<PAGE>   1
                                      1998
================================================================================
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB


( Mark One)
[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended June 30, 1998.

                                       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 Small Business Issuer as Specified in Its Charter)


        MASSACHUSETTS                                       04-2457335
--------------------------------------------------------------------------------
  (State or Other Jurisdiction                           (I.R.S. Employer  
of Incorporation or Organization                        Identification No.)


ONE PATRIOTS PARK, BEDFORD, MASSACHUSETTS                   01730-2396
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                    (Zip Code)


                                  781-275-6000
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days. 
                                                           Yes   X     No
                                                               -----      -----

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. There were 3,243,766
outstanding shares of the issuer's only class of common equity, Common Stock,
$.01 par value, on July 31, 1998.


      Transitional Small Business Disclosure Format (Check One): 
                                                           Yes         No   X
                                                               -----      -----



<PAGE>   2


                                SPIRE CORPORATION
                                      INDEX


                                                                   PAGE NUMBER
                                                                   -----------
PART I - FINANCIAL INFORMATION
------------------------------

    Condensed Consolidated Balance Sheets at                           
    June 30, 1998 (unaudited) and December 31, 1997                    3

    Condensed Consolidated Statements of Operations                    
    For the Three Months Ended June 30, 1998 and 1997 and
    For the Six Months Ended June 30, 1998 and 1997 (unaudited)        4

    Condensed Consolidated Statements of Cash Flows                    
    For the Six Months Ended June 30, 1998 and 1997 (unaudited)        5

    Notes to Condensed Consolidated Financial Statements               6

    Management's Discussion and Analysis of Financial                7 - 11
    Condition and Results of Operations


PART II - OTHER INFORMATION
---------------------------

    Item 1.  Legal Proceedings                                         11

    Item 4.  Submission of Matters to a Vote of Security Holders       11

    Item 6.  Exhibits and Reports on Form 8-K                          11




<PAGE>   3



                        SPIRE CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                        JUNE 30,          DECEMBER 31,
                                                                                         1998                1997
                                                                                      ------------         ------------
<S>                                                                             <C>                    <C>         
                                     ASSETS
CURRENT ASSETS
    Cash and cash equivalents                                                         $   523,050         $ 1,695,727
    Accounts receivable, trade:
        Amounts billed                                                                  2,631,099           3,012,701
        Retainage                                                                          57,874              69,772
        Unbilled costs                                                                    502,162             621,760
                                                                                      -----------         -----------
                                                                                        3,191,135           3,704,233
        Less allowance for doubtful accounts                                              225,000              40,000
                                                                                      -----------         -----------
            Net accounts receivable                                                     2,966,135           3,664,233
                                                                                      -----------         -----------

    Inventories (Note 2)                                                                1,749,941             988,580
    Deferred income taxes                                                                 300,000             300,000
    Prepaid expenses and other current assets                                             595,692             501,650
                                                                                      -----------         -----------
            Total current assets                                                        6,134,818           7,150,190
                                                                                      -----------         -----------

Property and equipment                                                                 24,614,915          24,015,445
    Less accumulated depreciation and amortization                                     19,690,663          19,242,437
                                                                                      -----------         -----------
            Net property and equipment                                                  4,924,252           4,773,008
                                                                                      -----------         -----------

Computer software costs (less accumulated amortization,
    $817,567 in 1998 and $810,466 in 1997)                                                 44,034              51,135
Patents (less accumulated amortization, $570,110 in 1998
    and $542,344 in 1997)                                                                 259,526             274,810
Other assets                                                                               17,221              19,679
                                                                                      -----------         -----------
                                                                                          320,781             345,624
                                                                                      -----------         -----------
                                                                                      $11,379,851         $12,268,822
                                                                                      ===========         ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                                  $   835,775         $   903,581
    Accrued liabilities                                                                 1,503,117             859,093
    Advances on contracts in progress                                                     567,952             410,370
                                                                                      -----------         -----------
        Total current liabilities                                                       2,906,844           2,173,044
                                                                                      -----------         -----------

STOCKHOLDERS' EQUITY
    Common stock, $.01 par value; shares
        authorized 20,000,000; issued 3,795,926
        shares in 1998 and 3,757,082 shares in 1997                                        37,959              37,571
    Additional paid-in capital                                                          9,780,494           9,645,468
    Retained earnings (accumulated deficit)                                              (125,758)          1,632,427
                                                                                      -----------         -----------
                                                                                        9,692,695          11,315,466
    Treasury stock at cost, 552,160 shares                                             (1,219,688)         (1,219,688)
                                                                                      -----------         -----------
        Total stockholders' equity                                                      8,473,007          10,095,778
                                                                                      -----------         -----------
                                                                                      $11,379,851         $12,268,822
                                                                                      ===========         ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.



<PAGE>   4




                        SPIRE CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED JUNE 30,              SIX MONTHS ENDED JUNE 30,
                                                            -------------------------------        -------------------------------
                                                               1998                1997               1998                1997
                                                            -----------         -----------        -----------         -----------
<S>                                                         <C>                 <C>                <C>                 <C>        
NET SALES AND REVENUES
    Contract research, service and license revenues         $ 2,619,588         $ 3,807,185        $ 5,735,474         $ 6,940,676
    Sales of manufacturing equipment                            825,703           2,625,663          2,152,343           3,942,871
                                                            -----------         -----------        -----------         -----------
        Total sales and revenues                              3,445,291           6,432,848          7,887,817          10,883,547
                                                            -----------         -----------        -----------         -----------

COSTS AND EXPENSES
    Cost of contract research, services and licenses          2,328,026           2,447,852          4,535,204           4,521,958
    Cost of manufacturing equipment                             763,599           1,759,344          1,567,360           2,615,452
    Selling, general and administrative expenses              2,135,160           1,424,004          3,552,925           2,797,812
                                                            -----------         -----------        -----------         -----------
        Total costs and expenses                              5,226,785           5,631,200          9,655,489           9,935,222
                                                            -----------         -----------        -----------         -----------

EARNINGS (LOSS) FROM OPERATIONS                              (1,781,494)            801,648         (1,767,672)            948,325

Interest income, net                                              6,150                  29             18,487               3,646
                                                            -----------         -----------        -----------         -----------

Earnings (loss) before income taxes                          (1,775,344)            801,677         (1,749,185)            951,971

Income tax expense                                                   --             100,000              9,000             100,000
                                                            -----------         -----------        -----------         -----------

NET EARNINGS (LOSS)                                         $(1,775,344)        $   701,677        $(1,758,185)        $   851,971
                                                            ===========         ===========        ===========         ===========

EARNINGS (LOSS) PER SHARE OF COMMON STOCK - BASIC           $     (0.55)        $      0.23        $     (0.54)        $      0.28
                                                            ===========         ===========        ===========         ===========

EARNINGS (LOSS) PER SHARE OF COMMON STOCK - DILUTED         $     (0.55)        $      0.22        $     (0.54)        $      0.27
                                                            ===========         ===========        ===========         ===========

Weighted average number of common shares
    outstanding - basic                                       3,241,291           3,031,294          3,227,989           3,026,464
                                                            ===========         ===========        ===========         ===========

Weighted average number of common and  common
    equivalent shares outstanding - diluted                   3,241,291           3,148,554          3,227,989           3,143,724
                                                            ===========         ===========        ===========         ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.



<PAGE>   5




                        SPIRE CORPORATION AND SUBSIDIARY
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                              SIX MONTHS ENDED JUNE 30,
                                                                            -------------------------------
                                                                               1998                1997
                                                                            -----------         -----------

<S>                                                                         <C>                 <C>        
Cash flows from operating activities:
    Net earnings (loss)                                                     $(1,758,185)        $   851,971
    Adjustments to reconcile net earnings (loss) to net cash used in
        operating activities:
            Depreciation and amortization                                       483,093             583,471
            Changes in assets and liabilities:
                Accounts receivable                                             698,098            (506,608)
                Inventories                                                    (761,361)           (706,756)
                Prepaid expenses and other current assets                       (94,042)            (17,887)
                Accounts payable and accrued liabilities                        576,218              65,387
                Advances on contracts in progress                               157,582          (1,076,876)
                                                                            -----------         -----------
                     Net cash used in operating activities                     (698,597)           (807,298)
                                                                            -----------         -----------

Cash flows from investing activities:
    Additions to property and equipment                                        (599,470)           (231,468)
    Increase in patent costs                                                    (12,482)            (18,986)
    Increase in software production costs                                            --             (34,229)
    Other assets                                                                  2,458             208,167
                                                                            -----------         -----------
                 Net cash used in investing activities                         (609,494)            (76,516)
                                                                            -----------         -----------

Cash flows from financing activities:
    Exercise of stock options                                                   135,414              89,733
    Repurchase of common stock                                                       --             (20,625)
                                                                            -----------         -----------
                      Net cash provided by financing activities                 135,414              69,108
                                                                            -----------         -----------

Net decrease in cash and cash equivalents                                    (1,172,677)           (814,706)

Cash and cash equivalents, beginning of period                                1,695,727             970,997
                                                                            -----------         -----------
Cash and cash equivalents, end of period                                    $   523,050         $   156,291
                                                                            ===========         ===========

Supplemental disclosures of cash flow information:
   Cash paid during the year for:
            Interest expense                                                $       723         $     5,118
                                                                            ===========         ===========
            Income taxes                                                    $    44,400         $     4,000
                                                                            ===========         ===========

</TABLE>


     See accompanying notes to condensed consolidated financial statements.



<PAGE>   6

                        SPIRE CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 1998


(1)  INTERIM FINANCIAL STATEMENTS

          In the opinion of management, the accompanying unaudited condensed
     consolidated financial statements contain all adjustments necessary to
     fairly present the Company's financial position as of June 30, 1998 and the
     results of operations and changes in cash flows for the six months ended
     June 30, 1998 and 1997. The results of operations for the six months ended
     June 30, 1998 are not necessarily indicative of the results to be expected
     for the fiscal year ending December 31, 1998. Certain amounts from the
     second quarter 1997 financial statements have been reclassified to conform
     to the second quarter 1998 presentation.

          The accounting policies followed by the Company are set forth in Note
     2 to the Company's consolidated financial statements in its annual report
     on Form 10-KSB for the year ended December 31, 1997.

          The financial statements, with the exception of the December 31, 1997
     balance sheet, are unaudited and have not been examined by independent
     public accountants.


(2)  INVENTORIES

          Inventories consist of the following:

<TABLE>
<CAPTION>
                                  June 30,        December 31,
                                   1998               1997
                                 ----------        ----------
<S>                              <C>               <C>       
          Raw materials          $  832,323        $  736,930
          Work in process           917,618           251,650
                                 ----------        ----------
                                 $1,749,941        $  988,580
                                 ==========        ==========
</TABLE>


(3)  EARNINGS PER SHARE

          The reconciliation of the denominators of the basic and diluted
     earnings (loss) per share computations for the Company's reported earnings
     (loss) is as follows:

<TABLE>
<CAPTION>

                                                     Three Months Ended June 30,        Six Months Ended June 30,
                                                     ---------------------------       --------------------------
                                                       1998             1997             1998              1997
                                                     ---------        ---------        ---------        ---------
<S>                                                  <C>              <C>              <C>              <C>      
          Weighted average number of shares
              outstanding - basic                    3,241,291        3,031,294        3,227,989        3,026,464
          Incremental shares from the assumed
              exercise of stock options                   --            117,260             --            117,260
                                                     ---------        ---------        ---------        ---------
          Weighted average number of shares
              outstanding - diluted                  3,241,291        3,148,554        3,227,989        3,143,724
                                                     =========        =========        =========        =========

</TABLE>




<PAGE>   7


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

     Spire develops, manufactures and markets highly-engineered photovoltaic
module manufacturing equipment and optoelectronic products and provides
biomedical processing services. Spire is the world's leader in the design and
manufacture of specialized equipment for the production of terrestrial
photovoltaic modules from solar cells, with its equipment installed in 140
factories and in 38 countries. The Company also offers certain optoelectronic
products and is continuing to develop additional advanced optoelectronic
products for telecommunications, biomedical and electronics applications,
including solar cells used to power satellites. Spire's value-added biomedical
processing services offer surface treatments to enhance the durability or the
antimicrobial characteristics of orthopedic and other medical devices.

     The Company's net sales and revenues for the quarter ended June 30, 1998
declined, compared to the quarter ended June 30, 1997.

RESULTS OF OPERATIONS

     The following table sets forth certain items as a percentage of net sales
and revenues for the periods presented:

<TABLE>
<CAPTION>

                                                           Three Months Ended June 30,   Six Months Ended June 30,
                                                           ---------------------------   -------------------------
                                                              1998          1997          1998           1997
                                                              -----         -----         -----          -----
<S>                                                           <C>           <C>           <C>            <C>   
          Net sales and revenues                              100.0%        100.0%        100.0%         100.0%
          Cost of sales and revenues                           89.7          65.4          77.4           65.6
                                                              -----         -----         -----          -----
          Gross profit                                         10.3          34.6          22.6           34.4
          Selling, general and administrative expenses         62.0          22.1          45.0           25.7
                                                              -----         -----         -----          -----
          Earnings (loss) from operations                     (51.7)         12.5         (22.4)           8.7
          Earnings (loss) before income taxes                 (51.5)         12.5         (22.2)           8.7
          Income tax expense                                     --           1.6           0.1            0.9
                                                              -----         -----         -----          -----
          Net (loss) earnings                                 (51.5)%        10.9%        (22.3)%          7.8%
                                                              =====         =====         =====          =====
</TABLE>


THREE AND SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE AND SIX MONTHS ENDED
JUNE 30, 1997

Net Sales and Revenues

     Net sales and revenues decreased $2,988,000 or 46% for the three months
ended June 30, 1998 to $3,445,000, compared to $6,433,000 for the three months
ended June 30, 1997. Contract research, service and license revenues decreased
$1,188,000 or 31% to $2,619,000 for the three months ended June 30, 1998
compared to $3,807,000 for 1997. Manufacturing equipment sales decreased
$1,800,000 or 69% to $826,000 for 1998, compared to $2,626,000 for 1997. The
following table categorizes the Company's net sales and revenues for the periods
presented:

<TABLE>
<CAPTION>
                                                                        Three Months Ended June 30,
                                                                 ----------------------------------------------
                                                                    1998              1997             Change
                                                                 ----------        ----------        ----------            

<S>                                                              <C>               <C>                  <C>  
          Contract research, service and license revenues        $2,619,000        $3,807,000           (31%)
          Manufacturing equipment sales                             826,000         2,626,000           (69%)
                                                                 ----------        ----------
          Net sales and revenues                                 $3,445,000        $6,433,000           (46%)
                                                                 ==========        ==========
</TABLE>


<PAGE>   8


     Net sales and revenues decreased $2,996,000 or 28% for the six months ended
June 30, 1998 to $7,888,000, compared to $10,884,000 for the six months ended
June 30, 1997. Contract research, service and license revenues decreased
$1,205,000 or 17% to $5,736,000 for the six months ended June 30, 1998 compared
to $6,941,000 for 1997. Manufacturing equipment sales decreased $1,791,000 or
45% to $2,152,000 for 1998, compared to $3,943,000 for 1997.

     The following table categorizes the Company's net sales and revenues for
the periods presented:

<TABLE>
<CAPTION>

                                                                              Six Months Ended June 30,
                                                                 -----------------------------------------------
                                                                    1998               1997            Change
                                                                 -----------        ----------        ----------            

<S>                                                              <C>                <C>                <C>  
          Contract research, service and license revenues        $ 5,736,000        $ 6,941,000           (17%)
          Manufacturing equipment sales                            2,152,000          3,943,000           (45%)
                                                                 ----------         -----------
          Net sales and revenues                                 $ 7,888,000        $10,884,000           (28%)
                                                                 ----------         -----------
</TABLE>


     The decline in manufacturing equipment sales for the three and six month
periods ended June 30, 1998 is primarily due to a decline in shipments to the
Far East in 1998. The decline in contract research, service and license revenues
for the three and six month periods ended June 30, 1998 is primarily due to
revenue of $600,000 associated with a one-time technology transfer in the second
quarter of 1997, a decline in revenues from United States government contracts
in 1998, and a revision to government contract overhead rates for 1997 and 1998,
which came in lower than billed rates and resulted in a reserve of $70,000.

Cost of Sales and Revenues

     The cost of sales and revenues decreased $1,115,000 to $3,092,000, but
increased to 90% of net sales and revenues, for the quarter ended June 30, 1998,
compared to $4,207,000 or 65% of net sales and revenues for the quarter ended
June 30, 1997.

     The cost of contract research, service and license revenues decreased
$120,000 to $2,328,000, but increased to 89% of related revenues, for the
quarter ended June 30, 1998, compared to $2,448,000 or 64% of related revenues
for the quarter ended June 30, 1997. Cost of manufacturing equipment sales
decreased $995,000 to $764,000, but increased to 92% of related sales, for the
quarter ended June 30, 1998, compared to $1,759,000 or 67% of related sales, for
the quarter ended June 30, 1997.

       The following table categorizes the Company's cost of sales and revenues
for the periods presented, stated in dollars and as a percentage of related
sales and revenues:


<TABLE>
<CAPTION>
                                                                                  Three Months Ended June 30,
                                                                 -------------------------------------------------------
                                                                    1998            %             1997             %
                                                                 ----------      ---------     ----------       --------

<S>                                                              <C>               <C>         <C>                <C>
          Contract research, service and license revenues        $2,328,000         89%        $2,448,000          64%
          Manufacturing equipment sales                             764,000         92%         1,759,000          67%
                                                                 ----------                    ----------    
          Total cost of sales and revenues                       $3,092,000         90%        $4,207,000          65%
                                                                 ==========                    ==========

</TABLE>


     The cost of sales and revenues decreased $1,034,000 to $6,103,000, but
increased to 77% of net sales and revenues, for the six months ended June 30,
1998, compared to $7,137,000 or 66% of net sales and revenues for the six months
ended June 30, 1997.

     The cost of contract research, service and license revenues increased
$13,000 to $4,535,000, and increased to 79% of related revenues, for the six
months ended June 30, 1998, compared to $4,522,000 or 65% of related revenues
for the six months ended June 30, 1997. Cost of manufacturing equipment sales
decreased $1,047,000 to $1,568,000, but increased to 73% of related sales, for
the six months ended June 30, 1998, compared to $2,615,000 or 66% of related
sales, for the six months ended June 30, 1997.


<PAGE>   9


     The following table categorizes the Company's cost of sales and revenues
for the periods presented, stated in dollars and as a percentage of related
sales and revenues:

<TABLE>
<CAPTION>
                                                                                  Six Months Ended June 30,
                                                                 -------------------------------------------------------
                                                                    1998            %             1997             %
                                                                 ----------      ---------     ----------       --------

<S>                                                              <C>                <C>        <C>                 <C>
          Contract research, service and license revenues        $4,535,000         79%        $4,522,000          65%
          Manufacturing equipment sales                           1,568,000         73%         2,615,000          66%
                                                                 ----------                    ----------    
          Total cost of sales and revenues                       $6,103,000         77%        $7,137,000          66%
                                                                 ==========                    ==========    
</TABLE>

     For both the three and six month periods ended June 30, 1998, the increase
in total cost of sales and revenues as a percentage of related sales and
revenues is due to lower sales volume in 1998 available to spread fixed cost of
sales over, the booking of $200,000 for the possibility that final payment from
a customer on a particular photovoltaic machine would not be received, and a
change in product mix from 1997, particularly related to a technology transfer
in the second quarter of 1997 for which revenue of $600,000 was recognized.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses for the quarter ended June 30,
1998 increased $711,000 to $2,135,000, and increased to 62% of sales and
revenues, compared to $1,424,000 or 22% of sales and revenues for the quarter
ended June 30, 1997. Selling, general and administrative expenses increased due
to the accrual of $547,000 of non-recurring costs related to the settlement with
the government (See Part II, Item 1. Legal Proceedings). Also impacting selling,
general and administrative expenses were legal costs in this matter amounting to
nearly $250,000.

Depreciation and Amortization Expenses

     Depreciation and amortization expenses for the six months ended June 30,
1998 decreased $100,000 or 17% to $483,000, compared to $583,000 for the six
months ended June 30, 1997. Capital expenditures increased $368,000 or 159% to
$599,000 for the six months ended June 30, 1998, compared to $231,000 for the
six months ended June 30, 1997.

Interest

     The Company earned $6,000 in interest income for the quarter ended June 30,
1998, compared to an insignificant amount for the quarter ended June 30, 1997.
The Company incurred insignificant interest expense in both periods.

Income Taxes

     The Company recorded no income tax expense for the quarter ended June 30,
1998 and income tax expense of $100,000 for the quarter ended June 30, 1997. At
June 30, 1998, the Company had gross deferred tax assets of $300,000, which
represents the amount of tax benefits of existing deductible temporary
differences or carryforwards that are more likely than not to be realized
through the generation of sufficient future taxable income within the
carryforward period.

Net Earnings (Loss)

     The Company reported a net loss for the quarter ended June 30, 1998 of
$1,775,000, compared to net earnings of $702,000 for the quarter ended June 30,
1997. The decline in the Company's profitability resulted in large part from
non-recurring charges accrued in the second quarter of 1998 associated with the
settlement (See Part II, Item 1. Legal Proceedings), and approximately a
$3,000,000 decrease in net sales and revenues when compared with the prior
period, including $600,000 of revenues associated with a technology transfer in
the second quarter of 1997.

LIQUIDITY AND CAPITAL RESOURCES

     To date the Company has been able to fund its liquidity requirements using
cash from operations and available lines of credit. On April 7, 1998, the
Company amended and extended its revolving credit agreement with Silicon Valley
Bank. This agreement provides for a $2 million revolving credit facility, based
upon eligible accounts receivable requirements. 



<PAGE>   10


This line of credit has been established to provide the Company with resources
for general working capital purposes and Standby Letter of Credit Guarantees for
foreign customers. The line is secured by all assets of the Company. Interest on
the line is at the Bank's prime rate plus one-half of one percent. The line
contains covenants including provisions relating to profitability and net worth.
As of June 30, 1998, the Company was in default of certain financial covenants;
however the Company anticipates receiving a waiver of these defaults from the
Bank. As of June 30, 1998, the Company had no outstanding debt under this
revolving credit facility. The Company has also entered into a $1 million
equipment leasing line with Silicon Valley Bank.

     The Company believes it has sufficient resources to finance its current
operations for the foreseeable future through working capital, its existing line
of credit and available lease arrangements. Cash and cash equivalents decreased
$1,173,000 to $523,000 at June 30, 1998, from $1,696,000 at December 31, 1997.
To date there are no material commitments by the Company for capital
expenditures. At June 30, 1998, the Company's accumulated deficit was $126,000,
compared to retained earnings of $1,632,000 as of December 31, 1997. Working
capital as of June 30, 1998 decreased 35% to $3,228,000, compared to $4,977,000
as of December 31, 1997.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board issued SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the way that public business enterprises report
selected information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports to stockholders. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. SFAS 131, which becomes effective for the Company in its
year ending December 31, 1998, is not expected to have a material impact on the
Company's results of operations. The Company is in the process of determining
the impact of SFAS 131 on its footnote disclosures.

     In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1), which establishes
guidelines for the accounting for the costs of all computer software developed
or obtained for internal use. SOP 98-1 is effective for the Company in 1999 and
is not expected to have a material effect on the Company's financial statements.

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as "derivatives") and for
hedging activities. This statement requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. The statement also sets forth the criteria for
determining whether a derivative may be specifically designed as a hedge of a
particular exposure with the intent of measuring the effectiveness of that hedge
in the statement of operations. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. Management does not
believe that the adoption of this statement will have a material impact on the
Company's consolidated financial position, results of operations or cash flows.

IMPACT OF THE YEAR 2000 ISSUE

     The Year 2000 Issue refers to potential problems with computer systems or
any equipment with computer chips or software that use dates where the date has
been stored as just two digits (e.g., 98 for 1998). On January 1, 2000, any
clock or date recording mechanism incorporating date sensitive software which
uses only two digits to represent the year may recognize a date using 00 as the
year 1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, send invoices, or engage in
similar business activities.

     The Company is in the process of conducting a review of its internal
information systems to determine the extent of any Year 2000 problem. The
Company is still gathering information, but based on such review to date, the
Company does not believe that the impact of any Year 2000 problem will be
material, because its principal information systems appear to correctly define
the year 2000. Although there exists the possibility that Year 2000 issues will
be identified, based on 



<PAGE>   11



such review to date, the Company does not currently expect that any such
problems will have a material adverse effect on the Company's future operating
results or financial condition.

     THE FOREGOING STATEMENTS MAY INCLUDE FORWARD-LOOKING STATEMENTS SUBJECT TO
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE INDICATED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE
SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED OR REFERRED
TO IN THIS REPORT AND IN ITEM 6 OF THE ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR
ENDED DECEMBER 31, 1997.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     On March 2, 1998 the Company received a letter from the Office of the
United States Attorney for the Eastern District of Virginia stating that it was
considering the commencement of a civil action concerning seven research
initiatives undertaken by the Company in the period from 1990 to the present.
The letter alleged that, in certain instances, the Company had failed to inform
the government of pending or previously submitted proposals for work the
government alleges was related to proposals which were funded. Rather than
continuing to incur the legal costs and expend management resources in
litigating this matter the Company settled with the government for $547,000.

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

     On May 21, 1998, the Company held a Special Meeting in Lieu of Annual
Meeting of Stockholders to vote on the following proposal:

     To fix the number of directors at six and to elect six members of the Board
     of Directors. Nominees for Director were: (a) Michael T. Eckhart, (b) A.
     John Gale, (c) Udo Henseler, (d) Roger G. Little, (e) Roger W. Redmond, (f)
     John A. Tarello.

<TABLE>
<CAPTION>

                                     Shares             Shares Voting Against              Shares                 Broker
            Proposal               Voting For            or Authority Withheld           Abstaining              Non-Votes
     -----------------------    ------------------    ---------------------------    -------------------    --------------------

<S>                                   <C>                        <C>                        <C>                  <C>   
     Michael T. Eckhart               3,136,498                  34,055                       0                    66,163
     A. John Gale                     3,137,898                  32,655                       0                    66,163
     Udo Henseler                     3,136,898                  33,655                       0                    66,163
     Roger G. Little                  3,137,898                  32,655                       0                    66,163
     Roger W. Redmond                 3,136,898                  33,655                       0                    66,163
     John A. Tarello                  3,136,898                  33,655                       0                    66,163

</TABLE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A.   The following exhibits are filed herewith:

     27    Financial Data Schedule

B.   During the quarter ended June 30, 1998, the Company filed no reports on 
     Form 8-K.


<PAGE>   12


                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  SPIRE CORPORATION
                                  (Registrant)


    14 August 1998                By:   /s/ Roger G. Little
---------------------------             ----------------------------------
Date                                    Roger G. Little
                                        President, Chief Executive Officer
                                        and Chairman of the Board


    14 August 1998                By:   /s/ Richard S. Gregorio
---------------------------             ---------------------------------- 
Date                                    Richard S. Gregorio
                                        Vice President and Chief Financial 
                                        Officer, Treasurer, Clerk and
                                        Principal Accounting Officer