         Cost of goods sold  increased 45% for the three months ended  September
30, 2008 as compared to the three months ended September 30, 2007,  primarily as
a result of the 116%  increase in related  revenues.  As a percentage  of sales,
cost of goods sold was 64% of sales of goods in 2008 as compared to 96% of sales
in 2007. This reduction in the percentage of sales in 2008 is due to a favorable
product  mix with  improved  margins  along  with  better  utilization  of solar
manufacturing overhead.

         Cost of contract research,  services and licenses increased 18% for the
three  months  ended  September  30, 2008 as compared to the three  months ended
September  30,  2007,  primarily  as a result  of the 10%  increase  in  related
revenues  and   increased   costs  at  our   optoelectronics   facility   (Spire
Semiconductor)  along with increased costs of our contract  research  activities
due to higher  volumes.  Cost of contract  research,  services and licenses as a
percentage  of revenue  increased  to 73% of  revenues in 2008 from 67% in 2007,
primarily  due to favorable  margin  related to $708,000 in  additional  service
revenue  associated  with the sale of  technology  services  delivered to Gloria
Solar in the fiscal third  quarter of 2007,  partially  offset by  absorption of
overhead costs improving  margins in biomedical and  optoelectronic  services in
2008.

         Cost of sales and  revenues  also  includes  approximately  $48,000 and
$26,000 of stock-based  compensation  for the three months ending  September 30,
2008 and 2007, respectively.

         The following table  categorizes our cost of sales and revenues for the
periods  presented,  stated in dollars and as a percentage  of related sales and
revenues:
<TABLE><CAPTION>
                                                  Nine Months Ended September 30,                     Increase
                                        --------------------------------------------------    -----------------------
                                            2008           %           2007           %            $             %
                                        ------------    -------    ------------    -------    ------------    -------
<S>                                     <C>             <C>        <C>             <C>        <C>             <C>
Cost of goods sold                      $ 26,339,000      69%      $ 14,801,000      88%      $ 11,538,000      78%
Cost of contract research, services
   and licenses                            7,510,000      70%         6,813,000      79%           697,000      10%
                                        ------------               ------------               ------------
   Net cost of sales and revenues       $ 33,849,000      69%      $ 21,614,000      85%      $ 12,235,000      57%
                                        ============               ============               ============
</TABLE>

         The  $11,538,000  (78%)  increase  in cost of  goods  sold for the nine
months ended  September 30, 2008 as compared to the nine months ended  September
30, 2007 was primarily due to increased costs within our solar equipment product
line  corresponding  to  the  159%  increase  in  solar  equipment  sales.  As a
percentage  of  sales,  cost of goods  sold was 69% of sales of goods in 2008 as
compared to 88% of sales in 2007.  This  reduction in the percentage of sales in
2008 is due to a favorable  product mix with improved  margins along with better
utilization of solar manufacturing overhead.

         Cost of contract  research,  services and licenses increased 10% in the
nine months  ended  September  30,  2008 as  compared  to the nine months  ended
September  30,  2007,  primarily  as a result  of the 25%  increase  in  related
revenues  and   increased   costs  at  our   optoelectronics   facility   (Spire
Semiconductor)  along with increased costs of our contract  research  activities
due to higher  volumes.  Cost of contract  research,  services and licenses as a
percentage  of revenue  decreased  to 70% of  revenues in 2008 from 79% in 2007,
primarily due to absorption of overhead  costs  improving  margins in biomedical
and  optoelectronic  services  in 2008,  partially  offset by  favorable  margin
related to $708,000 in additional  service  revenue  associated with the sale of
technology  services  delivered to Gloria  Solar in the fiscal third  quarter of
2007.

         Cost of sales and revenues  also  includes  approximately  $143,000 and
$53,000 of  stock-based  compensation  for the nine months ending  September 30,
2008 and 2007, respectively.

OPERATING EXPENSES

         The following table categorizes our operating  expenses for the periods
presented, stated in dollars and as a percentage of total sales and revenues:

                                       18
<PAGE>
<TABLE><CAPTION>
                                                 Three Months Ended September 30,                     Increase
                                        --------------------------------------------------    -----------------------
                                            2008           %           2007           %            $             %
                                        ------------    -------    ------------    -------    ------------    -------
<S>                                     <C>             <C>        <C>             <C>        <C>             <C>
Selling, general and administrative     $  5,242,000      30%      $  3,388,000      34%      $  1,854,000       55%
Internal research and development            200,000       1%            96,000       1%           104,000      108%
                                        ------------               ------------               ------------
   Operating expenses                   $  5,442,000      31%      $  3,484,000      35%      $  1,958,000       56%
                                        ============               ============               ============
</TABLE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling,  general and administrative expense increased 55% in the three
months ended  September 30, 2008 as compared to the three months ended September
30,  2007,  primarily  as a  result  of an  increase  in  marketing  activities,
professional  services  and higher  head  count and  related  employee  costs to
support  our  overall  growth.  In  addition,  commissions  to  our  network  of
independent  sales  representatives  related to sales of solar equipment were up
due to increased sales and revenues. Selling, general and administrative expense
decreased to 30% of sales and  revenues in 2008 as compared to 34% in 2007.  The
reduction  was  primarily  due  to  the  absorption  of  selling,   general  and
administrative overhead costs by the 78% increase in sales and revenues.

         Operating  expenses  includes  approximately  $137,000  and $155,000 of
stock-based  compensation  for the three months  ending  September  30, 2008 and
2007, respectively.

INTERNAL RESEARCH AND DEVELOPMENT

         Internal  research and development  expense increased 108% in the three
months ended  September 30, 2008 as compared to the three months ended September
30, 2007,  primarily as a result of our cost sharing  contract with the National
Renewable Energy  Laboratory  ("NREL")  reducing 2007 costs. In addition,  Spire
Semiconductor  had higher head count and related  employee costs for the period.
As a percentage of sales and revenue, however, internal research and development
expenses remained at 1% for both periods.

         The following  table  categorizes  the our  operating  expenses for the
periods  presented,  stated in dollars  and as a  percentage  of total sales and
revenues:
<TABLE><CAPTION>
                                                  Nine Months Ended September 30,                     Increase
                                        --------------------------------------------------    -----------------------
                                            2008           %           2007           %            $             %
                                        ------------    -------    ------------    -------    ------------    -------
<S>                                     <C>             <C>        <C>             <C>        <C>             <C>
Selling, general and administrative     $ 14,017,000      29%      $  9,252,000      36%      $  4,765,000       52%
Internal research and development            482,000       1%           219,000       1%           263,000      120%
                                        ------------               ------------               ------------
   Operating expenses                   $ 14,499,000      30%      $  9,471,000      37%      $  5,028,000       53%
                                        ============               ============               ============
</TABLE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling,  general and administrative  expense increased 52% in the nine
months ended  September 30, 2008 as compared to the nine months ended  September
30,  2007,  primarily  as a  result  of an  increase  in  marketing  activities,
professional  services,  stock-based  compensation,  and  higher  head count and
related employee costs to support our overall growth.  In addition,  commissions
to our network of independent  sales  representatives  related to sales of solar
equipment  were up due to increased  sales and  revenues.  Selling,  general and
administrative  expense  decreased  to 29% of  sales  and  revenues  in  2008 as
compared to 36% in 2007.  The reduction  was primarily due to the  absorption of
selling,  general and administrative overhead costs by the 93% increase in sales
and revenues.

         Operating  expenses  includes  approximately  $451,000  and $336,000 of
stock-based compensation for the nine months ending September 30, 2008 and 2007,
respectively.

INTERNAL RESEARCH AND DEVELOPMENT

         Internal  research and development  expense  increased 120% in the nine
months ended  September 30, 2008 as compared to the nine months ended  September
30,  2007,  primarily  as a result of our cost  sharing  contract  with the NREL
reducing 2007 costs. In addition,  Spire Semiconductor had higher head count and
related  employee  costs for the period.  As a percentage  of sales and revenue,
however,  internal  research and  development  expenses  remained at 1% for both
periods.

GAIN ON SALE OF TRADEMARK

         For the three and nine months ending September 30, 2007 we recorded a
one-time gain of $2,707,000 on the sale of a trademark to Gloria Solar as part
of a $4,000,000 PV module line and technology sale transaction.

                                       19
<PAGE>
OTHER INCOME (EXPENSE), NET

         We earned  $1,000 and $5,000 of  interest  income for the three  months
ended September 30, 2008 and 2007,  respectively.  The decreased interest income
is due to lower cash  balances  held by us during 2008  compared  with 2007.  We
incurred  interest  expense of $50,000 and $88,000  for the three  months  ended
September 30, 2008 and 2007, respectively. The decreased interest expense is due
to the capital lease  associated  with the  semiconductor  foundry ending in May
2008,  partially offset by higher interest  payments in 2008 associated with the
Equipment  Credit Facility  outstanding  with Silicon Valley Bank. We recorded a
$45,000  loss on equity  investment  in joint  venture with Gloria Solar for the
three  months  ended  September  30, 2008.  We had a currency  exchange  gain of
approximately  $16,000 and a currency  exchange  loss of less than $1,000 during
the three months ended September 30, 2008 and 2007, respectively.

         We earned  $12,000 and  $58,000 of interest  income for the nine months
ended September 30, 2008 and 2007,  respectively.  The decreased interest income
is due to lower cash  balances  held by us during 2008  compared  with 2007.  We
incurred  interest  expense of $169,000  and  $138,000 for the nine months ended
September 30, 2008 and 2007, respectively. The increased interest expense is due
to higher  interest  payments  associated  with the  Equipment  Credit  Facility
outstanding  with  Silicon  Valley Bank  compared  with 2007  interest  expenses
primarily  associated with interest  incurred on capital leases  associated with
the semiconductor  foundry.  The capital leases ended in May 2008. We recorded a
$409,000  loss on equity  investment  in joint venture with Gloria Solar for the
nine  months  ended  September  30,  2008.  We had a currency  exchange  loss of
approximately  $392,000 and $14,000  during the nine months ended  September 30,
2008 and 2007, respectively.

INCOME TAXES

         We did not record an income tax  benefit  for the three and nine months
ended  September 30, 2008. We recorded an income tax benefit of $884,000 for the
three and nine months ended September 30, 2007, representing the reversal of the
valuation  allowance due to the expected  utilization of net operating losses. A
valuation allowance has been provided against the current period tax benefit due
to  uncertainty  regarding  the  realization  of the net  operating  loss in the
future.

EXTRAORDINARY GAIN ON INVESTMENT IN JOINT VENTURE

         For the three and nine months ending  September 30, 2007 we recorded an
extraordinary  gain on investment in joint  venture of  $1,311,000,  net of tax,
based upon our 45% portion of tangible assets in the joint venture.

NET INCOME

         We reported a net income for the three months ended  September 30, 2008
and  2007  of  approximately  $445,000  and  $2,755,000,  respectively.  The net
decrease in income of  approximately  $2,310,000  is primarily due to gains from
the sale of assets to Gloria  Solar,  and the  extraordinary  gain on our equity
investment  in our joint venture with Gloria Solar in 2007  partially  offset by
the increase in sales and revenues and the improvement in gross margins in 2008.

         We reported a net loss for the nine months ended September 30, 2008 and
2007  of  approximately  $347,000  and  $856,000,  respectively.  The  net  loss
decreased  approximately  $509,000  primarily  due to the  increase in sales and
revenues and the improvement in gross margins in 2008 partially  offset by gains
from the sale of assets  to  Gloria  Solar,  and the  extraordinary  gain on our
equity investment in our joint venture with Gloria Solar in 2007.

Liquidity and Capital Resources
-------------------------------
<TABLE><CAPTION>
                                      September 30,  December 31,       Increase/(Decrease)
                                          2008           2007            $              %
                                                     As Restated
                                       ----------     ----------     ----------     ----------
         <S>                           <C>            <C>            <C>            <C>
         Cash and cash equivalents     $2,309,000     $2,372,000     $  (63,000)           (3%)
         Working capital               $1,617,000     $2,587,000     $ (970,000)          (38%)
         -------------------------------------------------------------------------------------
</TABLE>

         Cash and cash  equivalents  decreased due to cash used in investing and
financing activities, partially offset by cash provided by operating activities.
The  overall  reduction  in  working  capital is due to an  increase  in current
liabilities,  partially  offset by  operating  cash flow.  We have  historically
funded our operating cash requirements using operating cash flow,  proceeds from
the sale and  licensing  of  technology  and  proceeds  from the sale of  equity
securities.

         We had a $2,000,000 Loan Agreement with Citizens Bank of  Massachusetts
which  expired  on June  26,  2007.  On May 25,  2007,  we and our  wholly-owned
subsidiary, Spire Semiconductor, LLC, entered into a Loan and Security Agreement
(the "Equipment Credit  Facility") with Silicon Valley Bank (the "Bank").  Under
the Equipment Credit Facility, for a one-year period, we and Spire Semiconductor
could borrow up to  $3,500,000  in the  aggregate to finance  certain  equipment
purchases  (including  reimbursement  of  certain  previously-made   purchases).
Advances made under the  Equipment  Credit  Facility  would bear interest at the
Bank's  prime rate,  as  determined,  plus 0.5% and payable in  thirty-six  (36)
consecutive monthly payments following the funding date of that advance.

                                       20
<PAGE>
         On March 31, 2008, we entered into a second Loan and Security Agreement
(the  "Revolving  Credit  Facility")  with  the  Bank.  Under  the  terms of the
Revolving Credit  Facility,  the Bank agreed to provide us with a credit line up
to $5,000,000.  Our obligations  under the Equipment Credit Facility are secured
by  substantially  all of our assets and  advances  under the  Revolving  Credit
Facility are limited to 80% of eligible receivables and the lesser of 25% of the
value of our eligible  inventory,  as defined, or $2,500,000 if the inventory is
backed by a  customer  letter of  credit.  Interest  on  outstanding  borrowings
accrues at a rate per annum  equal to the greater of Prime Rate plus one percent
(1.0%)  or seven  percent  (7%).  In  addition,  we  agreed to pay to the Bank a
collateral  monitoring  fee of $750 per month in the event we are in  default of
our  covenants  and  agreed  to the  following  additional  terms:  (i)  $50,000
commitment  fee; (ii) an unused line fee in the amount of 0.75% per annum of the
average unused portion of the revolving line; and (iii) an early termination fee
of 0.5% of the total credit line if we terminate the Revolving  Credit  Facility
prior to 12 months from the Revolving  Credit  Facility's  effective  date.  The
Revolving  Credit  Facility,  if not sooner  terminated in  accordance  with its
terms,  expires on March 30, 2009.  In addition,  on March 31, 2008 our existing
Equipment  Credit Facility was amended whereby the Bank granted a waiver for our
defaults  for not meeting our December  31, 2007  quarter  liquidity  and profit
covenants and for not meeting our January and February 2008 liquidity covenants.
Further,  the covenants  were amended to match the covenants as discussed  below
contained  in the  Revolving  Credit  Facility.  Our  interest  rate  under  the
Equipment  Credit  Facility  was also  modified  from Bank  Prime  plus one half
percent to the  greater of Bank Prime  plus one  percent  (1%) or seven  percent
(7%).

         On May 13, 2008, the Bank amended the Equipment Credit Facility and the
Revolving  Credit  Facility,  modifying  our net income  profitability  covenant
requirements in exchange for a three quarters  percent  (0.75%)  increase in our
interest rate (7.75% at September 30, 2008) and waiver  restructuring  fee equal
to one half percent  (0.5%) of amounts  outstanding  under the Equipment  Credit
Facility  and  committed  under  the  Revolving  Credit  Facility.  Interest  on
outstanding borrowings accrues at a rate per annum equal to the greater of Prime
Rate plus one percent  (1.0%) or seven percent (7%). In addition,  our term loan
balance  will be  factored  in when  calculating  our  borrowing  base under the
Revolving Credit Facility.

         Under  the  amended  terms of both  credit  facilities,  as long as any
commitment  remains  outstanding  under the  facilities,  we must comply with an
adjusted  quick ratio  covenant and a minimum  monthly net income  covenant.  In
addition,  until all  amounts  under  the  credit  facilities  with the Bank are
repaid, covenants under the credit facilities impose restrictions on our ability
to, among other things, incur additional indebtedness, create or permit liens on
our assets, merge,  consolidate or dispose of assets (other than in the ordinary
course of business),  make dividend and other restricted payments,  make certain
debt or  equity  investments,  make  certain  acquisitions,  engage  in  certain
transactions  with  affiliates  or change the  business  conducted by us and our
subsidiaries.  Any failure by us to comply with the  covenants  and  obligations
under the credit  facilities could result in an event of default,  in which case
the Bank may be  entitled  to declare  all  amounts  owed to be due and  payable
immediately.  Our  obligations  under  the  credit  facilities  are  secured  by
substantially all of our assets.

         At September 30, 2008, we had outstanding borrowings from the Equipment
Credit  Facility  amounting to $2,042,000 and there were no borrowings  from the
Revolving  Credit  Facility.  We were in  compliance  with our  covenants  as of
September 30, 2008.

         We maintain  allowances  for  doubtful  accounts for  estimated  losses
resulting  from the  inability of our  customers to pay amounts due. We actively
pursues  collection  of  past  due  receivables  as the  circumstances  warrant.
Customers are contacted to determine the status of payment and senior accounting
and operations  management are included in these efforts as is deemed necessary.
A specific reserve will be established for past due accounts when it is probable
that a loss has been incurred and we can  reasonably  estimate the amount of the
loss.  We do not record an allowance  for  government  receivables  and invoices
backed by letters of credit as  realizability is reasonably  assured.  Bad debts
are  written  off  against the  allowance  when  identified.  There is no dollar
threshold  for  account  balance  write-offs.  While rare,  a write-off  is only
recorded when all efforts to collect the receivable have been exhausted and only
in consultation with the appropriate business line manager.

         There are no material  commitments by us for capital  expenditures.  At
September  30, 2008,  our  accumulated  deficit was  approximately  $12,036,000,
compared to accumulated deficit of approximately  $11,689,000 as of December 31,
2007.

         We have an  effective  shelf  registration  statement  on file with the
Securities  and  Exchange  Commission  allowing  us to sell up to $60 million of
common stock. We believe it is prudent to maintain shelf  registration  capacity
in order to facilitate  future capital  raising  activities.  To date there have
been no issuances of common stock under this shelf registration  statement.  Due
to the late  filing of this  Form  10-Q,  we will not be able to use this  shelf
registration  statement  after we file our  Annual  Report  on Form 10-K for the
fiscal year ended December 31, 2008.

                                       21
<PAGE>
         We  believe  we  have  sufficient  resources  to  finance  our  current
operations  for the  foreseeable  future  from  operating  cash flow and working
capital. We may, however, raise additional capital through the sale of equity or
equity-related securities,  under the shelf registration statement or otherwise,
under  appropriate  circumstances.  We may also sell or  license  our  assets or
technology.

         On  August  29,  2008,  we  delivered  to  Principia  Lightworks,  Inc.
("Principia")  a Notice of Breach and Pending  Termination  (the  "Notice") of a
certain  Manufacturing  Agreement,  dated August 29, 2006,  by and between Spire
Semiconductor and Principia (the "Manufacturing Agreement").  Under the terms of
the Manufacturing Agreement, Principia made an up-front payment for nonrecurring
engineering  and  facility  access  costs and, in addition  was required to make
monthly facility availability payments throughout the term of the agreement.  As
a result of  Principia's  failure to make recent monthly  facility  availability
payments,  we have reserved  $225,000 against  Principia's  accounts  receivable
balance.  Subsequent  to  September  30,  2008,  we have  entered  into a mutual
standstill  agreement with Principia until December 29, 2008. The purpose of the
standstill  is to give the  parties  the  time to try to  negotiate  a  business
resolution of the issues and disputes  between the parties.  Also  subsequent to
September 30, 2008, we received an up-front payment of $75,000 from Principia to
be applied against future services. Prior to December 29, 2008, the parties have
agreed to hold a meeting where the status of opportunities will be assessed.

         On September 1, 2008, Nisshinbo Industries, Inc ("Nisshinbo") delivered
a  letter  to  us  stating  its   intention   to  terminate   the   Development,
Manufacturing,  and Sales  Consortium  Agreement  (the  "Consortium  Agreement")
entered  into  between  Nisshinbo  and  us on  May  16,  2005.  Pursuant  to the
Consortium  Agreement,  Nisshinbo provided its 180 day prior notice to terminate
the Consortium Agreement effective as of February 28, 2009.

         Under the Consortium Agreement,  Nisshinbo manufactured  laminators for
us and we received royalties based upon Nisshinbo sales to third parties.  Under
the terms of the  Consortium  Agreement,  early  termination  by  Nisshinbo  for
convenience  entitles us to a termination  penalty payment of approximately $5.8
million.  Upon  all  payments  being  satisfied,  we  shall  grant  Nisshinbo  a
perpetual,   royalty-free,   non-exclusive   license  to  our   existing   solar
photovoltaic module manufacturing  equipment methods of engineering,  designing,
manufacturing and other related methods that were in effect when we entered into
the Consortium Agreement. We are in discussions with Nisshinbo on concluding the
Consortium  Agreement,  including  alternative  manufacturing  arrangements  and
technology  license  agreements   concerning   technology  developed  under  the
Consortium Agreement.

Foreign Currency Fluctuation
----------------------------

         We  sell  only  in  U.S.  dollars,  generally  against  an  irrevocable
confirmed letter of credit through a major United States bank.  Accordingly,  we
are not  directly  affected  by foreign  exchange  fluctuations  on our  current
orders. However, fluctuations in foreign exchange rates do have an effect on our
customers'  access to U.S.  dollars  and on the pricing  competition  on certain
pieces of equipment that we sell in selected  markets.  We received Japanese yen
in  exchange  for the sale of a license to our solar  technology.  In  addition,
purchases  made and  royalties  received  under our  Consortium  Agreement  with
Nisshinbo are in Japanese yen. We have  committed to purchase  certain pieces of
equipment from European vendors;  these commitments are denominated in Euros. We
bear the risk of any currency  fluctuations  that may be  associated  with these
commitments.  We attempt to hedge known  transactions  when possible to minimize
foreign exchange risk.

Related Party Transactions
--------------------------

         We  subleased  77,000  square-feet  in a  building  leased by  Mykrolis
Corporation,  who in turn leased the building from  SPI-Trust,  a Trust of which
Roger Little,  our Chairman of the Board, Chief Executive Officer and President,
is the sole trustee and principal beneficiary. 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 sublease  agreement  provided for minimum rental payments
plus annual increases linked to the consumer price index.  Effective December 1,
2005,  we entered  into a two-year  Extension  of Lease  Agreement  (the  "Lease
Extension") directly with SPI-Trust.

         We assumed certain  responsibilities of Mykrolis,  the tenant under the
former  lease,  as a result  of the Lease  Extension  including  payment  of all
building and real estate related expenses associated with the ongoing operations
of the property. We will allocate a portion of these expenses to SPI-Trust based
on  pre-established  formulas  utilizing  square  footage and actual usage where
applicable.  These  allocated  expenses  will be  invoiced  monthly  and be paid
utilizing a SPI-Trust escrow account of which we have sole withdrawal authority.
SPI-Trust is required to maintain three (3) months of its anticipated  operating
costs within this escrow account.  On December 1, 2006, we and SPI-Trust amended
the Lease  Extension to include the lease of an  additional  15,000  square feet
from SPI-Trust for a one-year term. The additional space was leased at a rate of
$8.06 per square foot on annual basis.  The additional  space was used to expand
our solar operations.

         On November 30, 2007, we entered into a new Lease  Agreement  (the "New
Lease") with SPI-Trust,  with respect to 144,230 square feet of space comprising
the entire  building in which we have occupied space since December 1, 1985. The
term of the New Lease  commenced on December 1, 2007 and  continues for five (5)
years until  November 30, 2012.  We have the right to extend the term of the New
Lease for an  additional  five (5) year period.  The annual  rental rate for the

                                       22
<PAGE>
first year of the Lease is $12.50 per square foot on a triple net basis, whereby
the tenant is responsible for operating  expenses,  taxes and maintenance of the
building.  The annual  rental rate  increases on each  anniversary  by $0.75 per
square foot. If we exercises our right to extend the term of the New Lease,  the
annual  rental rate for the first year of the extended  term will be the greater
of (a) the rental rate in effect  immediately  preceding the commencement of the
extended term or (b) the market rate at such time,  and on each  anniversary  of
the commencement of the extended term the rental rate will increase by $0.75 per
square  foot.  We  believe  that the  terms of the New  Lease  are  commercially
reasonable. Rent expense under the New Lease for the three and nine months ended
September 30, 2008 was $505,000 and $1,514,000, respectively.

         In conjunction with our acquisition of Spire Semiconductor in May 2003,
SPI-Trust purchased from Stratos Lightwave,  Inc. (Spire  Semiconductor's former
owner) the building that Spire  Semiconductor  occupies in Hudson, New Hampshire
for $3.7 million. Subsequently, we entered into a lease for the building (90,000
square  feet)  with  SPI-Trust  whereby  we  agreed to pay $4.1  million  to the
SPI-Trust over an initial five-year term expiring in May 2008 with an option for
us to  extend  for five  years.  In  addition  to the rent  payments,  the lease
obligated us to keep on deposit with  SPI-Trust  the  equivalent of three months
rent.  The lease  agreement  did not provide for a transfer of  ownership at any
point. Interest costs were assumed at 7%. This lease was classified as a related
party capital lease and a summary of payments (including interest) follows:

                              Rate Per                                  Security
             Year            Square Foot   Annual Rent   Monthly Rent   Deposit
---------------------------  -----------   -----------   ------------   --------
June 1, 2003 - May 31, 2004     $6.00      $   540,000   $     45,000   $135,000
June 1, 2004 - May 31, 2005      7.50          675,000         56,250    168,750
June 1, 2005 - May 31, 2006      8.50          765,000         63,750    191,250
June 1, 2006 - May 31, 2007     10.50          945,000         78,750    236,250
June 1, 2007 - May 31, 2008     13.50        1,215,000        101,250    303,750
                                           -----------
                                           $ 4,140,000
                                           ===========

         Upon the  expiration  of the lease in May 2008, we did not exercise our
option to extend the lease for an additional 5 years. On May 20, 2008, we agreed
with  SPI-Trust  to continue  the  current  lease,  under the current  terms and
conditions  on a  month-to-month  basis for a maximum of three (3) months beyond
the current term.

         On August 29, 2008, we entered into a new Lease  Agreement (the "Hudson
Lease") with SPI-Trust,  with respect to 90,000 square feet of space  comprising
the entire building in which Spire  Semiconductor  has occupied space since June
1, 2003.  The term of the Hudson  Lease  commenced  on  September  1, 2008,  and
continues for seven (7) years until August 31, 2015. We have the right to extend
the term of the Hudson Lease for an additional five (5) year period.  The annual
rental rate for the first year of the Hudson  Lease is $12.50 per square foot on
a triple-net  basis,  whereby the tenant is responsible for operating  expenses,
taxes and maintenance of the building.  The annual rental rate increases on each
anniversary  by $0.75 per square  foot.  If we exercise  our right to extend the
term of the  Hudson  Lease,  the  annual  rental  rate for the first year of the
extended term will be the greater of: (a) the rental rate in effect  immediately
preceding the  commencement of the extended term; or (b) the market rate at such
time,  and on each  anniversary  of the  commencement  of the extended  term the
rental rate will increase by $0.75 per square foot. In addition, we are required
to deposit with  SPI-Trust  $300,000 as security for  performance  by us for our
covenants and obligations under the Hudson Lease.  SPI-Trust is responsible,  at
its sole expense, to make certain defined tenant improvements to the building by
no later than  February 28, 2009.  We believe that the terms of the Hudson Lease
are commercially  reasonable and reflective of market rates. The lease agreement
did not provide for a transfer of ownership  at any point.  The Hudson Lease was
classified as a related  party  operating  lease.  Rent expense under the Hudson
Lease for the three and nine months ended September 30, 2008 was $111,000.

Critical Accounting Policies
----------------------------

         The  preparation of financial  statements in accordance with accounting
principles generally accepted in the United States requires us to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting  period.  Among the significant  estimates  affecting our consolidated
financial  statements  are those relating to revenue  recognition,  reserves for
doubtful  accounts  and sales  returns  and  allowances,  reserve for excess and
obsolete inventory,  impairment of long-lived assets, income taxes, and warranty
reserves.  We  regularly  evaluate  our  estimates  and  assumptions  based upon
historical  experience  and  various  other  factors  that  it  believes  to  be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  To the extent actual  results differ
from those  estimates,  our future  results of  operations  may be affected.  We
believe the following critical  accounting  policies affect our more significant
judgments and estimates used in the  preparation of our  consolidated  financial
statements.  Refer  to  Footnote  3  of  the  notes  to  consolidated  financial
statements in our Annual  Report on Form 10-K/A for the year ended  December 31,
2007 for a description of our significant accounting policies.

                                       23
<PAGE>
REVENUE RECOGNITION

         We derive our  revenues  from three  primary  sources:  (1)  commercial
products including,  but not limited to, solar energy  manufacturing  equipment,
solar  energy   systems  and   hemodialysis   catheters;   (2)   biomedical  and
semiconductor  processing  services;  and (3) United  States  government  funded
research and development contracts.

         We  generally  recognizes  product  revenue  upon  shipment of products
provided there are no uncertainties  regarding customer  acceptance,  persuasive
evidence of an arrangement exists, the sales price is fixed or determinable, and
collectibility  is reasonably  assured.  These criteria are generally met at the
time of  shipment  when the risk of loss and  title  passes to the  customer  or
distributor,  unless a consignment  arrangement exists. Revenue from consignment
arrangements is recognized based on product usage indicating sales are complete.

         We utilize a  distributor  network to market and sell our  hemodialysis
catheters  domestically.  We generally recognizes revenue when the catheters are
shipped to our  distributors.  Gross sales reflect  reductions  attributable  to
customer  returns and various  customer  incentive  programs  including  pricing
discounts and rebates.  Product returns are permitted in certain sales contracts
and an allowance is recorded for returns based on our history of actual returns.
Certain customer  incentive  programs require management to estimate the cost of
those  programs.  The  allowance  for these  programs is  determined  through an
analysis of programs offered, historical trends, expectations regarding customer
and  consumer  participation,  sales and payment  trends,  and  experience  with
payment  patterns  associated  with similar  programs  that had been  previously
offered.  An  analysis  of the sales  return and rebate  activity  for the three
months ended September 30, 2008, is as follows:

                                          Rebates        Returns       Total
                                         ---------      ---------     ---------
         Balance - June 30, 2008         $  96,000      $   9,000     $ 105,000
            Provision                      175,000          1,000       176,000
            Utilization                   (153,000)            --      (153,000)
                                         ---------      ---------     ---------
         Balance - September 30, 2008    $ 118,000      $  10,000     $ 128,000
                                         =========      =========     =========

         o Credits for rebates are recorded in the month of the actual sale.
         o Credits for returns are processed when we receive the actual returned
           merchandise.
         o Substantially all rebates and returns are processed no later than
           three months after our original shipment.

         The reserve  percentage of inventory held by distributors over the past
quarters  has  increased to  approximately  12.9% at  September  30, 2008,  when
compared to 8% at December 31, 2007. We perform various sensitivity  analyses to
determine the appropriate  reserve  percentage to use. To date, actual quarterly
reserve  utilization has approximated  the amount provided.  The total inventory
held by distributors was approximately $988,000 at September 30, 2008.

         If  sufficient  history to make  reasonable  and reliable  estimates of
returns or rebates does not exist,  revenue  associated  with such  practices is
deferred  until the return period  lapses or a reasonable  estimate can be made.
This deferred revenue will be recognized as revenue when the distributor reports
to us that it has either shipped or disposed of the units  (indicating  that the
possibility of return is remote).

         Our  OEM  capital   equipment  solar  energy  business  builds  complex
customized  machines to order for specific  customers.  Most of these orders are
sold on a FOB Bedford,  Massachusetts  (or EX-Works  Factory)  basis.  It is our
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 our
environment.  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.  For arrangements with multiple elements,
we allocate fair value to each element in the contract and revenue is recognized
upon  delivery of each  element.  If we are not able to establish  fair value of
undelivered elements, all revenue is deferred.

         We recognize  revenues and  estimated  profits on long-term  government
contracts  on the  accrual  basis  where the  circumstances  are such that total
profit can be estimated  with  reasonable  accuracy and ultimate  realization is
reasonably  assured.  We accrue  revenue and profit  utilizing the percentage of
completion method using a cost-to-cost methodology. A percentage of the contract
revenues  and  estimated  profits  is  determined  utilizing  the ratio of costs
incurred to date to total  estimated  cost to complete on a contract by contract
basis.  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 United  States  government  performs an audit of the cost
incurred  under the contract.  Our policy is to take into revenue the full value
of the contract,  including any  retainage,  as we perform  against the contract
because we have not  experienced  any  substantial  losses as a result of audits
performed by the United States government.

                                       24
<PAGE>
IMPAIRMENT OF LONG-LIVED ASSETS

         Long-lived  assets,  including fixed assets and intangible  assets, are
continually  monitored and are evaluated at least annually for  impairment.  The
determination  of  recoverability  is based on an estimate of undiscounted  cash
flows expected to result from the use of an asset and its eventual  disposition.
The  estimate  of  cash  flows  is  based  upon,  among  other  things,  certain
assumptions  about  expected  future  operating  performance.  Our  estimates of
undiscounted  cash flows may differ from  actual cash flows due to,  among other
things,  technological  changes,  economic  conditions,  changes to our business
model or changes in our operating  performance.  If the sum of the  undiscounted
cash flows (excluding interest) is less than the carrying value, we recognize an
impairment loss,  measured as the amount by which the carrying value exceeds the
fair value of the asset.

STOCK-BASED COMPENSATION

         On January 1, 2006, we adopted the fair value recognition provisions of
Financial Accounting Standards Board ("FASB") Statement No. 123(R),  Share-Based
Payment  ("Statement   123(R)")  using  the  modified   prospective  method.  In
accordance  with the  modified  prospective  method,  we have not  restated  our
consolidated  financial  statements  for prior  periods.  Under this  transition
method,  stock-based  compensation  expense  includes  stock-based  compensation
expense for all of our stock-based compensation awards granted prior to, but not
yet vested as of, January 1, 2006,  based on the grant-date fair value estimated
in accordance  with the  provisions of FASB  Statement No. 123,  Accounting  for
Stock-Based Compensation ("Statement 123"). Stock-based compensation expense for
all stock-based compensation awards granted on or after January 1, 2006 is based
on the  grant-date  fair value  estimated in accordance  with the  provisions of
Statement  123(R).  The impact of Statement  123(R) on our results of operations
resulted in recognition of stock compensation expense of approximately  $185,000
and  $181,000  for  the  three  months  ended   September  30,  2008  and  2007,
respectively.  Stock compensation expense was $594,000 and $389,000 for the nine
months ended September 30, 2008 and 2007, respectively.

Contractual Obligations, Commercial Commitments and Off-Balance Sheet
---------------------------------------------------------------------
Arrangements
------------

         The following  table  summarizes our gross  contractual  obligations at
September 30, 2008 and the maturity periods and the effect that such obligations
are expected to have on our liquidity and cash flows in future periods:
<TABLE><CAPTION>
                                                                Payments Due by Period
                                       ---------------------------------------------------------------------------
                                                        Less than         2 - 3           4 - 5         More Than
     Contractual Obligations              Total           1 Year          Years           Years          5 Years
-----------------------------------    -----------     -----------     -----------     -----------     -----------
<S>                                    <C>             <C>             <C>             <C>             <C>
Equipment Credit Facility (SVB)        $ 2,189,000     $ 1,285,000     $   904,000              --              --

Revolving Credit Facility (SVB)                 --              --              --              --              --

Purchase obligations                   $24,035,000     $24,035,000              --              --              --

Capital leases:
  Related party capital lease                   --              --              --              --              --

Operating leases:
  Unrelated party operating leases     $   307,000     $   142,000     $   165,000              --              --
  Related party operating leases       $17,792,000     $ 3,024,000     $ 6,574,000     $ 5,324,000     $ 2,870,000
</TABLE>

         Purchase  obligations  include  all open  purchase  orders  outstanding
regardless  of  whether  they  are  cancelable  or  not.  Included  in  purchase
obligations are raw material and equipment needed to fulfill customer orders.

         Capital lease and credit  facility  obligations  outlined above include
both the principal and interest components of these contractual obligations.

         Total foreign exchange gain for the quarter ended September 30, 2008 of
approximately  $16,000  is  reflected  in  other  income  (expense),  net in the
accompanying unaudited condensed consolidated statement of operations.

         Outstanding  letters  of  credit  totaled  approximately   $161,000  at
September  30,  2008.  The  letters  of credit  principally  secure  performance
obligations, and allow holders to draw funds up to the face amount of the letter
of credit if we do not  perform  as  contractually  required.  These  letters of
credit expire through 2009 and are 100% secured by cash.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market  risk to  which  we are  subject  consists  of the  risk of loss
arising  from  adverse  changes in market  interest  rates and foreign  exchange
rates. Exposure to market rate risk for changes in interest rates relates to our
investment  portfolio.  We have not used derivative financial instruments in our
investment portfolio. We seek to place our investments with high-quality issuers
and we have policies limiting, among other things, the amount of credit exposure
to  any  one  issuer.   We  seek  to  limit  default  risk  by  purchasing  only
investment-grade  securities. We do not believe we have any material market risk
with respect to our financial instruments.

                                       25
<PAGE>
ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
------------------------------------------------

         Our management,  under the supervision of and with the participation of
the Chief Executive Officer and Chief Financial Officer, performed an evaluation
of the  effectiveness  of our disclosure  controls and procedures (as defined in
Rules 13a-15(e) under the Securities  Exchange Act of 1934 (the "Exchange Act"))
as of the end of the period covered by this report, September 30, 2008.

         Based on its  evaluation,  and taking into  consideration  the material
weaknesses in internal control over financial  reporting  referenced  below, our
management,  including the Chief Executive Officer and Chief Financial  Officer,
concluded that our disclosure  controls and procedures  were not effective as of
September 30, 2008.

         As previously reported in our Annual Report on Form 10-K, as filed with
the  Securities and Exchange  Commission  (SEC) on March 31, 2008, in connection
with our assessment of the  effectiveness of our internal control over financial
reporting at the end of our last fiscal  year,  management  identified  material
weaknesses in the internal  control over financial  reporting as of December 31,
2007.

         We had an ineffective  control  environment.  This has been  previously
disclosed in prior filings. Efforts to remediate deficiencies were impeded by an
evolving control  environment  brought on by the rapid expansion in our business
over  the  past  twelve  months.  We did not  maintain  an  effective  financial
reporting process, ensure timely and accurate completion of financial statements
and we did not maintain effective monitoring controls including  reconciliations
and analysis of key  accounts.  We did not have a  sufficient  level of staffing
with the necessary knowledge, experience and training to ensure the completeness
and accuracy of our financial statements.  Specifically, the financial reporting
organization  structure  was not  adequate  to support the size,  complexity  or
activities of our Company.

         This affected our ability to maintain effective monitoring controls and
related segregation of duties over automated and manual transactions  processes.
Specifically,  inadequate  segregation of duties led to untimely  identification
and  resolution  of  accounting  and  disclosure  matters and failure to perform
timely and  effective  supervision  and reviews.  We did not maintain  effective
controls over our IT environment.  Specifically,  we did not perform a review of
restricted  user  access in our  application  software  system  and file  server
critical worksheet  directories.  We lacked sufficient  business  continuity and
back-up polices and procedures.

         In addition to the  material  weaknesses  discussed  above,  we did not
maintain  effective  controls to identify  and  monitor  the  existence  of side
agreements. In November 2008, we became aware of a preexisting undocumented side
agreement  made  in  connection  with a  multiple  element  arrangement.  Timely
notification of the existence of the oral agreement was not  communicated to the
Finance  Department,  and  therefore  the  impact  of  such  agreement  was  not
considered  in the  evaluation  of revenue  recognition  on the  contract.  As a
result, our recognition of revenue was materially  misstated with respect to the
fourth quarter of 2007 and the first quarter of 2008 which required  restatement
of previously issued financial statements.

         As a result of the  foregoing,  management  concluded that our internal
control over financial reporting was not effective as of December 31, 2007.

Changes in Internal Control Over Financial Reporting
----------------------------------------------------

         Except as described below, there have been no changes during our fiscal
quarter  ended  September  30,  2008  in our  internal  control  over  financial
reporting  that  may have  materially  affected,  or are  reasonably  likely  to
materially affect, our internal control over financial reporting.

         Management is actively  addressing the above noted material  weaknesses
and other operational,  financial and internal control  remediation  efforts are
also  underway.  New  policies  and  procedures  have been  created and existing
policies and procedures are being reviewed and have been modified as part of our
documentation  and  testing  of  internal  control  over  financial   reporting.
Management  believes these new internal  control  policies and procedures,  when
fully implemented, along with the training of key personnel and testing of these
key controls will be effective in remediating these material weaknesses.

         In February  2008,  we hired a Director of Financial  Reporting who has
the primary responsibility for the financial close and reporting process and our
internal control and monitoring  environment related to financial reporting.  In
July 2008, we hired a Senior Financial Analyst,  who is actively involved in the
financial  close and  reporting  process  and  assisting  us in our  remediation
efforts.
                                       26
<PAGE>
         We have  implemented  new IT policies  and  procedures  to address user
access,  back-up and business  continuity  and have made  progress in addressing
these  deficiencies.  We have  implemented  new inventory,  financial  close and
revenue recognition  procedures and progress was made in addressing the controls
over IT and Inventory and our financial reporting process.

         Further,  we have hired an outside  consulting firm to assist us in our
Sarbanes-Oxley  control  rationalization,  2008 testing and remediation efforts.
Initial  testing of controls was performed in the third  quarter and  additional
testing and remediation (as needed) will be performed in the fourth quarter.

         As a  non-accelerated  filer, our management will perform an evaluation
of our  internal  control  over  financial  reporting  at the  end of the  year;
however,  our independent  registered  public accounting firm is not required to
issue an opinion on the design or  effectiveness  on our  internal  control over
financial reporting for the 2008 fiscal year.













                                       27
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         During  the  second   quarter  of  2005  a  suit  was  filed  by  Arrow
International, Inc. against Spire Biomedical, Inc., our wholly owned subsidiary,
alleging patent  infringement  by us. The complaint  claimed one of our catheter
products  induced and  contributed to  infringement  when medical  professionals
inserted it. We responded to the  complaint  denying all  allegations  and filed
certain  counterclaims.  We also filed a motion for summary judgment,  asserting
patent   invalidity   resulting   from   plaintiff's   failure   to  follow  the
administrative  procedures of the U.S. Patent and Trademark Office ("USPTO"). On
August 4, 2006, the Court granted our motion and dismissed this lawsuit  without
prejudice. Plaintiffs applied to revive the applicable patent, which application
was granted by the USPTO later in August 2006.  Plaintiffs refiled their lawsuit
against us on August 31, 2006. We have filed our answer and resumed our defense.
We have filed summary  judgment motions with the Court and a hearing was held on
November 12, 2008.  Following this hearing, the Judge ordered discovery reopened
on  the  issue  of  possible   inequitable  conduct  by  the  Plaintiff,   Arrow
International,  Inc. Based on information  presently available to us, we believe
we have  meritorious  legal  defenses  with  respect to this  action.  If we are
unsuccessful  in our defenses,  a portion of our product line may be enjoined or
we may need to redesign certain products to avoid future infringement.  However,
if the plaintiff's patent is found valid and infringed, the parties have already
agreed to a stipulated  calculation of damages based on a pre-specified  royalty
rate.


ITEM 1A. RISK FACTORS

         There have been no material  changes in the Risk  Factors  described in
Part I, Item 1A ("Risk  Factors") of our Annual Report on Form 10-K for the year
ended December 31, 2007, except for the following:.

DISPUTES IN THE CAPITAL AND CREDIT MARKETS RELATED TO THE CURRENT NATIONAL AND
WORLD-WIDE FINANCIAL CRISIS, WHICH MAY CONTINUE OR INTENSIFY, COULD ADVERSELY
AFFECT OUR RESULTS OF OPERATIONS, CASH FLOWS AND FINANCIAL CONDITION, OR THOSE
OF OUR CUSTOMERS OR SUPPLIERS.

         The current  disruptions in the capital and credit markets may continue
indefinitely or intensify, and adversely impact our results of operations,  cash
flows and financial  condition,  or those of our customers and suppliers.  These
disruptions  could  adversely  affect  our  ability  to draw on our bank  credit
facilities.  Disruptions  in the  capital  and  credit  markets  as a result  of
uncertainty,  changing or increased regulation, reduced alternatives or failures
of  significant  financial  institutions  could  adversely  affect our access to
liquidity needed to conduct or expand our businesses or conduct  acquisitions or
make other  discretionary  investments,  as well as our  ability to  effectively
hedge our currency or interest rates.  These same conditions and disruptions may
also adversely  impact the capital needs of our customers and suppliers,  which,
in turn,  could  adversely  affect  our  results of  operations,  cash flows and
financial condition.


WE MAY NOT BE ABLE TO MAINTAIN OUR LISTING ON THE NASDAQ GLOBAL MARKET, WHICH
WOULD ADVERSELY AFFECT THE PRICE AND LIQUIDITY OF OUR COMMON STOCK.

         Our stock is currently  listed on the Nasdaq Global Market.  Because we
do not have a minimum of  stockholders'  equity of  $10,000,000  required  under
Standard No. 1 for continued listing on the Nasdaq Global Market, we have relied
on Standard No. 2 for continued  listing,  which  requires,  among other things,
that the value of our listed securities exceed  $50,000,000.  In order to remain
in  compliance  with  Standard No. 2, the market value of our listed  securities
cannot fall below $50,000,000 for ten consecutive trading days.  However,  since
November 13,  2008,  the market  value of our listed  securities  has been below
$50,000,000 (for a total of 7 consecutive  trading days). If the market value of
our listed  securities  remains below  $50,000,000 for ten  consecutive  trading
days, we will receive a deficiency  notice from Nasdaq.  Following  receipt of a
deficiency notice, we expect we would have 30 calendar days to regain compliance
by having the market value of our listed  securities  exceed  $50,000,000 for at
least 10 consecutive trading days. If we were to fail to meet the minimum market
value  standard  for at least 10  consecutive  trading  days  during  the 30-day
period,  our common stock could be delisted.  Even if we are able to comply with
the minimum market value  requirement,  there is no assurance that in the future
we will continue to satisfy  Nasdaq listing  requirements,  with the result that
our common stock may be delisted. For example, on November 20, 2008, we received
a deficiency  notice from Nasdaq  indicating  that,  because we failed to timely
file our Form 10-Q for the quarter  ended  September 30, 2008, we were no longer
in  compliance  with the  continued  listing  requirements  set  forth in Nasdaq
Marketplace  Rule  4310(c)(14).  While we believe that,  with the filing of this
Form 10-Q, we have regained compliance with Nasdaq Marketplace Rule 4310(c)(14),
we may fail to comply with this rule and other continued listing requirements in
the future.  If we fail to maintain  compliance  with these rules and our common
stock is  delisted  from the Nasdaq  Global  Market,  there could be a number of
negative  implications,  including  reduced  liquidity  in the common stock as a
result of the loss of market  efficiencies  associated  with the  Nasdaq  Global
Market,  the loss of federal  preemption of state securities laws, the potential
loss of confidence by suppliers, customers and employees, as well as the loss of
analyst coverage and institutional investor interest, fewer business development
opportunities and greater difficulty in obtaining financing.

                                       28
<PAGE>
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


ITEM 5.  OTHER INFORMATION

         On November 20, 2008,  we received a deficiency  notice from the Nasdaq
Stock Market  ("Nasdaq")  indicating that,  because we failed to timely file our
Form 10-Q for the quarter ended September 30, 2008 (the "Form 10-Q"), we were no
longer in compliance with the continued listing requirements set forth in Nasdaq
Marketplace Rule 4310(c)(14). The Nasdaq letter advised that, pursuant to Nasdaq
rules, we have 60 calendar days to submit a plan to regain compliance. Following
review of such plan, Nasdaq staff can grant us an exception,  up to 180 calendar
days  from the due date of the Form  10-Q,  or until  May 18,  2009,  to  regain
compliance.  We believe,  however,  that,  with the filing of this Form 10-Q, we
have  regained   compliance  with  Nasdaq   Marketplace  Rule  4310(c)(14)  and,
accordingly,  will not have to submit a plan to regain compliance to Nasdaq with
respect to this matter.


ITEM 6.  EXHIBITS

         10(ae) Lease Agreement, dated September 1, 2008, between Roger G.
                Little, Trustee of SPI-Trust, and Spire Corporation,
                incorporated by reference to Exhibit 10(ae) to the Company's
                Form 8-K filed with the SEC on August 29, 2008.

         31.1   Certification of the Chairman of the Board, Chief Executive
                Officer and President pursuant to ss.302 of the Sarbanes-Oxley
                Act of 2002.

         31.2   Certification of the Chief Financial Officer and Treasurer
                pursuant to ss.302 of the Sarbanes-Oxley Act of 2002.

         32.1   Certification of the Chairman of the Board, Chief Executive
                Officer and President pursuant to 18 U.S.C. ss.1350, as adopted
                pursuant to ss.906 of the Sarbanes-Oxley Act of 2002.

         32.2   Certification of the Chief Financial Officer and Treasurer
                pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of
                the Sarbanes-Oxley Act of 2002.





                                       29
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                       Spire Corporation



Dated:   November 24, 2008             By: /s/ Roger G. Little
                                           ------------------------------
                                           Roger G. Little
                                           Chairman of the Board,
                                           Chief Executive Officer and
                                           President



Dated:   November 24, 2008             By: /s/ Christian Dufresne
                                           ------------------------------
                                           Christian Dufresne, Ph. D.
                                           Chief Financial Officer and Treasurer






















                                       30
<PAGE>
                                  EXHIBIT INDEX




Exhibit                            Description
-------                            -----------

10(ae)   Lease Agreement, dated September 1, 2008, between Roger G. Little,
         Trustee of SPI-Trust, and Spire Corporation, incorporated by reference
         to Exhibit 10(ae) to the Company's Form 8-K filed with the SEC on
         August 29, 2008.

31.1     Certification of the Chairman of the Board, Chief Executive Officer and
         President pursuant to ss.302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification of the Chief Financial Officer and Treasurer pursuant to
         ss.302 of the Sarbanes-Oxley Act of 2002

32.1     Certification of the Chairman of the Board, Chief Executive Officer and
         President pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906
         of the Sarbanes-Oxley Act of 2002.

32.2     Certification of the Chief Financial Officer and Treasurer pursuant to
         18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley
         Act of 2002.