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

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

                                   FORM 10-Q/A
                                (AMENDMENT NO. 1)


  |X|  Quarterly  Report  Pursuant  to Section 13 or 15(d) of the  Securities
       Exchange Act of 1934 For the quarterly period ended March 31, 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 Identification Number)
 incorporation or organization)


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 (Do not check if a smaller reporting company) |_|

Smaller reporting company |X|

     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 May
2, 2008 was 8,330,688.
================================================================================
<PAGE>

                                TABLE OF CONTENTS
<TABLE><CAPTION>

                                                                                                            Page
                                                                                                            ----
<S>                                                                                                          <C>
Explanatory Note  .........................................................................................   1

PART I.      FINANCIAL INFORMATION

Item 1.      Unaudited Condensed Consolidated Financial Statements:

             Unaudited Condensed Consolidated Balance Sheets as of March 31, 2008 (as restated)
             and December 31, 2007 (as restated)  .........................................................   3

             Unaudited Condensed Consolidated Statements of Operations
             for the Three Months Ended March 31, 2008 (as restated) and 2007  ............................   4

             Unaudited Condensed Consolidated Statements of Cash Flows
             for the Three Months Ended March 31, 2008 (as restated) and 2007  ............................   5

             Notes to Unaudited Condensed Consolidated Financial Statements (as restated)  ................   6

Item 2.      Management's Discussion and Analysis of Financial Condition and Results of Operations  .......  18

Item 3.      Quantitative and Qualitative Disclosures About Market Risk  ..................................  27

Item 4T.     Controls and Procedures  .....................................................................  27


PART II.     OTHER INFORMATION

Item 1.      Legal Proceedings  ...........................................................................  29

Item 1A.     Risk Factors  ................................................................................  29

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  ..................................................................................  31

</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 the  previously  issued  financial
statements  included  in our  Quarterly  Reports  on Form  10-Q  for the  fiscal
quarters ended March 31, 2008 (the "Original  Report") 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.

     In this  Quarterly  Report on Form  10-Q/A  (the  "Amended  Report") we are
restating our condensed  consolidated  balance sheet as of December 31, 2007 and
March 31, 2008 and our condensed  consolidated  statements of  operations,  cash
flows and related  disclosures for the  three-month  period ended March 31, 2008
included in the Original Report to correct this error. We are also restating the
consolidated  financial  statements  for fiscal 2007 and condensed  consolidated
financial  statements  for  second  quarter of 2008 to correct  this  error.  We
anticipate  filing on the same date as this Amended Report,  an Annual Report on
Form 10-K/A for fiscal 2007 and a Quarterly Report on Form 10-Q/A for the second
quarter of 2008. We also anticipate filing our Quarterly Report on Form 10-Q for
the three and nine months ended September 30, 2008,  which will also include the
effects  of the  restatements.  We do not  anticipate  filing  amended  periodic
reports  for any  periods  prior to the fourth  quarter of 2007.  For a detailed
discussion  of the  effect  of the  restatements,  see Part I,  Item 1,  Note 2,
"Restatement  of  Previously  Issued  Financial  Statements"  to  the  unaudited
condensed consolidated financial statements.

     We  have  identified  and  reported  "material  weaknesses"  to  the  Audit
Committee of our Board of Directors and Vitale,  Caturano & Company,  Ltd.,  our
independent registered public accounting firm. Please see "Item 4T. Controls and
Procedures" in Part I for a description  of these  matters,  and of the measures
that we have implemented to date, as well as additional steps we plan to take to
strengthen our controls.

     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, 2007    March 31, 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>

     For the reasons discussed above, we are filing this Amended Report in order
to amend Part I, Item 1 "Unaudited Condensed Consolidated Financial Statements,"
Part I, Item 2 "Management's  Discussion and Analysis of Financial Condition and
Results of  Operations"  and Part I, Item 4T "Controls  and  Procedures"  of the
Original  Report to the extent  necessary to reflect the  adjustments  discussed
above and to reflect the results of our  evaluations of disclosure  controls and
procedures  and  internal   control  over  financial   reporting,   taking  into
consideration these restatements. The remaining Items of our Original Report are
not amended hereby and are repeated herein only for the reader's convenience.

     In order to preserve the nature and character of the  disclosures set forth
in the Original Report,  except as expressly noted above,  this report speaks as
of the date of the filing of the Original Report,  May 14, 2008, and we have not
updated  the  disclosures  in this  report  to  speak  as of a later  date.  All
information  contained  in this  Amended  Report  is  subject  to  updating  and
supplementing  as provided in our reports  filed with the SEC  subsequent to the
date of the Original Report.



                                        2
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SPIRE CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE><CAPTION>
                                                                     MARCH 31,       DECEMBER 31,
                                                                       2008              2007
                                                                   ------------      ------------
                                                                           AS RESTATED (1)
                                                                   ------------------------------
                                     ASSETS
<S>                                                               <C>               <C>
Current assets
   Cash and cash equivalents                                       $  2,196,000      $  2,372,000
   Restricted cash - current portion                                    380,000           391,000
                                                                   ------------      ------------
                                                                      2,576,000         2,763,000

   Accounts receivable - trade, net                                   8,738,000        11,865,000
   Inventories, net                                                  14,400,000        11,570,000
    Deferred cost of goods sold                                       8,264,000         8,044,000
    Deposits on equipment for inventory                               2,003,000         2,475,000
   Prepaid expenses and other current assets                            631,000           542,000
                                                                   ------------      ------------
        Total current assets                                         36,612,000        37,259,000

Property and equipment, net                                           6,277,000         6,209,000

Intangible and other assets, net                                        866,000           851,000
Available-for-sale investments, at quoted market value
  (cost of $1,693,000 and $1,696,000 at 3/31/08 and
   12/31/07, respectively)                                            1,693,000         1,800,000
Equity investment in joint venture                                    2,134,000         2,264,000
Deposit - related party                                                 304,000           304,000
                                                                   ------------      ------------
        Total other assets                                            4,997,000         5,219,000
                                                                   ------------      ------------
        Total assets                                               $ 47,886,000      $ 48,687,000
                                                                   ============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Current portion of capital lease obligation - related party     $    190,000      $    486,000
   Current portion of equipment line of credit                        1,167,000         1,167,000
   Accounts payable                                                   3,923,000         2,909,000
   Accrued liabilities                                                6,339,000         6,057,000
   Current portion of advances on contracts in progress              23,200,000        24,053,000
                                                                   ------------      ------------
      Total current liabilities                                      34,819,000        34,672,000

Long-term portion of equipment line of credit                         1,458,000         1,750,000
Long-term portion of advances on contracts in progress                1,765,000         1,950,000
Deferred compensation                                                 1,693,000         1,800,000
Other long-term liabilities                                              72,000            60,000
                                                                   ------------      ------------
   Total long-term liabilities                                        4,988,000         5,560,000
                                                                   ------------      ------------
      Total liabilities                                              39,807,000        40,232,000
                                                                   ------------      ------------

Stockholders' equity
   Common stock, $0.01 par value; 20,000,000 shares
       authorized; 8,328,688 and 8,321,188 shares issued
       and outstanding at March 31, 2008 and  December 31,
       2007, respectively                                                83,000            83,000
   Additional paid-in capital                                        20,208,000        19,999,000
   Accumulated deficit                                              (12,212,000)      (11,689,000)
   Accumulated other comprehensive income, net                             --              62,000
                                                                   ------------      ------------
      Total stockholders' equity                                      8,079,000         8,455,000
                                                                   ------------      ------------
      Total liabilities and stockholders' equity                   $ 47,886,000      $ 48,687,000
                                                                   ============      ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

(1) See Note 2.

                                        3
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE><CAPTION>


                                                                    THREE MONTHS ENDED MARCH 31,
                                                                   ------------------------------
                                                                        2008
                                                                   AS RESTATED(1)        2007
                                                                   -------------     ------------
<S>                                                               <C>               <C>
Net sales and revenues
   Sales of goods                                                  $ 10,995,000      $  4,339,000
   Contract research, service and license revenues                    3,543,000         2,658,000
                                                                   ------------      ------------
      Total net sales and revenues                                   14,538,000         6,997,000

Costs of sales and revenues
   Cost of goods sold                                                 8,494,000         3,526,000
   Cost of contract research, services and licenses                   2,374,000         2,173,000
                                                                   ------------      ------------
      Total cost of sales and revenues                               10,868,000         5,699,000
                                                                   ------------      ------------
Gross Margin                                                          3,670,000         1,298,000

Operating expenses
   Selling, general and administrative expenses                       3,778,000         3,008,000
   Internal research and development expenses                           111,000            45,000
                                                                   ------------      ------------
      Total operating expenses                                        3,889,000         3,053,000
                                                                   ------------      ------------

Loss from operations                                                   (219,000)       (1,755,000)

Interest income (expense), net                                          (60,000)           18,000
Loss on equity investment in joint venture                             (130,000)             --
Foreign exchange loss                                                  (114,000)           (9,000)
                                                                   ------------      ------------
Total other income (expense), net                                      (304,000)            9,000
                                                                   ============      ============

Net loss                                                           $   (523,000)     $ (1,746,000)
                                                                   ============      ============

Loss per share - basic and diluted                                 $      (0.06)     $      (0.21)
                                                                   ============      ============

Weighted average number of common and common equivalent
shares outstanding - basic and diluted                                8,322,919         8,246,691
                                                                   ============      ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

(1) See Note 2.

                                        4
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>


                                                                    THREE MONTHS ENDED MARCH 31,
                                                                   ------------------------------
                                                                        2008
                                                                   AS RESTATED(1)        2007
                                                                   -------------     ------------
<S>                                                               <C>               <C>
Cash flows from operating activities:
-------------------------------------
   Net loss                                                        $   (523,000)     $ (1,746,000)
   Adjustments to reconcile net loss to net cash provided
     by (used in) operating activities:
      Depreciation and amortization                                     454,000           455,000
      Loss on impairment of capital equipment                              --              78,000
      Loss on equity investment in joint venture                        130,000              --
      Deferred compensation                                             (62,000)           (1,000)
      Stock-based compensation                                          196,000            71,000
      Decrease in accounts receivable reserves                          (21,000)          (36,000)
      Decrease in inventory reserves                                    (41,000)         (157,000)
      Changes in assets and liabilities:
        Restricted cash                                                  11,000            (1,000)
        Accounts receivable                                           3,148,000           987,000
        Inventories                                                  (2,789,000)       (3,161,000)
        Deferred cost of goods sold                                    (220,000)             --
        Deposits, prepaid expenses and other current assets             383,000         1,249,000
        Accounts payable, accrued liabilities and other
          liabilities                                                 1,308,000        (1,275,000)
        Advances on contracts in progress                            (1,038,000)        1,012,000
                                                                   ------------      ------------
           Net cash provided by (used in) operating activities          936,000        (2,525,000)
                                                                   ------------      ------------

Cash flows from investing activities:
   Proceeds from maturity of short-term investments                        --           5,000,000
   Purchase of property and equipment                                  (493,000)         (279,000)
   Increase in intangible and other assets                              (44,000)          (28,000)
                                                                   ------------      ------------
           Net cash provided by (used in) investing activities         (537,000)        4,693,000
                                                                   ------------      ------------

Cash flows from financing activities:
   Principal payments on capital lease obligations -
     related parties                                                   (296,000)         (210,000)
   Principal payments on equipment line of credit, net                 (292,000)             --
   Proceeds from exercise of stock options                               13,000           104,000
                                                                   ------------      ------------
           Net cash used in financing activities                       (575,000)         (106,000)
                                                                   ------------      ------------

Net increase (decrease) in cash and cash equivalents                   (176,000)        2,062,000
Cash and cash equivalents, beginning of period                        2,372,000         1,536,000
                                                                   ------------      ------------
Cash and cash equivalents, end of period                           $  2,196,000      $  3,598,000
                                                                   ============      ============

Supplemental disclosures of cash flow information:
   Interest received                                               $      9,000      $     44,000
                                                                   ============      ============
   Interest paid                                                   $     62,000      $      1,000
                                                                   ============      ============
   Interest paid - related party                                   $      7,000      $     25,000
                                                                   ============      ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

(1) See Note 2.

                                        5
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 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 cell and 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 building  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 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 will 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 62% of net sales and revenues
for the quarter  ending March 31,  2008,  continue to  constitute a  significant
portion of the Company's net sales and revenues.

        The Company has incurred significant operating losses in 2008, 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. Loss from operations
for the quarter ended March 31, 2008 was $219,000. These 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 in 2007 and $7.7 million from the sale of equity in
2006. For the quarter ended March 31, 2008, the cash gain (loss from operations
plus or minus non-cash adjustments) was $437,000. As of March 31, 2008, the
Company had unrestricted cash and cash equivalents of $2.2 million compared to
unrestricted cash and cash equivalents of $2.4 million as of December 31, 2007.
While the Company believes it has inherent assets and technology that it could
sell or

                                        6
<PAGE>

license in the near term,  there is no guarantee  that the Company would be able
to sell or license those assets on a timely basis and at appropriate values that
would allow the Company to continue to fund its  operating  losses.  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 March 31, 2009.

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, 2007    March 31, 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
                                              ============        ============

The tables below set forth the effect of the adjustments as of March 31, 2008
and December 31, 2007 and for the three month period ended March 31, 2008 as
applicable:

                                        7
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES
            UNAUDITED RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE><CAPTION>

                                                                         MARCH 31, 2008                     DECEMBER 31, 2007
                                                                 ------------------------------      ------------------------------
                                                                  As Reported       As Restated       As Reported       As Restated
                                                                 ------------      ------------      ------------      ------------
                                     ASSETS
<S>                                                             <C>               <C>               <C>               <C>
Current assets
--------------
   Cash and cash equivalents                                     $  2,196,000      $  2,196,000      $  2,372,000      $  2,372,000
   Restricted cash - current portion                                  380,000           380,000           391,000           391,000
                                                                 ------------      ------------      ------------      ------------
                                                                    2,576,000         2,576,000         2,763,000         2,763,000

   Accounts receivable - trade, net                                 8,738,000         8,738,000        12,766,000        11,865,000
   Inventories, net                                                21,191,000        14,400,000        18,506,000        11,570,000
    Deferred cost of goods sold                                          --           8,264,000              --           8,044,000
    Deposits on equipment for inventory                             2,003,000         2,003,000         2,475,000         2,475,000
   Prepaid expenses and other current assets                          631,000           631,000           542,000           542,000
                                                                 ------------      ------------      ------------      ------------
        Total current assets                                       35,139,000        36,612,000        37,052,000        37,259,000

Property and equipment, net                                         6,277,000         6,277,000         6,209,000         6,209,000

Intangible and other assets, net                                      866,000           866,000           851,000           851,000
Available-for-sale investments, at quoted market value (cost
    of $1,693,000 and $1,696,000 at 3/31/08 and 12/31/07,           1,693,000         1,693,000         1,800,000         1,800,000
    respectively)
Equity investment in joint venture                                  2,134,000         2,134,000         2,264,000         2,264,000
Deposit - related party                                               304,000           304,000           304,000           304,000
                                                                 ------------      ------------      ------------      ------------
        Total other assets                                          4,997,000         4,997,000         5,219,000         5,219,000
                                                                 ------------      ------------      ------------      ------------
        Total assets                                             $ 46,413,000      $ 47,886,000      $ 48,480,000      $ 48,687,000
                                                                 ============      ============      ============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
-------------------
   Current portion of capital lease obligation - related         $    190,000      $    190,000      $    486,000      $    486,000
party
   Current portion of equipment line of credit                      1,167,000         1,167,000         1,167,000         1,167,000
   Accounts payable                                                 3,923,000         3,923,000         2,909,000         2,909,000
   Accrued liabilities                                              6,339,000         6,339,000         6,057,000         6,057,000
   Current portion of advances on contracts in progress            21,465,000        23,200,000        23,599,000        24,053,000
                                                                 ------------      ------------      ------------      ------------
      Total current liabilities                                    33,084,000        34,819,000        34,218,000        34,672,000

Long-term portion of equipment line of credit                       1,458,000         1,458,000         1,750,000         1,750,000
Long-term portion of advances on contracts in progress              1,765,000         1,765,000         1,950,000         1,950,000
Deferred compensation                                               1,693,000         1,693,000         1,800,000         1,800,000
Other long-term liabilities                                            72,000            72,000            60,000            60,000
                                                                 ------------      ------------      ------------      ------------
   Total long-term liabilities                                      4,988,000         4,988,000         5,560,000         5,560,000
                                                                 ------------      ------------      ------------      ------------
      Total liabilities                                            38,072,000        39,807,000        39,778,000        40,232,000
                                                                 ------------      ------------      ------------      ------------

Stockholders' equity
--------------------
  Common stock, $0.01 par value; 20,000,000 shares
  authorized; 8,328,688 and 8,321,188 shares issued
  and outstanding at March 31, 2008 and December 31, 2007,
  respectively                                                         83,000            83,000            83,000            83,000
   Additional paid-in capital                                      20,208,000        20,208,000        19,999,000        19,999,000
   Accumulated deficit                                            (11,950,000)      (12,212,000)      (11,442,000)      (11,689,000)
   Accumulated other comprehensive income, net                           --                --              62,000            62,000
                                                                 ------------      ------------      ------------      ------------
      Total stockholders' equity                                    8,341,000         8,079,000         8,702,000         8,455,000
                                                                 ------------      ------------      ------------      ------------
      Total liabilities and stockholders' equity                 $ 46,413,000      $ 47,886,000      $ 48,480,000      $ 48,687,000
                                                                 ============      ============      ============      ============
</TABLE>

                                        8
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES
       UNAUDITED RESTATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE><CAPTION>

                                                           THREE MONTHS ENDED MARCH 31, 2008
                                                           ---------------------------------
                                                             AS REPORTED       AS RESTATED
                                                            ------------      ------------
Net sales and revenues
----------------------
<S>                                                         <C>               <C>
   Sales of goods                                           $ 11,375,000      $ 10,995,000
   Contract research, service and license revenues             3,543,000         3,543,000
                                                            ------------      ------------
      Total net sales and revenues                            14,918,000        14,538,000

Costs of sales and revenues
---------------------------
   Cost of goods sold                                          8,859,000         8,494,000
   Cost of contract research, services and licenses            2,374,000         2,374,000
                                                            ------------      ------------
      Total cost of sales and revenues                        11,233,000        10,868,000
                                                            ------------      ------------
Gross Margin                                                   3,685,000         3,670,000

Operating expenses
------------------
   Selling, general and administrative expenses                3,778,000         3,778,000
   Internal research and development expenses                    111,000           111,000
                                                            ------------      ------------
      Total operating expenses                                 3,889,000         3,889,000
                                                            ------------      ------------

Loss from operations                                            (204,000)         (219,000)
--------------------

Interest income (expense), net                                   (60,000)          (60,000)
Loss on equity investment in joint venture                      (130,000)         (130,000)
Foreign exchange loss                                           (114,000)         (114,000)
                                                            ------------      ------------
Total other income (expense), net                               (304,000)         (304,000)
                                                            ============      ============

Net loss                                                    $   (508,000)     $   (523,000)
--------                                                    ============      ============

Loss per share - basic and diluted                          $      (0.06)     $      (0.06)
----------------------------------                          ============      ============

Weighted average number of common and common
equivalent shares outstanding - basic and diluted              8,322,919         8,322,919
                                                            ============      ============
</TABLE>

                                        9
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES
       UNAUDITED RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>

                                                                        THREE MONTHS ENDED MARCH 31, 2008
                                                                        ---------------------------------
                                                                          AS REPORTED       AS RESTATED
                                                                         ------------      ------------
Cash flows from operating activities:
-------------------------------------
<S>                                                                     <C>               <C>
   Net loss                                                              $   (508,000)     $   (523,000)
   Adjustments to reconcile net loss to net cash provided by (used
      in) operating activities:
      Depreciation and amortization                                           454,000           454,000
      Loss on impairment of capital equipment                                    --                --
      Loss on equity investment in joint venture                              130,000           130,000
      Deferred compensation                                                   (62,000)          (62,000)
      Stock-based compensation                                                196,000           196,000
      Decrease in accounts receivable reserves                                (21,000)          (21,000)
      Decrease in inventory reserves                                          (41,000)          (41,000)
      Changes in assets and liabilities:
        Restricted cash                                                        11,000            11,000
        Accounts receivable                                                 4,049,000         3,148,000
        Inventories                                                        (2,644,000)       (2,789,000)
        Deferred cost of goods sold                                              --            (220,000)
        Deposits, prepaid expenses and other current assets                   383,000           383,000
        Accounts payable, accrued liabilities and other liabilities         1,308,000         1,308,000
        Advances on contracts in progress                                  (2,319,000)       (1,038,000)
                                                                         ------------      ------------
           Net cash provided by (used in) operating activities                936,000           936,000
                                                                         ------------      ------------

Cash flows from investing activities:
-------------------------------------
   Proceeds from maturity of short-term investments                              --                --
   Purchase of property and equipment                                        (493,000)         (493,000)
   Increase in intangible and other assets                                    (44,000)          (44,000)
                                                                         ------------      ------------
           Net cash provided by (used in) investing activities               (537,000)         (537,000)
                                                                         ------------      ------------

Cash flows from financing activities:
-------------------------------------
   Principal payments on capital lease obligations - related parties         (296,000)         (296,000)
   Principal payments on equipment line of credit, net                       (292,000)         (292,000)
   Proceeds from exercise of stock options                                     13,000            13,000
                                                                         ------------      ------------
           Net cash used in financing activities                             (575,000)         (575,000)
                                                                         ------------      ------------

Net increase (decrease) in cash and cash equivalents                         (176,000)         (176,000)
Cash and cash equivalents, beginning of period                              2,372,000         2,372,000
                                                                         ------------      ------------
Cash and cash equivalents, end of period                                 $  2,196,000      $  2,196,000
                                                                         ============      ============

Supplemental disclosures of cash flow information:
--------------------------------------------------
   Interest received                                                     $      9,000      $      9,000
                                                                         ============      ============
   Interest paid                                                         $     62,000      $     62,000
                                                                         ============      ============
   Interest paid - related party                                         $      7,000      $      7,000
                                                                         ============      ============
</TABLE>


                                       10
<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/A 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 March 31, 2008 and December 31,
2007 and the results of its operations and cash flows for the three months ended
March 31, 2008 and 2007.  The results of  operations  for the three months ended
March 31, 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 that this issuance will have on its
financial position and results of operation.

     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 Statement of Financial  Accounting Standards
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. FAS161 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 that this issuance will
have on its financial position and results of operation.

                                       11
<PAGE>

4. ACCOUNTS RECEIVABLE/ADVANCES ON CONTRACTS IN PROGRESS

     Net accounts receivable, trade consists of the following:

                                                                  December 31,
                                                 March 31,            2007
                                                   2008           As Restated
                                               ------------      ------------

     Amounts billed                            $  7,810,000      $ 11,142,000
     Retainage                                        8,000             8,000
     Accrued revenue                              1,129,000           945,000
                                               ------------      ------------
                                                  8,947,000        12,095,000
     Less: Allowance for sales returns and
       doubtful accounts                           (209,000)         (230,000)
                                               ------------      ------------
     Net accounts receivable, trade            $  8,738,000      $ 11,865,000
                                               ============      ============
     Advances on contracts in progress         $ 24,965,000      $ 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. Included in
retainage  are amounts  expected to be collected  after one year,  which totaled
approximately  $8,000 at March 31, 2008 and December 31, 2007. The  government's
most recent audit was as of December 31, 2006, with no adverse impact. All other
accounts receivable are expected to be collected within one year.

     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 over 60
days and  over a  specified  amount,  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.

     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 COST OF GOODS SOLD

     Inventories, net of $313,000 and $354,000 of reserves at March 31, 2008 and
December 31, 2007, respectively, consist of the following at:

                                               March 31,      December 31,
                                                 2008             2007
                                             ------------     ------------
                                                      As Restated
                                             -----------------------------

     Raw materials                           $  4,860,000     $  4,989,000
     Work in process                            8,142,000        4,663,000
     Finished goods                             1,398,000        1,918,000
                                             ------------     ------------
     Net Inventory                           $ 14,400,000     $ 11,570,000
                                             ============     ============
     Deferred cost of goods sold             $  8,264,000     $  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.

                                       12
<PAGE>

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:
<TABLE><CAPTION>
                                                               Three Months Ended March 31,
                                                               ----------------------------
                                                                   2008           2007
                                                                ----------     ----------
<S>                                                            <C>            <C>
     Weighted average number of common and common
        equivalent  shares outstanding - basic                   8,322,919      8,246,691
     Add: Net additional common shares upon assumed
        exercise of common stock options                              --             --
                                                                ----------     ----------
     Adjusted weighted average number of common and
        common equivalents shares outstanding - diluted          8,322,919      8,246,691
                                                                ==========     ==========
</TABLE>

     For the three  months  ended March 31,  2008 and 2007,  208,847 and 101,050
shares,  respectively,  of common stock  related to stock  options 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  months  ended March 31, 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 period.

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                                       Company
                                                  As Restated   Biomedical   Optoelectronics   As Restated
                                                  -----------   ----------   ---------------   -----------
For the three months ended March 31, 2008
-----------------------------------------
<S>                                               <C>           <C>             <C>            <C>
Net sales and revenues                            $10,293,000   $2,808,000      $1,437,000     $14,538,000
Income (loss) from operations                     $   313,000   $ (176,000)     $ (356,000)    $  (219,000)

                                                                                                  Total
                                                     Solar      Biomedical   Optoelectronics     Company
                                                  -----------   ----------   ---------------   -----------
For the three months ended March 31, 2007
-----------------------------------------
Net sales and revenues                            $ 3,594,000   $2,505,000     $  898,000      $ 6,997,000
Loss from operations                              $  (583,000)  $ (512,000)    $ (660,000)     $(1,755,000)
</TABLE>


The following table shows net sales and revenues by geographic area (based on
customer location):

                                         Three Months Ended March 31,
                                ---------------------------------------------
                                    2008
                                As Restated      %          2007         %
                                -----------   -------   -----------   -------

     United States              $ 5,470,000       38%   $ 3,211,000       46%
     Europe/Africa                5,219,000       36%     1,702,000       24%
     Asia                         3,647,000       25%     1,997,000       29%
     Rest of the world              202,000        1%        87,000        1%
                                -----------   -------   -----------   -------
                                $14,538,000      100%   $ 6,997,000      100%
                                ===========   =======   ===========   =======

     Revenues  from  contracts  with United States  government  agencies for the
three  months  ended March 31,  2008 and 2007 were  approximately  $400,000  and
$254,000, or 3% and 4% of consolidated net sales and revenues, respectively.

     One customer accounted for approximately 20% and three customers  accounted
for approximately 50% of the Company's gross sales during the three months ended
March 31, 2008 and 2007,  respectively.  One customer  represented  31% of trade
account receivables at March 31, 2008 and two customer  represented 46% of trade
account receivables at December 31, 2007.

                                       13
<PAGE>

8. INTANGIBLE AND OTHER ASSETS

     Patents  amounted to $130,000 net of accumulated  amortization of $700,000,
at March 31, 2008. Licenses amounted to $93,000, net of accumulated amortization
of  $232,000  at March 31,  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
$603,000 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 9 months                          $ 153,000
     2009                                               171,000
     2010                                               166,000
     2011                                               159,000
     2012 and beyond                                    177,000
                                                      ---------
                                                      $ 826,000
                                                      =========

     Also  included  in other  assets are  approximately  $40,000 of  refundable
deposits made by the Company at March 31, 2008.

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:

                                           March 31, 2008     December 31, 2007
                                           --------------     -----------------

     Equity investments                      $1,410,000          $1,411,000
     Government bonds                           259,000             303,000
     Cash and money market funds                 24,000              86,000
                                             ----------          ----------
                                             $1,693,000          $1,800,000
                                             ==========          ==========

     These  investments  have been  classified  as long-term  available-for-sale
investments  and are reported at fair value,  with  unrealized  gains and losses
included in accumulated other  comprehensive loss, net of related tax effect. As
of March 31, 2008, the net unrealized  gain on these  marketable  securities was
less than $1,000.

     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:

          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.

                                       14
<PAGE>

          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 March 31, 2008 by FAS 157 valuation hierarchy (as defined above).


                                    Level 1      Level 2    Level 3      Total
                                  ----------------------------------------------
Available for sale investments    $ 1,377,000   $ 316,000      --     $1,693,000
Percent of total                          81%         19%      --           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).  Each  advance  made  under  the  Equipment  Credit
Facility would be due thirty-six  (36) months from the date the advance is made.
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  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%) (7% at March 31,  2008).  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 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 new  covenants  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%) (7% at March 31, 2008).

     Under the terms of the Equipment Credit Facility, as long as any commitment
remains outstanding under the facility, the Company must comply with an adjusted
quick ratio covenant and a minimum  quarterly 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.

     At March 31, 2008, the Company's outstanding  borrowings from the Equipment
Credit  Facility  amounted to $2,625,000  and there were no borrowings  from the
Revolving Credit Facility.  The Company was not in compliance with its covenants
as of  March  31,  2008,  but not in  default  because  a Bank  waiver  has been
received.

                                       15
<PAGE>

     On May 13, 2008, the Bank amended each of 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 and waiver  restructuring  fee equal to one half
percent (.05%) 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.


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 March 31, 2008 and 2007,
the Company applied 8% and 14% 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  $196,000 and
$71,000 for the three  months ended March 31, 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:


                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                      2008              2007
                                                    --------          --------

     Cost of contract research, services and
       licenses                                     $ 13,000          $  5,000
     Cost of goods sold                               32,000             1,000
     Selling, general and administrative             151,000            65,000
                                                    --------          --------
           Total stock-based compensation           $196,000          $ 71,000
                                                    ========          ========

     At March 31,  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
March 31, 2008 and changes during the three-month period is as follows:
<TABLE><CAPTION>
                                                                             Average
                                                            Weighted-       Remaining
                                              Number of      Average       Contractual      Aggregate
                                               Shares     Exercise Price   Life (Years)  Intrinsic Value
                                              ---------   --------------   -----------   ---------------
<S>                                           <C>           <C>               <C>          <C>
Options Outstanding at December 31, 2007       495,177        $7.10
Granted                                         25,000       $12.75
Exercised                                       (7,500)       $1.78
Cancelled/expired                               (3,500)       $9.60
                                              --------      -------
Options Outstanding at March 31, 2008          509,177        $7.44            7.47         $4,032,549
                                              ========      =======

Options Exercisable at March 31,  2008         223,492        $5.94            5.96         $2,106,295
                                              ========      =======
</TABLE>

                                       16
<PAGE>

     No stock options were granted during the three months ended March 31, 2007.
The per-share  weighted-average  fair value of stock options  granted during the
three  months  ended  March 31,  2008 was  $7.28 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           --             2.42%        4.5 years         70.69%

     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.

12. COMPREHENSIVE LOSS

     Comprehensive  loss  includes  certain  changes in equity that are excluded
from net loss and consists of the following:

                                            For the Three Months Ended March 31,
                                            ------------------------------------
                                                     2008
                                                 As Restated        2007
                                                 -----------    -----------

     Net loss                                    $  (523,000)   $(1,746,000)
     Other comprehensive income:
       Unrealized gain on available for sale
         marketable securities, net of tax              --            1,000
                                                 -----------    -----------
     Total comprehensive loss                    $  (523,000)   $(1,745,000)
                                                 ===========    ===========

13. SUBSEQUENT EVENTS

     On May 13, 2008, the Bank amended each of 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 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.

                                       17
<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  cell and 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 building 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

                                       18
<PAGE>

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 62% of net sales and  revenues for the
three months ended March 31, 2008,  continue to constitute a significant portion
of our net sales and revenues.

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  quarter  ended
March 31, 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:

                                                          Three Months Ended
                                                                March 31,
                                                       -------------------------
                                                           2008
                                                       As Restated       2007
                                                       -----------    ----------
     Net sales and revenues                                100%          100%
     Cost of sales and revenues                             75            81
                                                       -----------    ----------
        Gross margin                                        25            19
     Selling, general and administrative expenses           26            43
     Internal research and development expenses              1             1
                                                       -----------    ----------
        Loss from operations                                (2)          (25)
     Other income (expense), net                            (2)           --
                                                       -----------    ----------
        Loss before income tax benefit                      (4)          (25)
     Income tax benefit                                     --            --
                                                       -----------    ----------
        Net loss                                            (4%)         (25%)
                                                       -----------    ----------


                                       19
<PAGE>

OVERALL

     Our total net sales and  revenues for the three months ended March 31, 2008
("2008") were  $14,538,000  as compared to $6,997,000 for the three months ended
March 31, 2007 ("2007"), which represents an increase of $7,541,000 or 108%. The
increase was primarily  attributable to a $6,699,000 increase in solar sales and
a $539,000 increase in optoelectronics sales.

SOLAR BUSINESS UNIT

     Sales in our solar  business unit increased 186% during 2008 to $10,293,000
as compared to  $3,594,000  in 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  12% during 2008 to
$2,808,000 as compared to $2,505,000 in 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 60% to $1,437,000
during 2008 as compared to $898,000 in 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.

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
-------------------------------------------------------------------------------

NET SALES AND REVENUES

     The following table  categorizes our net sales and revenues for the periods
presented:
<TABLE><CAPTION>
                                        Three Months Ended March 31,           Increase
                                        ----------------------------    ----------------------
                                                                             $             %
                                            2008                        -----------     ------
                                         As Restated        2007        As Restated
                                         -----------     ----------     ----------------------
<S>                                      <C>             <C>             <C>             <C>
     Sales of goods                      $10,995,000     $4,339,000      $6,656,000      153%
     Contract research, services and
       license revenues                    3,543,000      2,658,000         885,000       33%
                                         -----------     ----------      ----------
        Net sales and revenues           $14,538,000     $6,997,000      $7,541,000      108%
                                         ===========     ==========      ==========
</TABLE>

     The 153%  increase in sales of goods for the three  months  ended March 31,
2008 as compared to the three months ended March 31, 2007 was  primarily  due to
an  increase  in solar  equipment  revenues,  partially  offset by a decrease in
catheter  products  sales.  Solar  equipment  sales  increased  198%  in 2008 as
compared to 2007  primarily due to an overall  increase in solar power  industry
activity. Sales of catheters decreased approximately 3%.

     The 33% increase in contract  research,  services and license  revenues for
the three  months  ended March 31, 2008 as  compared to the three  months  ended
March  31,  2007  is  primarily  attributable  to an  increase  in  orthopedics,
optoelectronics and government research and development activities. Revenue from
our optoelectonics  processing services (Spire  Semiconductor)  increased 60% 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 64% 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.

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:

                                       20
<PAGE>
<TABLE><CAPTION>
                                                       Three Months Ended March 31,                      Increase
                                             ------------------------------------------------     ---------------------
                                                 2008          %           2007          %            $            %
                                             -----------    -------    -----------    -------     --------      -------
                                                  As Restated                                          As Restated
                                             ----------------------    ----------------------     ---------------------
<S>                                          <C>              <C>      <C>              <C>       <C>             <C>
Cost of goods sold                           $ 8,494,000      77%      $ 3,526,000      81%       $ 4,968,000      141%
Cost of contract research, services
   and licenses                                2,374,000      67%        2,173,000      82%           201,000        9%
                                             -----------               -----------                -----------
   Net cost of sales and revenues            $10,868,000      75%      $ 5,699,000      81%       $ 5,169,000       91%
                                             ===========               ===========                ===========
</TABLE>

     Cost of goods sold increased 141% in 2008 as compared to 2007, primarily as
a result of the 153%  increase in related  revenues.  As a percentage  of sales,
cost of goods sold was 77% of sales of goods in 2008 as compared to 81% of sales
in 2007.  This  reduction  in the  percentage  of sales in 2008 is due to higher
levels of revenue along with better utilization of solar manufacturing overhead.

     Cost of contract  research,  services and licenses  increased 9% in 2008 as
compared to 2007,  primarily as a result of the 33% 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 67% of  revenues  in 2008 from 82% in 2007,  primarily  due to the
increase  in related  revenues  and better  utilization  of  biomedical  and its
optoelectronic factory overhead.

     Cost of sales and revenues also includes  approximately  $45,000 and $6,000
of stock-based compensation for the three months ending March 31, 2008 and 2007,
respectively, due to the adoption of SFAS 123(R) in 2006.

OPERATING EXPENSES

     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>
                                                       Three Months Ended March 31,                      Increase
                                             ------------------------------------------------     ---------------------
                                                 2008          %           2007          %            $            %
                                             -----------    -------    -----------    -------     --------      -------
                                                  As Restated                                          As Restated
                                             ----------------------    ----------------------     ---------------------
<S>                                          <C>              <C>      <C>              <C>       <C>             <C>

Selling, general and administrative          $ 3,778,000      26%      $ 3,008,000      43%       $   770,000       26%
Internal research and development                111,000       1%           45,000       1%            66,000      147%
                                             -----------               -----------                -----------
   Operating expenses                        $ 3,889,000       27%     $ 3,053,000      44%       $   836,000       27%
                                             ===========               ===========                ===========
</TABLE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expense  increased  26% in  2008 as
compared  to  2007,  primarily  as  a  result  of  an  increase  in  stock-based
compensation, professional services used by us and higher head count and related
employee  costs.  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 26%
of sales and  revenues  in 2008 as compared to 43% in 2007.  The  reduction  was
primarily due to the 108% increase in sales and revenues partially offset by the
26% increase in expenses.

     Operating   expenses  includes   approximately   $151,000  and  $65,000  of
stock-based  compensation  for the three months  ending March 31, 2008 and 2007,
respectively, due to the adoption of SFAS 123(R) in 2006.

INTERNAL RESEARCH AND DEVELOPMENT

     Internal  research  and  development  expense  increased  147%  in  2008 as
compared to 2007,  primarily as a result of our cost sharing  contract  with the
National Renewable Energy Laboratory ("NREL") reducing 2007 costs.

OTHER INCOME (EXPENSE), NET

     We earned  $9,000 and $44,000 of  interest  income for the  quarters  ended
March 31, 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 $69,000 and $26,000 for the  quarters  ended March 31, 2008
and 2007, respectively. The increased interest expense is due to higher interest
payments  associated  with the $3.5 million term loan  outstanding  with Silicon
Valley Bank compared  with 2007  interest  expenses  primarily  associated  with
interest incurred on capital leases associated with the semiconductor foundry.

                                       21
<PAGE>

     We recorded a $130,000  loss on equity  investment  in joint  venture  with
Gloria Solar for the quarter ended March 31, 2008.

     Due  to  the  conversion  of  U.S.  dollars  into  Japanese  Yen,  we  lost
approximately  $114,000 and $9,000 during the quarters  ended March 31, 2008 and
2007, respectively.

INCOME TAXES

     We did not record an income tax  benefit for the three  months  ended March
31, 2008 and 2007. 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.

NET INCOME

     We  reported  a net loss for the  three  months  ended  March  31,  2008 of
approximately  $523,000,  compared to a net loss of $1,746,000 in 2007.  The net
loss decreased  approximately  $1,223,000 primarily due to the increase in sales
and revenues and the improvement in gross margins.

Liquidity and Capital Resources
-------------------------------

                                                                  Decrease
                                  March 31,   December 31,   -------------------
                                     2008        2007              $          %
                                        As Restated              As Restated
                                 -------------------------   -------------------

     Cash and cash equivalents   $2,196,000     $2,372,000   $ (176,000)    (7%)
     Working capital             $1,793,000     $2,587,000   $ (794,000)   (31%)

     Cash and cash equivalents  decreased slightly 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 cash losses from
operations  and an additional  investment in property and equipment of $493,000.
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).  Each
advance made under the Equipment  Credit  Facility would be due thirty-six  (36)
months  from the date the  advance is made.  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,  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%) (7% at March 31, 2008).  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,  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 new covenants  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%) (7% at March 31, 2008).

                                       22
<PAGE>

     Under the terms of the Equipment Credit Facility, as long as any commitment
remains  outstanding  under the facility,  we must comply with an adjusted quick
ratio covenant and a minimum quarterly 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 March 31, 2008, we had outstanding  borrowings from the Equipment Credit
Facility amounting to $2,625,000 and there were no borrowings from the Revolving
Credit  Facility.  We were not in compliance  with our covenants as of March 31,
2008, but not in default because a Bank waiver has been received.

     On May 13, 2008, the Bank amended each of the Equipment Credit Facility and
the  Revolving  Credit  Facility,  modifying  the our net  income  profitability
covenant  requirements in exchange for a three quarters percent (0.75%) increase
in our  interest  rate 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,  our term loan balance will be
factored in when  calculating  our  borrowing  base under the  Revolving  Credit
Facility.

     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 over 60 days and over
a specified amount, 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 March
31, 2008, our accumulated  deficit was  approximately  $12,212,000,  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.

     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 securities,  under
the shelf registration statement or otherwise, under appropriate circumstances.

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 our
Japanese  partner 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 do not believe that foreign exchange  fluctuations  will
materially affect our operations.

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.

                                       23
<PAGE>

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
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 months ended March
31, 2008 was $505,000.

     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 2008 with an option for us
to extend for five years. In addition to the rent payments,  the lease obligates
us to keep on  deposit  with  SPI-Trust  the  equivalent  of three  months  rent
($304,000  as of March 31,  2008.) The lease  agreement  does not  provide for a
transfer of ownership at any point.  Interest costs were assumed at 7%. Interest
expense was approximately $6,800 for the three months ended March 31, 2008. This
lease has been  classified  as a related  party  capital  lease and a summary of
payments (including interest) follows:

                                    Rate Per       Annual     Monthly   Security
                Year               Square Foot      Rent       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
                                                 ==========

     At March 31, 2008,  $190,000 reflected the current portion of capital lease
obligation - related party, in the consolidated balance sheet.

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

                                       24
<PAGE>

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.

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 March 31, 2008, is as follows:

                                           Rebates      Returns      Total
                                           --------     -------     --------

     Balance - December 31, 2007           $ 77,000     $10,000     $ 87,000
        Provision                           109,000       9,000      118,000
        Utilization                        (100,000)     (9,000)    (109,000)
                                           --------     -------     --------
     Balance - March 31, 2008              $ 86,000     $10,000     $ 96,000
                                           ========     =======     ========

     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  9% at March 31, 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 $987,000 at March 31, 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

                                       25
<PAGE>

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.

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 option  expense of  approximately  $196,000 and
$71,000 for the three months ended March 31, 2008 and 2007, respectively.

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

The following table summarizes our gross contractual obligations at March 31,
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)           $2,841,000    $1,313,000    $1,528,000          --           --

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

Purchase obligations                      $1,412,000    $1,405,000       $ 7,000          --           --

Capital leases:
  Related party capital lease             $  192,000    $  192,000          --            --           --

Operating leases:
  Unrelated party operating leases        $  345,000    $  135,000     $ 210,000          --           --
  Related party operating lease           $9,495,000    $1,839,000    $4,002,000    $3,654,000         --
</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.

                                       26
<PAGE>

     We closed our Japanese yen account during the first quarter of 2008.  Total
foreign  exchange  loss for the quarter  ended  March 31, 2008 of  approximately
$114,000  is  reflected  in  other  income  (expense),  net in the  accompanying
unaudited condensed consolidated statement of operations.

     Outstanding letters of credit totaled  approximately  $250,000 at March 31,
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
2008 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.

ITEM 4T. CONTROLS AND PROCEDURES

Restatement of Consolidated Financial Statements
------------------------------------------------

     In November 2008, we detected a side arrangement of which its existence was
not taken into account when we recognized revenue on the multi-element contract.
The identified  contract was partially  recognized in the fourth quarter of 2007
and  partially  in the first  quarter  of 2008 under  multi-element  arrangement
accounting  rules.  As we could not establish the fair value of the  undelivered
elements given under the side arrangement, we incorrectly recognized the revenue
rather than deferring all revenue until all elements were delivered.

     Under the direction of the Audit  Committee and with the  assistance of the
Chief  Operating  Officer,  the Company's Chief  Financial  Officer  conducted a
review of the solar equipment contracting process and order management activity,
including a review of contract  modifications.  Sales personnel and key managers
in the  solar  equipment  department  who are  involved  with the  execution  of
contracts were interviewed with respect to the knowledge of internal  procedures
on  customer  requests  for  concessions  as  well  as  their  knowledge  of any
previously  granted customer  concessions or  modifications.  Additionally,  the
Company  contacted  a  large  sample  of  external   customers  to  confirm  the
completeness of deliverables as called for by the written  contract or any other
means of  communications.  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.

     The error that caused the  improper  recognition  of revenue was not timely
identified  by our  procedures  and  controls  in place and $1.735  million  was
incorrectly  recognized as goods revenue,  resulting in a material overstatement
of goods  revenue  for the  fourth  quarter  of  fiscal  year 2007 and the first
quarter of 2008.  On November  18,  2008,  the Audit  Committee  of the Board of
Directors, in consultation with and upon recommendation of management, concluded
that due to the error in accounting  for goods revenue,  our  previously  issued
financial  statements  for the fourth  quarter and fiscal  2007  included in the
Annual  Report on Form 10-K for the fiscal year ended  December 31, 2007 and our
previously issued financial statements included in the Quarterly Reports on Form
10-Q for the fiscal  quarters  ended  March 31, 2008 and June 30, 2008 should no
longer be relied  upon and  should be  restated.  Please  refer to Note 2 of the
notes to the  consolidated  financial  statements  for a  quantification  of the
restatement.

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, March 31, 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
March 31, 2008.

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<PAGE>

     As previously reported in our Annual Report on Form 10-K, as filed with the
Securities & 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,  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.

     In connection  with the findings of our review related to the  restatement,
management  and the Audit  Committee  reviewed the additional  internal  control
procedures and processes that have been  implemented  since the original date of
the error and have  identified  additional  remediation  to address the material
weakness  of  untimely  reporting  of  customer  contract  changes.  We  will be
implementing new internal controls and enhanced accounting policies,  as well as
improved sales policies and procedures  relating to customer contract management
and order  fulfillment.  In addition,  we have begun to strengthen our financial
reporting  competencies,  develop  internal  controls  and  compliance  training
programs directed towards contract management, implement personnel changes where
necessary and establish  corporate  policies,  practices and controls  which are
clear, concise and consistent.

     As a result of the  foregoing,  management  has 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 March 31, 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  are being created and existing  policies
and  procedures  are  being  reviewed  and  will  be  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 will have the
primary  responsibility  for the financial  close and reporting  process and our
internal control and monitoring  environment related to financial reporting.  We
implemented  new IT policies and  procedures and progress was made in addressing
the controls over our IT environment.

                                       28
<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  claims one of our catheter  products
induces and contributes to infringement when medical professionals insert it. We
have responded to the complaint  denying all  allegations and have filed certain
counterclaims.  The  discovery  process in this case has continued and is nearly
complete.  We 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")  which  failure has  remained
uncorrected.  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 in August 2006.  Plaintiffs  refiled
their lawsuit against us in September 2006. We have filed our answer and resumed
our  defense.  The parties  have been  working to conclude  discovery.  Based on
information  presently  available  to us, we believe that we do not infringe any
valid  claim  of  the  plaintiff's  patent  and  that,  consequently,   we  have
meritorious  legal  defenses with respect to this action in the event it were to
be reinstated. The parties have agreed to limit any potential damages to us to a
pre-specified royalty rate.

     In an amended complaint filed on December 28, 2006, in the Eastern Division
of the U.S.  District  Court for the  Southern  District  of Ohio,  the wife and
executor of the estate of Darrell Adams, deceased, alleged that the failure of a
hemodialysis  catheter  manufactured  by us  contributed  to his  death.  In the
quarter  ended March 31, 2008,  the case was settled  between the  parties.  Our
product liability insurance covered the settlement and all legal expenses,  less
our deductible.

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.

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 May 13, 2008, the Bank amended each of the Equipment Credit Facility and
the  Revolving  Credit  Facility,  modifying  the our net  income  profitability
covenant  requirements in exchange for a three quarters percent (0.75%) increase
in our  interest  rate 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,  our term loan balance will be
factored in when  calculating  our  borrowing  base under the  Revolving  Credit
Facility.


ITEM 6. EXHIBITS

     10(z)  Amended and Restated Deferred Compensation Plan with Roger G. Little
            dated as of  January  1,  2005,  incorporated  by  reference  to the
            Company's  Form 10-Q dated  March 31, 2008 with the  Securities  and
            Exchange Commission filed on May 13, 2008.

     10(aa) First Loan Modification Agreement, dated March 31, 2008, to the Loan
            and Security Agreement, dated May 25, 2007, among Spire Corporation,
            Bandwidth  Semiconductor,  LLC and Silicon Valley Bank, incorporated
            by  reference to the  Company's  Form 10-Q dated March 31, 2008 with
            the Securities and Exchange Commission filed on May 13, 2008.

     10(ab) Loan and  Security  Agreement,  dated  March 31,  2008,  among Spire
            Corporation,  Spire  Solar,  Inc.,  Spire  Biomedical,  Inc.,  Spire
            Semiconductor,   LLC  and  Silicon  Valley  Bank,   incorporated  by
            reference to the  Company's  Form 10-Q dated March 31, 2008 with the
            Securities and Exchange Commission filed on May 13, 2008.

                                       29
<PAGE>

     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.












                                       30
<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












                                       31
<PAGE>




                                  EXHIBIT INDEX


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

  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.




                                       32