2000
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

(MARK ONE)

  |X|      Annual Report Pursuant to Section 13 or 15(d) of the Securities
           Exchange Act of 1934 [No Fee Required]

           For the fiscal year ended December 31, 2000.

                                       or

  |_|      Transition Report Pursuant to Section 13 or 15(d) of the Securities
           Exchange Act of 1934 [No Fee Required]

           For the transition period from ___________ to ___________.


Commission file number:  0-12742

                                SPIRE CORPORATION
--------------------------------------------------------------------------------
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

          Massachusetts                                 04-2457335
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

  One Patriots Park, Bedford, Massachusetts                       01730-2396
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                        (ZIP CODE)

                                  781-275-6000
                          (ISSUER'S TELEPHONE NUMBER,
                              INCLUDING AREA CODE)

Securities registered under Section 12(b)         Name of Each Exchange on Which
 of the Exchange Act: Title of Each Class                  Registered
--------------------------------------------------------------------------------
             Not applicable                              Not applicable

Securities registered under Section 12(g) of the Exchange Act:
  Common Stock, $.01 par value, Nasdaq
  ------------------------------------

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.   |_|

State issuer's revenues for its most recent fiscal year: $12,885,000.

Based on the closing average price for the registrant's voting stock on February
28, 2001, the aggregate market value of such voting stock held by non-affiliates
of the registrant was $18,920,307.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. There were 6,685,824 shares of the
issuer's only class of common equity, Common Stock, $.01 par value, on February
28, 2001.

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

DOCUMENTS INCORPORATED  BY REFERENCE

Portions of the definitive proxy statement for the Special Meeting of
Stockholders in Lieu of 2001 Annual Meeting to be held on June 6, 2001 are
incorporated by reference into Part III of this Report.
================================================================================

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.
--------------------------------

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY
DIFFER MATERIALLY FROM THE RESULTS AND TIMING DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW AND IN "RISK FACTORS" AND
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

BUSINESS DEVELOPMENT

         Spire Corporation ("Spire" or the "Company"), a Massachusetts
corporation incorporated in 1969, is organized into two separate businesses:
solar energy and biotechnology surface engineering.

         The Company's revenues of the past three years have been between $12
million and $14 million, but the sources of those revenues have varied among the
Company's business areas.

         On October 25, 2000, the Company formed a wholly-owned subsidiary for
the placement of its assets from its biotechnology surface engineering division.
This subsidiary, named Spire Biomedical, Inc., has been formed to pursue its own
business objectives which may include the possibility of seeking outside
investment.

         In December of 1999, the Company entered into agreements with the City
of Chicago, Illinois, and ComEd, a subsidiary of UniCom, whose territory
encompasses the city of Chicago, to provide solar electric systems. The terms of
the agreements call for the Company to establish a business to assemble, sell
and install solar electric systems in Chicago in exchange for an $8 million
purchase commitment by the City and ComEd. Prior to entering into the
agreements, the Company entered into a business agreement with BP Solar in which
BP Solar would supply solar cells and purchase the module capital equipment for
the proposed Chicago business. The Company has formed a business unit, Spire
Solar Chicago, to fulfill the obligations of the agreements.

         On December 30, 1999, the Company sold substantially all of the assets
of its optoelectronics business for cash proceeds of $12,910,003. The Company
will continue to perform the project management element of its U.S. government
optoelectronics research and development contracts until they are completed
through 2001. The Company has entered into subcontracts with the purchaser of
the optoelectronics business under each of the remaining government contracts
for a portion of the research and development services.

BUSINESS OF ISSUER

         Spire's solar energy business is directed towards the production of
solar electric systems for use in distributed power generation. Spire is the
world's leader in the design and manufacture of specialized equipment for the
production of terrestrial PV solar electric modules from solar cells. Spire
provides solar electric systems through its Chicago operations.

         Spire is a pioneer in the solar electric energy business with over 25
years of experience. It provides complete turnkey factories using its own
manufacturing equipment and processing technology. Spire has established
customers for its technology and manufacturing equipment in 144 factories in 42
countries worldwide. Spire is recognized throughout the U.S. and the world for
its contributions to the growth of the solar electric industry.

         During much of the time that Spire has been in the solar electric
business, the industry has been mainly focused on exporting to those countries
that do not have a wired infrastructure for utilizing large, central electric
generating facilities. Solar electric systems are substitutes for producing
electricity in a small-scale distributed fashion without the need for a wired
infrastructure. Historically, cost has limited solar to these applications or
applications such as telecommunication towers. Spire has provided local
manufacturers the equipment and technology to manufacture modules for use in
developing solar electricity in distributed remote applications.

                                      -2-
<PAGE>

         In the past five years, the use of solar generated electricity has
changed as the cost of solar electric systems has decreased and concern has
increased over the emissions from using fossil fuels to generate electricity.
There has been a dramatic increase in the demand for renewable energy including
solar. Major solar initiatives in Japan and Europe, such as the PV Rooftop
Program in Japan and the German Building Integration Program, have dramatically
increased the quantity of PV solar electric systems used to supplement and
reduce the amount of electricity purchased by users from their local utility. In
2000, the world capacity grew 38% of solar electric energy systems. The world
market has been growing at a compounded rate of greater than 25% per year for
more than 5 years with grid connected installations growing at an even faster
rate.

         In the U.S., utility deregulation has positively impacted the growth of
solar electricity. Unlike Europe and Japan power markets, U.S. deregulation is
occurring at the state level. The demand for solar generated electricity has
been affected both directly and indirectly by deregulation. Several states have
mandated that utilities add new renewable energy generation capacity either
through portfolio standards, renewable emission credit trading programs, and/or
creating trust funds for renewable energy. Under deregulation, utilities have
been mandated to sell their generation assets, thereby creating companies that
only serve the distribution and transmission segment of the market. This
decoupling has strengthened the wholesale markets for power generation. The
electricity power markets are being slowly transformed from regulated rates
guaranteeing a return on investment to more market driven rates where power
prices are determined by the uncertainty of market forces. Recently, the
increase in demand for electricity in California combined with a lack of large
central station investment caused by deregulation uncertainty and strict
environmental rules has caused major disruptions. This has raised the awareness
level of the nation's consumers and utilities to the benefits of distributed
power generation as a means to hedge against price spikes and increase local
reliability.

         There is a further need for localized electricity generation as large
central electric power producing facilities are now having difficulty
transmitting electricity to many sites. The conduits through which the
electricity flows are not able to support additional capacity in many geographic
areas. Therefore, in many U.S. industrial cities demand is exceeding supply. An
example is New York City, which has reached a point where no additional
electricity can be transmitted from outside the City. Some experts predict in
the near future that summer peak loads caused by hot weather could result in
brownouts and blackouts. Distributed power generation, using solar electric
systems, is emerging as a means to ease situations predicted for New York City
and existing in California.

         The Company has developed a strategy to address this domestic utility
market. As part of this strategy, the Company establishes a stand-alone, small
"franchise-like" factory to provide solar electric modules and systems for a
range of applications in partnership with the local utility. Spire Solar Chicago
is an example of this approach. It is a small, solar electric module and system
factory that has received a commitment for purchasing $8 million of solar
electric systems over the next 2 years by the City of Chicago and ComEd, the
local utility. In addition, the Illinois Department of Commerce and Community
Affairs has established a renewable energy subsidy program that will fund up to
60% of the cost of installed solar energy systems.

         Additionally, as a means of further reducing the cost of solar electric
systems, the Company is developing solar electric systems using very large
arrays of modules for deployment on a "brownfield" or mildly contaminated land
site. With brownfield remediation offsets, financial analysis shows that
electricity produced from such a site can be cost competitive with the price of
peak power produced by central generating facilities in many locations today. In
2000, the Company's business unit Spire Solar Chicago announced its first
brownfield project: a 500kW solar electric system for deployment on a brownfield
on Chicago's south side converting it into a Solar Brightfield(TM). This site is
being developed in partnership with ComEd, the City of Chicago, and the State of
Illinois.

SPIRE BIOMEDICAL, INC.

         In 2000, the Company formed Spire Biomedical, Inc. as a wholly-owned
subsidiary as part of the continuing plan to focus Spire on becoming a "pure
play" in the solar energy industry. This restructuring effort allows Spire
Biomedical, Inc. to pursue its own corporate development activities and
strategic relationships, and acquire its own capital and infrastructure.

         Spire Biomedical, Inc. uses biotechnology surface engineering to
improve the performance of implantable medical devices. In 2000, Spire
Biomedical made progress in developing a range of bone-like surface treatments
for application

                                      -3-
<PAGE>

to orthopedic devices. These surface treatments stimulate the integration of
bone directly into the device, thereby improving fixation. This new process is
being marketed to Spire's orthopedic customers to expand its service business.
Also in 2000, Spire Biomedical made progress in its hemodialysis catheter
development program.

                               GENERAL INFORMATION
                               -------------------

SALES AND MARKETING

         The Company builds its photovoltaic module manufacturing equipment and
solar electric systems generally to order, and usually requires 35% of the total
purchase price on order, 55% on shipment and the final 10% upon acceptance of
the equipment by the customer. The Company receives progress payments under its
research and development contracts on a cost reimbursement or per deliverable
basis. Biomedical processing services generally are sold on a net 30 day basis.

         The Company markets its photovoltaic manufacturing equipment through
non-exclusive commissioned sales representatives, as well as through its
internal staff. The outside sales representatives are responsible for making
initial contacts with potential customers, after which the representatives work
in conjunction with the Company's internal staff to consummate sales. The
Company believes that use of outside sales representatives is particularly
important in facilitating access into certain foreign countries. Most of the
Company's sales representatives have had long term relationships with the
Company, and work with the Company without written agreements. Sales initiated
through the Company's internal staff arise from a number of sources, including
trade shows, printed advertisements and telephone campaigns.

         The Company markets its solar electric systems through dedicated
internal sales staff out of its Chicago facility. The systems are marketed
directly to the local utility and the City. The Company has also begun to market
to potential residential users.

         In the biomedical area, SBI concentrates on identifying and serving the
leading U.S. manufacturers of orthopedic and other medical devices. Where
possible, SBI seeks to be the sole provider of surface processing services to
its customers.

         The Company's scientists are responsible for submitting proposals to
the U.S. government and other outside sources for sponsored research and
development work, particularly in the optoelectronics area. See "Risk Factors -
Dependence on Outside Funding for Research and Development," " - Reliance on
Sales Representatives" and " -Technological Advances; Dependence on Future
Product Development and Market Acceptance."

MANUFACTURING AND QUALITY CONTROL

         The Company manufactures all of its photovoltaic manufacturing
equipment and performs all of its biotechnology surface engineering processing
services in a single facility. Spire Solar Chicago manufactures photovoltaic
systems in a leased facility in Chicago, Illinois. The fulfillment of each
customer order for the Company's photovoltaic module manufacturing equipment and
systems requires customized engineering and systems design. While the time
required to fill orders is slightly different for each item, it generally takes
approximately six months from date of order to delivery to the customer. The
first few months of this process is devoted to customizing the design of the
item of equipment or systems to meet the customer's requirements. The balance of
the time is spent on internal assembly, wiring and testing of the equipment or
systems. The Company maintains quality control measures throughout each step of
the manufacturing process. Employees are responsible for reviewing incoming
materials, conducting interim testing throughout the Company's processing of the
materials, and servicing and testing final products before shipment to the
Company's customers.

         In the biomedical area, customers ship medical devices to be
surface-processed to the Company. These devices are reviewed for surface defects
prior to undergoing the Company's surface processing, and are reviewed again for
defects upon completion of the processing. The devices are then shipped back to
the customer.

                                      -4-
<PAGE>

         The Company assembles its photovoltaic module manufacturing equipment
and systems from a combination of components purchased from a variety of
suppliers and self-fabricated components. The Company has not experienced any
major price increases, or lack of availability, of its components. For many
items, alternate sources are available. The Company believes that the loss of
any supplier would not be material due to the ability to use alternate suppliers
or to substitute other items with minimal re-engineering. The Company
anticipates that it will be able to manufacture and procure all such parts and
materials in sufficient quantities to meet its needs. See "Risk Factors -
Dependence on Major Facility."

PROPRIETARY RIGHTS

         Through over 30 years of research and development, the Company has
accumulated extensive scientific and technological expertise. The Company
protects its technological advances as trade secrets, in part through
confidentiality agreements with employees, consultants and third parties. The
Company also seeks and enforces patents as appropriate. The Company currently
has 25 U.S. patents, of which one is jointly owned, one patent pending in the
United States and two foreign patents pending, all of which cover elements of
its biomedical materials and processing technologies.

         The U.S. government and other entities fund the majority of the
Company's research and development work. The U.S. government retains the right
to obtain a patent on any invention developed under government contracts as to
which the Company does not seek and obtain a patent, and may require the Company
to grant a third party license of such invention if steps to achieving practical
application of the invention have not been taken. The U.S. government also
retains a non-exclusive, royalty-free, non-transferable license to all
technology developed under government contracts, whether or not patented, for
government use, including use by other parties to U.S. government contracts.
Furthermore, the Company's U.S. government contracts prohibit the Company from
granting exclusive rights to use or sell any inventions unless the grantee
agrees that any product using the invention will be manufactured substantially
in the United States. See "Risk Factors - Protection of Proprietary Technology"
and "Government Regulation."

COMPETITION

         The Company sells its products and services in competitive markets.
Entities now operating in related markets can also enter the Company's markets.
Some of the Company's current and potential competitors have financial and
technical resources greater than those of the Company. Competitive factors for
the Company in its various markets include the amount and pace of technological
innovation, financial resources, product quality, timely delivery, service and
price. The Company believes that there are considerable barriers to entry into
the markets it serves, including a significant investment in specialized capital
equipment and product design and development, and the need for a staff with
sophisticated scientific and technological knowledge.

         The Company faces competition from various companies in the terrestrial
photovoltaic module manufacturing equipment market. As an industry leader, the
Company has been subject to competitive pricing on some of the components of its
photovoltaic module manufacturing equipment product line. The Company's
automated equipment competes with more labor intensive, lower priced
alternatives. Furthermore, the Company competes in foreign countries where there
may be a preference for doing business with local companies. In addition, large
manufacturers may produce items of equipment for their own internal use,
eliminating the purchase of such equipment from commercial vendors. With respect
to its biomedical services, the Company competes on the basis of overall quality
of service and price, and at times on the basis of value added. The Company's
services also compete against products based on alternate technologies. In
addition, the Company faces competition from numerous other businesses,
particularly small businesses throughout the United States, for contracts for
research and development funded by the U.S. government and other outside
sources.

         Because the Company often markets its photovoltaic manufacturing
equipment to governmental agencies or financiers in foreign countries, it faces
risks inherent in international sales, such as regulatory requirements,
political and economic changes and disruptions and transportation delays. The
Company also faces competition from government or private companies in these
countries. The Company addresses these issues by working with local commissioned
sales representatives, seeking to establish a local presence, such as through
its agreements with Marubeni, maintaining technological leadership, and quoting
prices and accepting payment only in U.S. dollars, generally against letters of
credit. Because the Company sells its products only in U.S. dollars, the
Company's sales could be adversely affected to

                                      -5-

<PAGE>

the extent that its customers have limited access to U.S. dollars and to the
extent that fluctuations in exchange rates may render the Company's prices less
competitive relative to competitors' prices. See "Risk Factors - Competition"
and " - Dependence on Export Sales."

EMPLOYEES

         As of December 31, 2000, the Company employed 94 people, of whom 84
were full-time. Four of the Company's employees hold Ph.D.'s. The Company has
seven employees on its technical staff and 25 on its manufacturing staff. The
Company has never experienced a work stoppage and considers its relationship
with its employees to be good. See "Risk Factors - Competition" and " -
Dependence on Export Sales."

GOVERNMENT REGULATION

         The Company's government contracts are subject to a large number of
federal regulations and oversight requirements. Compliance with the array of
government regulations requires extensive record keeping and the maintenance of
complex policies and procedures relating to all aspects of the Company's
business, as well as to work performed for the Company by any subcontractors.
The Company believes that it has put in place systems and personnel to ensure
compliance with all U.S. government regulations relating to contracting.

         The Company also is subject to export control regulations that govern
the export of Company products to designated countries, as well as the release
of technical information to non-U.S. individuals and entities. Further, the
Company is subject to federal, state and local governmental environmental
regulations and to federal OSHA regulations. The Company believes that it has
complied in all material respects with all applicable environmental and safety
regulations and has all permits necessary to conduct its business. The Company
employs a part-time Environmental and Safety Engineer to manage its compliance
efforts. The cost of such compliance has not been material to the Company.

         The introduction by the Company's customers of new biomedical products
depends on passage of these products through various stages of review by the
FDA. The process of obtaining regulatory approvals involves lengthy and detailed
laboratory and clinical testing and other costly and time-consuming procedures.
The Company continues to refine its interaction with its customers in the
regulatory approval process in an effort to streamline its customers'
application process. See "Risk Factors - Government Regulation."

RESEARCH AND DEVELOPMENT

         The Company's policy is to support as much of its research and
development as possible through government contract funding, which it recognizes
as revenue. Revenues from the Company's research and development contracts
funded by the U.S. government, and their percent of net revenues were $4,098,000
or 32%, $4,381,000 or 37%, and $6,092,000 or 43%, for the years ended December
31, 2000, 1999 and 1998, respectively. As of December 31, 2000, the Company was
performing 12 contracts and grants for the U.S. government, compared with 24 as
of December 31, 1999. All contracts with U.S. government agencies have been
audited through December 1997. The audits for the years ended December 31, 1998
through December 31, 2000 have not yet been performed.

         The Company's contracts with the U.S. government grant to the Company
proprietary rights in any technology developed pursuant to such contracts and
grant to the U.S. government a non-exclusive license to utilize the technology
for its benefit. The U.S. government retains the right to obtain the patent on
any inventions made under these contracts as to which patent protection is not
sought and obtained by the Company. The Company's rights to technology developed
under contracts with private companies vary, depending upon negotiated terms.
See "Risk Factors - Dependence on Outside Funding for Research and Development,"
" - Protection of Proprietary Technology" and " - Government Regulation."

         The Company's internally funded research and development expenditures
were $299,000, $184,000 and $344,000 for the years ended 2000, 1999 and 1998,
respectively.

                                      -6-

<PAGE>

                                  RISK FACTORS
                                  ------------

         IN ADDITION TO THE OTHER INFORMATION IN THIS SEC FORM 10-KSB, THE
FOLLOWING RISK FACTORS INHERENT IN AND AFFECTING THE BUSINESS OF THE COMPANY
SHOULD BE CONSIDERED. THE DISCUSSION IN THIS SEC FORM 10-KSB CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY DIFFER MATERIALLY FROM THE
RESULTS AND TIMING DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DISCUSSED BELOW AND IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS."

         DEPENDENCE ON MARKET GROWTH. The ability of the Company to sustain or
expand its business depends substantially on the stability and growth of the
various markets for the Company's products and services.

         The size of the photovoltaic market depends on the amount of worldwide
need for wireless power, especially in developing countries, and on domestic and
international government funding of initiatives to invest in solar energy as an
alternative to the burning of fossil fuels and other energy production methods.
There can be no assurance that government funding for such initiatives will be
available, or that solar energy will prove to be a cost-effective alternative to
other energy sources and gain acceptance where traditional energy sources
continue to be available. Most of the Company's research and development
revenues are generated by contracts with the U.S. government. There can be no
assurance that the U.S. government will fund the Company's research and
development projects at the same level as it has in the past. The growth of the
Company's biomedical business depends on the condition of the health care system
and the industry sectors serving that system; and on the Company's ability to
introduce new products and services. The health care system recently has been
characterized by pricing pressures and consolidations which could reduce or
eliminate demand for the Company's processing services. The merger or
consolidation of manufacturers of orthopedic and other medical devices could
reduce the number of customers for the Company's biomedical processing services.

         COMPETITION. The Company sells its products and services against
existing competitors, and entities now operating in related markets may enter
the Company's markets. Some of the Company's current and potential competitors
have financial and technical resources greater than those of the Company.
Competitive factors for the Company in its various markets include the amount
and pace of technological innovation, financial resources, product quality,
timely delivery, service and price. Although the Company believes that there are
considerable barriers to entry into the markets it serves, including a
significant investment in specialized capital equipment and product design and
development, and the need for a staff with sophisticated scientific and
technological knowledge, there can be no assurance that new or existing entities
will not seek to enter the Company's markets.

         The Company faces competition from various companies in the terrestrial
photovoltaic module manufacturing equipment and systems markets. The Company's
more technologically sophisticated and highly automated photovoltaic module
manufacturing equipment competes with more labor intensive, lower priced
alternatives. Furthermore, the Company competes in foreign countries where there
may be a preference for doing business with local companies. In addition, large
manufacturers produce some of the equipment for their own internal use,
eliminating the purchase of such equipment from commercial vendors. With respect
to its biomedical services, the Company competes on the basis of overall quality
of service and price, and at times on the basis of value added. The Company's
products and services also compete against products based on alternate
technologies. In addition, the Company faces competition from numerous other
businesses, particularly small businesses throughout the United States, for
contracts for research and development funded by the U.S. government and other
outside sources.

         DEPENDENCE ON OUTSIDE FUNDING FOR RESEARCH AND DEVELOPMENT.
Substantially all of the Company's research and development work is funded by
the U.S. government. Loss of outside funding may materially adversely affect the
Company's ability further to develop its proprietary technologies and
applications of these technologies to its current products and products under
development. If the Company is unable to maintain its current level of such
funding for any reason, the Company would need to generate funds for such
research from other sources, reduce its research and development effort or
increase its internal research and development. An increase in internally funded
research and development would have a negative impact on profitability. U.S.
government contracts are cancelable without the Company's consent. Furthermore,
all companies that are parties to cost-plus contracts with the U.S. government
are subject to annual government audit and possible recapture of payments. While
the Company has not incurred significant losses as a result of government audits
to date, the Defense Contract Audit Agency has not yet audited the Company for

                                      -7-
<PAGE>

the years ended after December 31, 1997 and the rates at which the Company is
reimbursed for future government contracts (see also "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Other Operating
Charges"). Loss of a number of U.S. government or other research and development
contracts could have a material adverse effect on the Company's business,
results of operations or financial condition. The number of contracts performed
by the Company for the U.S. government decreased from 25 at December 31, 1999 to
12 at December 31, 2000, or a decrease of 52%.

         DEPENDENCE ON EXPORT SALES. For the fiscal years ended December 31,
2000, 1999 and 1998, export sales from the United States accounted for
approximately the following percentages of the Company's net sales and revenues
were 20%, 22% and 17% for the years ended 2000, 1999 and 1998, respectively. The
majority of the Company's international revenues are derived from sales of its
photovoltaic module manufacturing equipment. The Company anticipates that
international sales of photovoltaic equipment will continue to account for a
significant portion of net sales and revenues. The Company's operating results
are subject to the risks inherent in international sales, including, but not
limited to, regulatory requirements, political and economic changes and
disruptions, transportation delays, national preferences for locally
manufactured products and import duties or other taxes which may affect the
prices of the Company's products in other countries relative to competitors'
products. In addition, present or future U.S. government trade restrictions
relating to sales to certain countries may limit the Company's ability to sell
its products in the affected foreign countries.

         The Company currently sells its products only in U.S. dollars. As a
result, the Company's sales could be negatively affected to the extent that its
customers have limited access to U.S. dollars and to the extent that
fluctuations in exchange rates may render the Company's prices less competitive
relative to competitors' prices. If the Company chooses to accept payment for
its products in other currencies, it may be subject to reduced profits from
adverse changes in exchange rates. These factors could have a material adverse
effect on the Company's business, results of operations or financial condition.

         RELIANCE ON SALES REPRESENTATIVES. The Company markets its photovoltaic
manufacturing equipment products through non-exclusive commissioned sales
representatives, as well as though its internal staff. While the Company
believes it has good relationships with its sales representatives, there can be
no assurance that the Company will be able to retain such representatives. In
addition, under the Company's agreements with Marubeni Corporation of Nagoya,
Japan, Marubeni will distribute, and in some cases manufacture under a
technology license, certain Spire photovoltaic module manufacturing equipment
under Spire's name in Japan, and has rights to market this equipment line
throughout certain countries in Southeast Asia and the Pacific Rim. The loss of
a significant number of the Company's commissioned sales representatives or the
inability of Marubeni to market and distribute the Company's products
effectively in Japan, Southeast Asia and the Pacific Rim could adversely affect
the Company's ability to market its photovoltaic products and could have a
material adverse effect on the Company's business, results of operations or
financial condition.

         FLUCTUATIONS IN OPERATING RESULTS. The Company has experienced a net
loss in two out of its most recent three full fiscal years. The Company's
revenues and operating results may vary significantly from quarter to quarter as
a result of a number of factors, many of which are outside of management's
control. These factors include, among others, timing of capital expenditures by
customers, changes in demand for the Company's products, long business
procurement cycles, changes in pricing policies by the Company and its
competitors, cancellation or delay by customers of contracts with the Company
and access to U.S. currency by the Company's customers.

         TECHNOLOGICAL ADVANCES; DEPENDENCE ON FUTURE PRODUCT DEVELOPMENT AND
MARKET ACCEPTANCE. Each of the areas in which the Company maintains a
proprietary technology position is characterized by rapid technological advances
and improvements in manufacturing efficiencies. The Company's ability to operate
profitably depends in large part on its timely access to, or development of,
technological advances, and on its ability to use those advances to improve
existing products, develop new products and manufacture those products
efficiently. In addition, there can be no assurance that the Company will be
able to attain market acceptance for commercial products based on these
technologies. The failure to introduce new or enhanced products on a timely and
cost competitive basis, or to attain market acceptance for commercial products,
could have a material adverse effect on the Company's business, results of
operations or financial condition.

                                      -8-
<PAGE>

         PROTECTION OF PROPRIETARY TECHNOLOGY. The Company actively protects its
intellectual property and technological advances as trade secrets, in part
through confidentiality agreements with employees, consultants and third
parties. The Company also seeks and enforces patents as it deems appropriate.
The Company currently has 26 U.S. patents, one of which is jointly owned, one
patent pending in the United States and two foreign patents pending, all of
which cover elements of its biomedical materials and processing technologies.
There can be no assurance that the Company will be able to assert its
intellectual property rights successfully against allegedly infringing
competitors, and the inability to assert its rights successfully may have a
negative impact on the Company's competitive position and financial condition.
Furthermore, there can be no assurance that the Company's intellectual property
rights will deter others from developing substantially equivalent or competitive
products or from reverse-engineering the Company's products. Even if a third
party's products infringe upon the Company's patents or other intellectual
property, it may be costly to enforce such rights, and such enforcement efforts
may divert management attention from the operations of the Company. In addition,
the foreign legal protection afforded intellectual property rights, including
patents, if issued, may be different from that afforded under U.S. laws. To the
extent the Company relies on non-disclosure agreements to protect its rights,
there can be no assurance that such information will not be disclosed in breach
of these agreements or, if disclosed, that the Company will be able to recover
amounts sufficient to compensate it for any damage such disclosure may cause.

         Further, although no such claims are currently outstanding against the
Company, there can be no assurance that the Company will not be subject to
patent or other intellectual property rights infringement claims asserted by
others, or if asserted, that the Company will be successful in defending its
position or challenging such claims. In the event that the Company were to be
adjudged to infringe patents or other intellectual property rights of others,
the Company might be required to pay damages, and might be enjoined from making,
using or selling the infringing product or service, or might be required to
obtain a royalty-bearing license, if available on acceptable terms.
Alternatively, in the event a license is not offered or is not available on
commercially acceptable terms, the Company may be required to re-engineer the
affected products or processes to avoid such infringement. There can be no
assurance that any such re-engineering will be successful or will result in
commercially acceptable alternatives, and any such re-engineering may entail
significant or prohibitive expense to the Company.

         In addition to the foregoing, the U.S. government retains the right to
obtain a patent on any invention developed under contract as to which patent
protection is not sought and obtained by the contractor, or to require the
contractor to grant a third party license of such invention if steps to achieve
practical application of the invention have not been taken. The Company has not
sought, and will not seek, patent protection for each of its inventions under
U.S. government contracts, either due to the nature of the invention or the cost
of applying for and obtaining a patent. This practice subjects the Company to
the potential of losing patent rights to the U.S. government. The Company also
may not achieve practical application of an invention in each instance, or in a
timely manner, thus leading to the possibility of a mandatory third party
license. Furthermore, the U.S. government retains a non-exclusive, royalty-free,
non-transferable license to all technology developed under government contracts.

         DEPENDENCE ON MAJOR FACILITY. The Company has only one facility for
manufacturing photovoltaic module manufacturing equipment and performing
biomedical processing services. The Company's revenues are dependent upon the
continued operation of such facility. The operation of a manufacturing plant
involves many risks, including potential damage from fire or natural disasters.
In addition, the Company has obtained certain permits to conduct its business as
currently operated at its facility. There can be no assurance that such permits
would continue to be effective at the current location if the facility were
destroyed and rebuilt, or that the Company will be able to obtain similar
permits to operate at another location. While the Company maintains insurance
covering such risks, including business interruption coverage, there can be no
assurance that the occurrence of these or any other operational problems at the
Company's Massachusetts facility would not materially adversely affect the
Company's business, results of operations or financial condition.

         NEED TO MANAGE GROWTH. The future success of the Company will depend
upon, among other factors, the ability of the Company to identify and exploit
new product and services opportunities, to recruit, hire, train and retain
highly educated, skilled and experienced management and technical personnel, to
generate capital from operations and to manage the effects of growth on all
aspects of its business, including research, development, manufacturing,
distribution, sales and marketing, administration and finance. Any failure by
the Company to identify and exploit new product and service opportunities,
attract or retain necessary personnel, generate adequate revenues or conduct its
expansion or manage growth effectively could have a material adverse effect on
the Company's business, results of operations or financial condition.

                                      -9-
<PAGE>

         DEPENDENCE ON KEY PERSONNEL. The Company's long-term success and its
growth strategy depend on the efforts and abilities of its senior management,
particularly Roger G. Little, the Company's founder and its Chairman, Chief
Executive Officer and President, and on its technical staff. The loss of
services of Mr. Little or one or more of the Company's technical staff, or an
ability of the Company to attract and motivate highly educated and skilled
employees, could result in the Company's inability to continue certain product
offerings, and could have a material adverse effect on the Company's business,
results of operations or financial condition. Further, there can be no assurance
that former employees will not compete with the Company or disclose Company
confidential information, whether or not in violation of any agreements. While
the Company has sought to enforce its rights, any such competition or disclosure
could have a material adverse effect on the Company's business, results of
operations or financial condition.

         CONTROL BY PRINCIPAL STOCKHOLDER. Roger G. Little, the Chairman of the
Board, Chief Executive Officer and President of the Company, controls
approximately 37.1% of the Company's outstanding Common Stock. In addition, as
one of three Trustees of the Company's 401(k) Plan, Mr. Little may exercise
control over shares of Common Stock held by the Plan. As a result, Mr. Little is
in a position to exert significant influence over actions of the Company which
require stockholder approval and generally to direct the affairs of the Company,
including potential acquisitions, sales and changes in control of the Company.

         GOVERNMENT REGULATION. The process of bidding for, obtaining, retaining
and performing U.S. government contracts is subject to a large number of U.S.
government regulations and oversight requirements. Compliance with these
government regulations requires extensive record keeping and the maintenance of
complex policies and procedures relating to all aspects of the Company's
business, as well as to work performed for the Company by any subcontractors.
Any failure by the Company to comply with applicable regulations, or to require
its subcontractors so to comply, could result in a variety of adverse
consequences, ranging from remedial requirements to termination of contracts,
reimbursement of fees, reduction of fees on a going forward basis and
prohibition from obtaining future U.S. government contracts. While the Company
believes that it has put in place systems and personnel to ensure compliance
with all U.S. government regulations relating to contracting, there can be no
assurance that it will at all times be in compliance or that any failure to
comply will not have a material adverse effect on the Company's business,
results of operations or financial condition. See Note (3) to the financial
statements in Item 7, below. Furthermore, the Company's U.S. government
contracts include provisions prohibiting the Company from granting exclusive
rights to use or sell any inventions unless the grantee agrees that any product
using the invention will be manufactured substantially in the United States.

         The Company is subject to export control regulations, which govern the
export of Company products to certain countries, as well as the release of
technical information to non-U.S. individuals and entities. It also is subject
to the federal Occupational Safety and Health Act ("OSHA"). While the Company
has a part-time compliance officer monitoring compliance with these laws and
regulations, there can be no assurance that it will at all times be in
compliance. Failure to comply with these laws and regulations could result in
penalties to the Company, including fines and requirements to take remedial
action, which would have a material adverse effect on the Company's business,
results of operations or financial condition.

         The Company is also subject to a number of federal, state and local
government regulations relating to the use, storage, discharge and disposal of
toxic, volatile or otherwise hazardous chemicals used in its business. Any
failure to comply with present or future regulations could result in the
imposition of fines and the suspension of production or a cessation of
operations. In addition, such regulations could restrict the Company's ability
to expand, or could require the Company to acquire costly equipment or incur
other significant expenses to comply with environmental regulations or to
remediate any pollution.

         The introduction by the Company's customers of certain new biomedical
products depends on such products' passage through various stages of review by
the United States Food and Drug Administration ("FDA"). The process of obtaining
regulatory approvals involves lengthy and detailed laboratory and clinical
testing and other costly and time-consuming procedures. There can be no
assurance as to the timely or positive outcome of any such review process. The
inability of the Company's customers to obtain such approvals in a timely
manner, or at all, could impede or prevent the introduction of these biomedical
products into the marketplace, and could adversely affect the Company's revenues
from its biomedical services.

                                      -10-
<PAGE>

         The extent of government regulation that may arise from future
legislative or administrative action cannot be predicted.

         RISK OF UNINSURED LOSS. The use of orthopedic and other medical devices
may entail a risk of physical injury to patients. To the extent the Company has
been involved in the manufacturing of these products, it may be exposed to
potential product liability and other damage claims. Furthermore, the use of the
Company's photovoltaic module manufacturing equipment could result in operator
injury. To date, no product liability or other damage claim has been initiated
against the Company. The Company maintains product liability and umbrella
insurance coverage; however, there can be no assurance that any product
liability claim assessed against the Company would not exceed its insurance
coverage, or that insurance coverage will continue to be available. While the
Company typically obtains agreements of indemnity from manufacturers of
biomedical products for which the Company provides services, there can be no
assurance that any such indemnity agreements will be enforceable or that such
manufacturers will have adequate funds to meet their obligations under such
agreements. The cost of defending a product liability, negligence or other
action, and/or assessment of damages in excess of insurance coverage, could have
a material adverse effect on the Company's business, results of operations, or
financial condition.

         FLUCTUATIONS IN STOCK PRICE. The Company's Common Stock has recently
experienced price and volume fluctuations and may experience such fluctuations
in the future. Factors such as announcements of technological innovations or new
products by the Company or its competitors, changes in domestic or foreign
governmental regulations or regulatory approval processes and fluctuations in
quarterly operating results, have and may continue to have a significant impact
on the market price of the Common Stock. Moreover, the stock market (and in
particular the securities of technology companies such as the Company) has
experienced and could in the future experience extreme price and volume
fluctuations. These fluctuations may be unrelated to operating performance and
could have a significant impact on the market price of the Common Stock.

         NO DIVIDENDS. The Company has paid no dividends since its inception.
The Company anticipates retaining any future earnings for operations and does
not anticipate that dividends will be paid in the foreseeable future. Under its
credit agreement with Silicon Valley Bank, the Company is prevented from paying
dividends without the prior written consent of the Bank.

ITEM 2.  DESCRIPTION OF PROPERTY.
--------------------------------

         The Company leases two facilities. One facility is a 74,000-square-foot
building located at One Patriots Park, Bedford, Massachusetts, of which the
Company subleases approximately 22,000-square-feet to the purchaser of the
assets of its optoelectronics business. All of the Bedford space is subleased
from Millipore Corporation on what the Company believes are commercially
reasonable terms. Millipore leases the building from a trust of which Roger G.
Little, Chairman, Chief Executive Officer and President of the Company, is sole
trustee and principal beneficiary. The 1985 sublease originally was for a period
of ten years, was extended by the Company for a five-year period expiring on
November 30, 2000, and further extended for an additional five-year period
expiring on November 30, 2005. The Company also leases approximately
12,725-square-feet at 240 W. Carroll Street, Chicago, Illinois. The Company
believes that its facilities are suitable for their present intended purposes
and adequate for the Company's current level of operations. See "Risk Factors -
Dependence on Major Facility" and "- Need to Manage Growth."

ITEM 3.  LEGAL PROCEEDINGS.
--------------------------

         The Company is subject, from time to time, to legal proceedings and
claims arising out of its business, which cover a wide range of matters.
Management, after review and consultation with counsel, considers that any
liability from all of these legal proceedings and claims would not materially
affect the consolidated financial position, results of operations or liquidity
of the Company.

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

         No matters were submitted to a vote of the Company's security-holders
in the fourth quarter 2000.

                                      -11-
<PAGE>

                                     PART II
                                     -------

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
-----------------------------------------------------------------

         The Company's Common Stock, $.01 par value ("Common Stock"), is traded
on the Nasdaq National Market under the symbol "SPIR." The following chart sets
forth the high and low closing sale prices for the Common Stock for the periods
shown:
                                Closing                   Closing
                              Sale Price                 Sale Price
                                 High                       Low
                       -------------------------- -------------------------
    2000
    ----
    First Quarter                  $5.98                     $2.69
    Second Quarter                  3.24                      1.87
    Third Quarter                   4.31                      2.31
    Fourth Quarter                  7.84                      3.15

    1999
    ----
    First Quarter                  $2.50                     $1.39
    Second Quarter                  2.12                      1.25
    Third Quarter                   2.34                      1.62
    Fourth Quarter                  3.56                      1.36

         These prices do not reflect retail mark-ups, mark-downs or commissions.
The closing price of the Common Stock on February 28, 2001 was $5.13, and on
that date, there were approximately 193 stockholders of record.

         The Company did not pay any cash dividends during 2000 or 1999. On
December 22, 2000, the Company paid a stock dividend of one share for each share
held of record on November 22, 2000. These prices above have been adjusted
retroactively to reflect the stock dividend.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS.
--------------

         THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS SECTION AND OTHER PARTS OF THIS REPORT CONTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY DIFFER SIGNIFICANTLY FROM
THE RESULTS AND TIMING DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DISCUSSED BELOW AND IN "RISK FACTORS" AND "BUSINESS." THE FOLLOWING
DISCUSSION IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION
WITH, THE DETAILED INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN
THIS REPORT.

OVERVIEW

         Spire develops, manufactures and markets highly-engineered solar
electric module manufacturing equipment and systems 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 144 factories and in 42
countries. 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 year ended December 31,
2000 increased 8%, compared to the year ended December 31, 1999. Both of the
Company's primary areas of business increased in net sales and revenues.

         Sales of the Company's Spire Solar business area increased 53% during
2000 as compared to 1999, due to increased demand for the Company's capital
equipment and new system sales from the Company's Chicago facility.

                                      -12-
<PAGE>

         Revenues of the Company's subsidiary Spire Biomedical, Inc. (SBI) also
increased 17% during 2000 as compared to 1999 due primarily to a one time
license sale.

         Operating results in any particular quarter will depend upon product
mix, as well as the timing of shipments of higher priced products from the
Company's equipment line. Export sales, which amounted to 20% of net sales and
revenues for the year ended December 31, 2000, continue to constitute a
significant portion of the Company's net sales and revenues.

         On December 30, 1999, the Company sold substantially all of the assets
of its optoelectronics business for cash proceeds of $12,910,003. The purchaser
of the optoelectronics assets received machinery, equipment and technology.

         The sale of the assets of the optoelectronics business resulted in a
pre-tax net gain of $9,918,189.

RESULTS OF OPERATIONS

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

                                                             Years Ended December 31,
                                           --------------------------------------------------------------
                                                  2000                 1999                 1998
                                           -------------------- -------------------- --------------------
<S>                                               <C>                    <C>                 <C>
  Net sales and revenues                           100.0%               100.0%               100.0%
  Cost of sales and revenues                        74.3                 89.1                 79.3
                                           -------------------- -------------------- --------------------
      Gross profit                                  25.7                 10.9                 20.7
  Selling, general and administrative
    expenses                                        40.3                 39.3                 36.4
  Other operating charges                             --                   --                  8.7
                                           -------------------- -------------------- --------------------
      Loss from operations                         (14.6)               (28.4)               (24.4)
  Gain on sale of assets                              --                 83.3                   --
                                           -------------------- -------------------- --------------------
      Earnings (loss) before income taxes          (10.8)                54.1                (24.4)
  Income tax expense (benefit)                      (4.6)                 9.0                  2.5
                                           -------------------- -------------------- --------------------
      Net earnings (loss)                           (6.2)%               45.1%               (26.9)%
                                           ==================== ==================== ====================
</TABLE>

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

NET SALES AND REVENUES

         Net sales and revenues increased $984,000 or 8% for the year ended
December 31, 2000 to $12,885,000, compared to $11,901,000 for the year ended
December 31, 1999. Contract research, service and license revenues decreased
$1,046,000 or 12% to $7,860,000 for the year ended December 31, 2000 compared to
$8,906,000 for 1999. Sales of goods increased $2,030,000 or 68% to $5,025,000
for 2000, compared to $2,995,000 for 1999 due to the growth in the photovoltaic
industry, and sales from the Company's newly established Chicago facility. The
decline in research, service and license revenue was attributed mostly to a
decline in research and development contracts with the U.S. Government as a
result of the sale of the assets of the optoelectronics business at the end of
1999. This was partially offset by recognition of $500,000 related to a one-time
license sale. The following table categorizes the Company's net sales and
revenues for the periods presented:

                                     Years Ended December 31,
                                   -----------------------------
                                        2000           1999           Change
                                   -------------- --------------  --------------

 Contract research, service and
   license revenues                  $7,860,000     $8,906,000        (12%)
 Sales of goods                       5,025,000      2,995,000         68%
                                   -------------- --------------
     Net sales and revenues         $12,885,000    $11,901,000          8%
                                   ============== ==============

                                      -13-
<PAGE>

COST OF SALES AND REVENUES

         The cost of contract research, service and license revenues decreased
$2,459,000 to $4,927,000, and decreased to 63% of related revenues, for the year
ended December 31, 2000, compared to $7,386,000 or 83% of related revenues for
the year ended December 31, 1999. Cost of contract research, service and license
revenues decreased, in dollars and as a percentage of sales due to a decline in
fixed costs and a one-time license sale with no associated cost. Cost of goods
sold increased $1,428,000 to $4,642,000, and decreased to 92% of related sales,
for the year ended December 31, 2000, compared to $3,214,000 or 107% of related
sales, for the year ended December 31, 1999. The decrease in total cost of sales
and revenues as a percentage of related sales and revenues is caused by product
mix and higher volume, and a one time write down to market value of certain work
in process inventories in 1999.

         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:

                                December 31, 2000   %   December 31, 1999   %
                                -----------------  ---  -----------------  ---

 Contract research, service and
   license revenues                 $4,927,000     63%     $7,386,000      83%
 Cost of goods sold                  4,642,000     92%      3,214,000     107%
                                -----------------       -----------------
      Total cost of sales and
        revenues                    $9,569,000     74%    $10,600,000      89%
                                =================       =================

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses for the year ended
December 31, 2000 increased $513,000 to $5,195,000, and increased to 40% of
sales and revenues, compared to $4,682,000 or 39% of sales and revenues for the
year ended December 31, 1999. Selling, general and administrative expenses
increased as a percentage of sales due to increased sales and marketing
activities.

INTEREST

         The Company earned $488,000 in interest income for the year ended
December 31, 2000 from the investment of the proceeds from the sale of the
optoelectronics assets in short-term debt securities, compared to $3,000 for the
year ended December 31, 1999. The Company incurred interest expense of $18,000
in 2000 and $132,000 in 1999, of which $11,000 was capitalized in 2000 and
$28,000 in 1999 related to internally constructed assets.

INCOME TAXES

         The Company recorded $598,000 of tax benefit for the year ended
December 31, 2000, compared to expenses of $1,070,000 for the year ended
December 31, 1999. At December 31, 2000, the Company had a gross deferred tax
asset of expenses of $1,307,000, against which a valuation allowance of $895,000
was applied. Gross deferred tax liability of $152,000 was applied against the
net deferred tax asset resulting in a net deferred tax asset of $260,000.

NET EARNINGS (LOSS)

         The Company reported a net loss for the year ended December 31, 2000 of
$800,000, compared to net earnings of $5,367,000 for the year ended December 31,
1999. Net earnings for the year ended December 31, 1999 resulted from the
pre-tax gain on sale of assets of $9,918,000, which offset pre-tax operating
losses of $3,380,000.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

NET SALES AND REVENUES

        Net sales and revenues decreased $2,242,000 or 16% for the year ended
December 31, 1999 to $11,901,000, compared to $14,143,000 for the year ended
December 31, 1998. Contract research, service and license revenues decreased
$2,018,000 or 18% to $8,906,000 for the year ended December 31, 1999 compared to
$10,924,000 for 1998. Sales of goods decreased $224,000 or 7% to $2,995,000 for
1999, compared to $3,219,000 for 1998. The decline in research, service and
license revenue was attributed mostly to a decline in research and development
contracts with the U.S. Government, as well as a slight decline in Biomedical
processing services. The following table categorizes the Company's net sales and
revenues for the periods presented:

                                      -14-
<PAGE>

                                   Years Ended December 31,
                                 ----------------------------
                                     1999            1998           Change
                                 ------------    ------------    ------------

 Contract research, service and
   license revenues                $8,906,000     $10,924,000        (18%)
 Sales of goods                     2,995,000       3,219,000         (7%)
                                 ------------    ------------    ------------
     Net sales and revenues       $11,901,000     $14,143,000        (16%)
                                 ============    ============    ============

COST OF SALES AND REVENUES

         The cost of sales and revenues decreased $609,000 to $10,600,000, but
increased to 89% of net sales and revenues, for the year ended December 31,
1999, compared to $11,209,000 or 79% of net sales and revenues for the year
ended December 31, 1998.

         The cost of contract research, service and license revenues decreased
$716,000 to $7,386,000, and increased to 83% of related revenues, for the year
ended December 31, 1999, compared to $8,102,000 or 74% of related revenues for
the year ended December 31, 1998. Cost of contract research, service and license
revenues decreased, but increased as a percentage of sales, due to a decline in
volume. Cost of goods sold increased $107,000 to $3,214,000, and increased to
107% of related sales, for the year ended December 31, 1999, compared to
$3,107,000 or 97% of related sales, for the year ended December 31, 1998. The
increase in total cost of sales and revenues as a percentage of related sales
and revenues is caused by product mix and lower volume, and a one time write
down to market value of certain work in process inventories.

         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:

                                December 31, 1999   %   December 31, 1998   %
                                -----------------  ---  -----------------  ---

 Contract research, service and
   license revenues                 $7,386,000      83%     $8,102,000     74%
 Cost of goods sold                  3,214,000     107%      3,107,000     97%
                                -----------------  ---  -----------------  ---
     Total cost of sales
       and revenues                $10,600,000      89%    $11,209,000     79%
                                =================       =================

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses for the year ended
December 31, 1999 decreased $465,000 to $4,682,000, and increased to 39% of
sales and revenues, compared to $5,147,000 or 36% of sales and revenues for the
year ended December 31, 1998. Selling, general and administrative expenses
increased as a percentage of sales due to the lower volume.

OTHER OPERATING CHARGES

         Other operating charges in 1998 included expenses of a non-recurring
nature, and amounted to $1,244,000, or 9% of total revenues. Included in the
1998 charge are a $547,000 payment to the U.S. government to settle a dispute
involving contracting requirements in proposals and contract fulfillment,
associated legal costs, other legal costs incurred in the enforcement of
non-competition agreements of two former employees, and severance costs and
related fringe benefits incurred in downsizing the Company's workforce. These
downsizing efforts, which were completed in February 1999, included the
reduction of 24 employees and resulted in an annualized savings of $1,100,000,
primarily in the contract research and manufacturing areas. No such charges were
incurred in 1999.

GAIN ON SALE OF ASSETS

        On December 30, 1999, the Company sold substantially all of the assets
of its Optoelectronics business for cash proceeds of $12,910,000. Additionally,
the purchaser of the Optoelectronics assets received machinery, equipment and
technology. The sale of the assets of the Optoelectronics business resulted in a
pre-tax net gain of $9,918,000.

                                      -15-
<PAGE>

INTEREST

         The Company earned $3,000 in interest income for the year ended
December 31, 1999, compared to $22,000 for the year ended December 31, 1998. The
Company incurred interest expense of $132,000 in 1999 related to internally
constructed assets and $18,000 in 1998, of which $28,000 was capitalized in 1999
and zero in 1998. Increased interest expense during 1999 is a result of
increased borrowings under the Company's line of credit to fund working capital
requirements.

INCOME TAXES

         The Company recorded $1,070,000 of tax expense for the year ended
December 31, 1999, compared to $359,000 for the year ended December 31, 1998.
Tax expense for the year ended December 31, 1999 benefited from the realization
of a $1,668,000 deferred tax asset for net loss and other credit carryforwards,
which was fully reserved at December 31, 1998. At December 31, 1999, the Company
had a gross deferred tax asset of $807,000, against which a valuation allowance
of $505,000 was applied. Gross deferred tax liability of $302,000 was applied
against the net deferred tax asset resulting in a net deferred tax asset of
zero.

NET EARNINGS (LOSS)

         The Company reported net earnings for the year ended December 31, 1999
of $5,367,000, compared to net loss of $3,811,000 for the year ended December
31, 1998. Net earnings for the year ended December 31, 1999 included a pre-tax
gain on sale of assets of $9,918,189, which offset pre-tax operating loss of
$3,380,249.

LIQUIDITY AND CAPITAL RESOURCES

         To date the Company has been able to fund its operating cash
requirements using proceeds from sale of assets, operations and available lines
of credit. On July 25, 2000, the Company entered into a revolving credit
agreement with the Silicon Valley Bank, replacing its previous credit facility
with the Bank. This agreement provides for a $2 million revolving credit
facility, based upon eligible accounts receivable requirements. 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. At December 31,
2000, interest on the line was at the Bank's prime rate plus 1/2 percent (10%).
The line contains covenants including provisions relating to profitability and
net worth. The Company is currently compliant with the terms of this credit
agreement. As of December 31, 2000, the Company had $550,000 outstanding under
this revolving credit facility.

         The Company believes it has sufficient resources to finance its current
operations for the foreseeable future through working capital, its existing line
of credit and available lease arrangements. Cash and cash equivalents decreased
$3,246,000 to $7,463,000 at December 31, 2000, from $10,709,000 at December 31,
1999. To date, there are no material commitments by the Company for capital
expenditures. At December 31, 2000, the Company's retained earnings were
$2,128,000, compared to retained earnings of $3,188,000 as of December 31, 1999.
Working capital as of December 31, 2000 decreased 7% to $9,024,000, compared to
$9,718,000 as of December 31, 1999.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities." was issued.
The Company adopted SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138,
on January 1, 2001. The adoption of SFAS No. 133 has not had a material impact
on the Company's financial position or overall trends in results of operations
and has not resulted in significant changes to its financial risk management
practices.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulleting (SAB) No. 101. "Revenue Recognition." An amendment in June
2000 delayed the effective date until the fourth quarter of 2000. The adoption
of SAB 101 did not have a material impact on the consolidated financial
statements.

                                      -16-
<PAGE>

         In July and September 2000, the EITF reached consensus on Issue No
00-10, "Accounting for Shipping and Handling Fees and Costs." This issue
addresses the income statement classification for shipping and handling fees and
costs. The Company adopted the consensus in the fourth quarter of 2000. The
adoption of EITF Issue No. 00-10 did not have a material impact on the
consolidated financial statements.

IMPACT OF INFLATION AND CHANGING PRICES

         Historically, the Company's business has not been materially impacted
by inflation. Manufacturing equipment sales are generally quoted, manufactured
and shipped within a cycle of approximately six months, allowing for orderly
pricing adjustments to the cost of labor and purchased parts. The Company has
not experienced any negative effects from the impact of inflation on long-term
contracts. The Company's service business is not expected to be seriously
affected by inflation because its procurement-production cycle typically ranges
from two weeks to several months, and prices generally are not fixed for more
than one year. Research and development contracts usually include cost
escalation provisions.

FOREIGN EXCHANGE FLUCTUATION

         The Company sells only in U.S. dollars, generally against an
irrevocable confirmed letter of credit through a major U.S. bank. Therefore the
Company is not directly affected by foreign exchange fluctuations on its current
orders. However, fluctuations in foreign exchange rates do have an effect on the
Company's customers' access to U.S. dollars and on the pricing competition on
certain pieces of equipment that the Company sells in selected markets.

                                      -17-
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE><CAPTION>
                                                                                                                  Page
                                                                                                                  Number
                                                                                                                  ------
<S>                                                                                                                 <C>
Independent Auditors' Report                                                                                        19

Consolidated Financial Statements:

     Consolidated Balance Sheets as of December 31, 2000 and 1999                                                   20

     Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998                     21

     Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2000, 1999 and 1998           22

     Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998                     23

     Notes to Consolidated Financial Statements                                                                     24
</TABLE>

























                                       18
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Spire Corporation:


We have audited the consolidated balance sheets of Spire Corporation and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Spire Corporation
and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States of America.


KPMG LLP

Boston, Massachusetts
March 16, 2001


                                       19
<PAGE>


                       SPIRE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE><CAPTION>
                                                                                                   DECEMBER 31,
                                                                                        --------------------------------
                                                                                            2000                 1999
                                                                                        -----------          -----------
<S>                                                                                     <C>                  <C>
                                                      ASSETS
Current assets
--------------
    Cash and cash equivalents                                                           $ 7,463,382          $10,709,370
    Accounts receivable, trade:
        Amounts billed                                                                    2,210,901            2,017,865
        Retainage                                                                            45,457               50,878
        Unbilled costs                                                                      977,800              343,242
                                                                                        -----------          -----------
                                                                                          3,234,158            2,411,985
        Less allowance for doubtful accounts                                                108,000              107,000
                                                                                        -----------          -----------
            Net accounts receivable                                                       3,126,158            2,304,985
                                                                                        -----------          -----------

    Inventories                                                                           2,958,840            1,862,933
    Deferred income taxes                                                                   260,000                 --
    Prepaid expenses and other current assets                                               326,725              351,948
                                                                                        -----------          -----------
            Total current assets                                                         14,135,105           15,229,236
                                                                                        -----------          -----------

Property and equipment                                                                   15,084,479           14,640,003
    Less accumulated depreciation and amortization                                       12,913,912           12,621,001
                                                                                        -----------          -----------
            Net property and equipment                                                    2,170,567            2,019,002
                                                                                        -----------          -----------

Patents (less accumulated amortization, $478,287 in 2000 and $448,507 in 1999)              131,128              106,956
Other assets                                                                                  5,567                8,271
                                                                                        -----------          -----------
                                                                                            136,695              115,227
                                                                                        -----------          -----------
                                                                                        $16,442,367          $17,363,465
                                                                                        ===========          ===========
                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable                                                                    $ 1,230,607          $ 1,280,951
    Accrued liabilities                                                                   1,229,432            1,197,624
    Notes payable                                                                           550,000                 --
    Federal and State income taxes payable                                                     --              1,070,000
    Advances on contracts in progress                                                     2,100,910            1,962,299
                                                                                        -----------          -----------
        Total current liabilities                                                         5,110,949            5,510,874
                                                                                        -----------          -----------
Stockholders' equity
    Common stock, $.01 par value; shares authorized 20,000,000;
        issued 6,681,824 shares in 2000 and 7,637,852 shares in 1999                         66,818               76,379
    Additional paid-in capital                                                            8,877,019            9,808,049
    Retained earnings                                                                     2,387,581            3,187,850
                                                                                        -----------          -----------
                                                                                         11,331,418           13,072,278
    Less treasury stock at cost, 1,104,320 shares in 1999                                      --              1,219,687
                                                                                        -----------          -----------
        Total stockholders' equity                                                       11,331,418           11,852,591
                                                                                        -----------          -----------
                                                                                        $16,442,367          $17,363,465
                                                                                        ===========          ===========

                                  See accompanying notes to consolidated financial statements.
</TABLE>

                                       20
<PAGE>


                       SPIRE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE><CAPTION>
                                                                                  YEARS ENDED DECEMBER 31,
                                                                 ----------------------------------------------------------
                                                                     2000                   1999                   1998
                                                                 ------------           ------------           ------------
<S>                                                              <C>                    <C>                    <C>
Net sales and revenues
    Contract research, service and license revenues              $  7,859,470           $  8,905,528           $ 10,924,062
    Sales of goods                                                  5,025,159              2,995,240              3,219,181
                                                                 ------------           ------------           ------------
        Total sales and revenues                                   12,884,629             11,900,768             14,143,243
                                                                 ------------           ------------           ------------

Costs and expenses
    Cost of contract research, services and licenses                4,927,157              7,385,649              8,102,075
    Cost of goods sold                                              4,641,586              3,213,643              3,106,948
    Selling, general and administrative expenses                    5,195,365              4,681,725              5,146,930
    Other operating charges                                              --                     --                1,243,989
                                                                 ------------           ------------           ------------
        Total costs and expenses                                   14,764,108             15,281,017             17,599,942
                                                                 ------------           ------------           ------------

Loss from operations                                               (1,879,479)            (3,380,249)            (3,456,699)


Gain on sale of assets                                                   --                9,918,189                   --

Interest income (expense), net                                        481,591               (101,245)                 4,005
                                                                 ------------           ------------           ------------

Earnings (loss) before income taxes                                (1,397,888)             6,436,695             (3,452,694)

Income tax expense (benefit)                                         (597,619)             1,070,000                358,578
                                                                 ------------           ------------           ------------

Net earnings (loss)                                              $   (800,269)          $  5,366,695           $ (3,811,272)
                                                                 ============           ============           ============

Earnings (loss) per share of common stock - basic                $      (0.12)          $       0.83           $      (0.59)
                                                                 ============           ============           ============

Earnings (loss) per share of common stock - diluted              $      (0.12)          $       0.82           $      (0.59)
                                                                 ============           ============           ============
Weighted average number of common and common equivalent
    shares outstanding - basic                                      6,628,667              6,492,224              6,470,542
                                                                 ============           ============           ============
Weighted average number of common and common equivalent
    shares outstanding - diluted                                    6,628,667              6,549,426              6,470,542
                                                                 ============           ============           ============

                               See accompanying notes to consolidated financial statements.
</TABLE>

                                       21
<PAGE>


                       SPIRE CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE><CAPTION>
                                      COMMON STOCK         ADDITIONAL         TREASURY STOCK           RETAINED
                                ----------------------      PAID-IN      -------------------------     EARNINGS
                                  SHARES       AMOUNT       CAPITAL        SHARES        AMOUNT        (DEFICIT)        TOTAL
                                ----------    --------    -----------    ----------    -----------    -----------    ------------
<S>                              <C>          <C>         <C>             <C>          <C>            <C>            <C>
Balance, December 31, 1997       7,514,164    $ 75,142    $ 9,607,897     1,104,320    $(1,219,687)   $ 1,632,427    $ 10,095,779
    Exercise of stock options       77,688         777        134,637          --             --             --           135,414
    Net loss                          --          --             --            --             --       (3,811,272)     (3,811,272)
                                ----------    --------    -----------    ----------    -----------    -----------    ------------

Balance, December 31, 1998       7,591,852      75,919      9,742,534     1,104,320     (1,219,687)    (2,178,845)      6,419,921
    Exercise of stock options       46,000         460         65,515          --             --             --            65,975
    Net earnings                      --          --             --            --             --        5,366,695       5,366,695
                                ----------    --------    -----------    ----------    -----------    -----------    ------------

Balance, December 31, 1999       7,637,852      76,379      9,808,049     1,104,320     (1,219,687)     3,187,850      11,852,591
    Exercise of stock options      148,292       1,482        277,614          --             --             --           279,096
    Retire treasury stock       (1,104,320)    (11,043)    (1,208,644)   (1,104,320)     1,219,687           --              --
    Net loss                          --          --             --            --             --         (800,269)       (800,269)
                                ----------    --------    -----------    ----------    -----------    -----------    ------------

Balance, December 31, 2000       6,681,824    $ 66,818    $ 8,877,019          --             --      $ 2,387,581    $ 11,331,418
                                ==========    ========    ===========    ==========    ===========    ===========    ============

                                   See accompanying notes to consolidated financial statements.
</TABLE>
                                       22
<PAGE>


                       SPIRE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE><CAPTION>
                                                                                             YEARS ENDED DECEMBER 31,
                                                                                 -----------------------------------------------
                                                                                      2000              1999             1998
                                                                                 ------------      ------------      -----------
<S>                                                                              <C>               <C>               <C>
Cash flows from operating activities:
    Net earnings (loss)                                                          $   (800,269)     $  5,366,695      $(3,811,272)
    Adjustments to reconcile net earnings (loss) to net
        cash provided by operating activities:
            Depreciation and amortization                                             452,291           970,646        1,018,112
            Loss (gain) on sale and abandonment of assets                              13,064        (9,918,189)            --
            Deferred income taxes                                                    (260,000)             --            300,000
            Changes in assets and liabilities (excluding the impact of
                assets sold):
                Accounts receivable                                                  (821,173)          850,291          549,307
                Inventories                                                        (1,095,907)          289,910       (1,265,463)
                Prepaid expenses and other current assets                              25,223           (11,701)         138,001
                Income taxes payable                                               (1,070,000)        1,070,000             --
                Accounts payable and accrued liabilities                              (18,536)           86,711          629,191
                Advances on contracts in progress                                     138,611           850,242          701,688
                                                                                 ------------      ------------      -----------
                     Net cash (used in) provided by operating activities           (3,436,696)         (445,395)      (1,740,436)
                                                                                 ------------      ------------      -----------

Cash flows from investing activities:
    Proceeds from sale of assets (net of related expenses)                               --          12,204,007             --
    Additions to property and equipment                                              (584,436)         (351,522)        (798,654)
    Increase in patent costs                                                          (53,952)          (30,383)         (24,793)
    Other assets                                                                         --              (5,178)           4,608
                                                                                 ------------      ------------      -----------
                   Net cash provided by (used in) investing activities               (638,388)       11,816,924         (818,839)
                                                                                 ------------      ------------      -----------

Cash flows from financing activities:
    Net borrowings (payments) on short-term debt                                      550,000          (850,000)         850,000
    Exercise of stock options                                                         279,096            65,975          135,414
                                                                                 ------------      ------------      -----------
                     Net cash provided by (used in) financing activities              829,096          (784,025)         985,414
                                                                                 ------------      ------------      -----------

Net increase (decrease) in cash and cash equivalents                               (3,245,988)       10,587,504       (1,573,861)

Cash and cash equivalents, beginning of year                                       10,709,370           121,866        1,695,727
                                                                                 ------------      ------------      -----------
Cash and cash equivalents, end of year                                           $  7,463,382      $ 10,709,370      $   121,866
                                                                                 ============      ============      ===========

Supplemental disclosures of cash flow information:
     Cash paid during the year for:
            Interest                                                             $     17,297      $    132,294      $    19,030
                                                                                 ============      ============      ===========
            Income taxes                                                         $    489,547              --        $    44,400
                                                                                 ============      ============      ===========

                                        See accompanying notes to consolidated financial statements.
</TABLE>

                                       23
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2000, 1999 AND 1998

(1)     NATURE OF THE BUSINESS

        Spire develops, manufactures, and markets highly engineered solar
electric manufacturing equipment and systems and provides biomedical processing
services. Spire designs and manufactures specialized equipment for the
production of terrestrial photovoltaic modules from solar cells. Spire sells
solar systems through its Chicago, Illinois facility. Spire's value-added
service offerings to biomedical customers provide surface treatments to enhance
the performance of medical products. Spire also conducts research and
development activities, primarily for the U.S. government.

(2)     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        (A)    PRINCIPLES OF CONSOLIDATION

        The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.

        The Company has entered into an unsecured revolving Loan Agreement with
its subsidiary Spire Biomedical, Inc. The note has interest on the line at prime
rate plus 1/2 percent. This loan has been eliminated for consolidation purposes.

        (B)    REVENUE RECOGNITION

        Sales of good and services. A sale is recorded when title passes to the
customer or when services are performed in accordance with contracts. Sales
under complex contracts are recorded based on objectively determined fair value
of each component of the contract, in accordance with generally accepted
accounting principles.

        Government contracts. Revenues and estimated profits on long-term
government contracts are generally recognized under the percentage-of-completion
method of accounting using a cost-to-cost methodology. Profit estimates are
revised periodically based on changes in facts and any losses on contracts are
recognized immediately.

        (C)    INVENTORIES

        Inventories are stated at the lower of cost or market, cost being
determined by the average cost method, on a first-in, first-out (FIFO) basis.

        (D)    PROPERTY AND EQUIPMENT

        Property and equipment is stated at cost. Depreciation and amortization
are provided using the straight-line method over the estimated useful lives of
the respective assets, as follows:

             Machinery and equipment     5 and 7 years
             Furniture and fixtures      5 years
             Leasehold improvements      Lesser of 10 years or remaining life of
                                         facility lease

        Maintenance and repairs are charged to expense as incurred. Major
renewals and betterments are added to property and equipment accounts at cost.

        (E)    PATENT COSTS

        Patent costs are capitalized and amortized over five years using the
straight-line method.

                                       24
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


        (F)    INCOME TAXES

        The Company accounts for income taxes under the asset and liability
method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

        (G)    RESEARCH AND DEVELOPMENT COSTS

        Research and development costs are charged to operations as incurred,
except where such costs are reimbursable under customer funded contracts. During
the years ended December 31, 2000, 1999 and 1998, unfunded research and
development costs were $299,000, $184,000 and $344,000, respectively.

        (H)    EARNINGS (LOSS) PER SHARE

        Basic earnings (loss) per share is computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings (loss) per share gives effect to
all dilutive potential common shares outstanding during the period. The
computation of diluted earnings (loss) per share does not assume conversion,
exercise or contingent exercise of securities that would have an antidilutive
effect on earnings.

        (I)    USE OF ESTIMATES

        The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management 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 revenue and
expenses during the reporting period. Actual results could differ from those
estimates.

        (J)    FINANCIAL INSTRUMENTS

        Financial instruments of the Company consist of cash and cash
equivalents, accounts receivable, accounts payable and notes payable. The
carrying amounts of these financial instruments approximate their fair value.

        (K)    LONG-LIVED ASSETS

    The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.

        (L)    STOCK-BASED COMPENSATION

        The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations including FASB
Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion N. 25" issued in March 2000, to
account for its fixed plan stock options. Under this method, compensation
expense is recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," established
accounting and disclosure requirements using a fair value-based method of
accounting for stock-based employee compensation plans. As allowed by SFAS No.
123, the Company has elected to continue to apply the intrinsic value-based
method of accounting described above, and has adopted the disclosure
requirements of SFAS No. 123.

                                       25
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


        (M)    RECLASSIFICATION OF PRIOR YEARS

        Prior year financial statements have been reclassified to conform to the
current presentation.

        (N)    CASH AND CASH EQUIVALENTS

        Cash and cash equivalents include cash, time deposits and all highly
liquid debt with an original maturity of three months or less. Included in Cash
and Cash Equivalents at December 31, 2000 was $750,000 in an escrow account
relating to the sale of assets of the Optoelectronics business.

        (O)    SHIPPING AND HANDLING COSTS

        Shipping and handling costs are included in cost of goods sold.

        (P)    NEW ACCOUNTING STANDARDS

        In June 1998, Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities." was issued.
The Company adopted SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138,
on January 1, 2001. The adoption of SFAS No. 133 has not had a material impact
on the Company's financial position or overall trends in results of operations
and has not resulted in significant changes to its financial risk management
practices.

        In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulleting (SAB) No. 101. "Revenue Recognition." An amendment in June
2000 delayed the effective date until the fourth quarter of 2000. The adoption
of SAB 101 did not have a material impact on the consolidated financial
statements.

        In July and September 2000, the EITF reached consensus on Issue No
00-10, "Accounting for Shipping and Handling Fees and Costs." This issue
addresses the income statement classification for shipping and handling fees and
costs. The Company adopted the consensus in the fourth quarter of 2000. The
adoption of EITF Issue No. 00-10 did not have a material impact on the
consolidated financial statements.

(3)     ACCOUNTS RECEIVABLE

        Unbilled costs on contracts in progress represent revenues recognized on
contracts for which billings have not been presented to customers as of each
balance sheet date. These amounts are billed and generally collected within one
year.

        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 $45,000 and $51,000 at December 31, 2000 and 1999, respectively. All
other accounts receivable are expected to be collected within one year.

        All contracts with United States Government agencies have been audited
through December 1997. Except as discussed in the following paragraph, the
Company has not incurred significant losses as a result of government audits.

        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 on August 18,
1998 for $547,000. This amount was included in Other Operating Expenses in the
Statements of Operations.

                                       26
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


(4)     INVENTORIES

        Inventories consist of the following:

<TABLE><CAPTION>
                                                                       December 31,
                                                             ------------------------------
                                                                2000                1999
                                                             ----------          ----------
                  <S>                                        <C>                 <C>
                  Raw materials                              $  588,732          $  653,695
                  Work in process                             1,951,842           1,044,331
                  Finished goods                                418,266             164,907
                                                             ----------          ----------
                                                             $2,958,840          $1,862,933
                                                             ==========          ==========
</TABLE>

(5)     ACCRUED LIABILITIES

        Accrued liabilities include the following:

<TABLE><CAPTION>
                                                                       December 31,
                                                             ------------------------------
                                                                2000                1999
                                                             ----------          ----------
                  <S>                                        <C>                 <C>
                  Accrued payroll and payroll taxes          $  337,161          $  575,401
                  Advanced purchase discounts                   272,965                --
                  Accrued other                                 619,306             622,223
                                                             ----------          ----------
                                                             $1,229,432          $1,197,624
                                                             ==========          ==========
</TABLE>

(6)     PROPERTY AND EQUIPMENT

        Property and equipment consists of the following:

<TABLE><CAPTION>
                                                               December 31,
                                                    --------------------------------
                                                        2000                 1999
                                                    -----------          -----------
                  <S>                               <C>                  <C>
                  Machinery and equipment           $10,490,494          $10,416,381
                  Furniture and fixtures              2,880,596            2,716,215
                  Leasehold improvements              1,600,645            1,503,452
                  Construction in progress              112,744                3,955
                                                    -----------          -----------
                                                    $15,084,479          $14,640,003
                                                    ===========          ===========
</TABLE>

(7)     NOTES PAYABLE AND CREDIT ARRANGEMENTS

        On July 25, 2000, the Company entered into a new revolving credit
agreement for a one year period with Silicon Valley Bank. This agreement
established a $2 million revolving credit facility, based upon eligible accounts
receivable requirements. This line of credit was 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 1/2 percent
(10% at December 31, 2000). The line contains restrictive covenants including
provisions relating to profitability and net worth. The Company is currently
compliant with the terms of this credit agreement. As of December 31, 2000, the
Company had $550,000 outstanding under this revolving credit line, and the
related interest expense in 2000 was $18,000.

                                       27
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


(8)     STOCK COMPENSATION PLANS

        The Company has two employee stock option plans: the 1985 Incentive
Stock Option Plan, and the 1996 Equity Incentive Plan. These plans provide that
the Board of Directors may grant options to purchase the Company's common stock
to key employees of the Company. Incentive 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 exercise price of
options is determined by the Board of Directors. The options may be exercised,
subject to certain vesting requirements, for periods up to ten years from the
date of issue.

        Through December 31, 2000, the Company has outstanding under its
Directors Stock Option Plan and the 1996 Equity Incentive Plan, 85,000
non-qualified stock options to the unaffiliated directors of the Company for the
purchase of common stock at an average price of $4.67 per share. The options may
be exercised, subject to certain vesting requirements, for periods up to ten
years from the date of issue. The Company may no longer award options under any
plans except the 1996 Equity Incentive Plan.

       A summary of the activity of these plans follows:

<TABLE><CAPTION>
                                                                                    Weighted
                                                                    Number of        Average
                                                                     Shares        Option Price
                                                                    --------       ------------
               <S>                                                   <C>              <C>
                  Outstanding, December 31, 1997                     439,762           $1.88
                       Granted                                       199,326           $5.76
                       Exercised                                     (77,688)          $1.75
                       Canceled                                      (81,700)          $1.84
                                                                    --------           -----

                  Outstanding, December 31, 1998                     479,700           $3.51
                       Granted                                       226,900           $1.80
                       Exercised                                     (46,000)          $1.43
                       Canceled                                      (61,900)          $3.87
                                                                    --------           -----

                  Outstanding, December 31, 1999                     598,700           $3.01
                       Granted                                       330,244           $2.91
                       Exercised                                    (149,542)          $1.83
                       Canceled                                     (196,544)          $3.73
                                                                    --------           -----

                  Outstanding, December 31, 2000                     582,858           $2.99
                                                                    ========           =====
                  Options Exercisable at December 31, 2000           122,572           $3.24
                                                                    ========           =====
</TABLE>

        The following table summarizes information about stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                         Options Outstanding                                     Options Exercisable
                       --------------------------------------------------------       -------------------------------------------
                                        Weighted Average       Weighted
         Range of         Number           Remaining            Average                       Number         Weighted Average
      Exercise Price   Outstanding     Contractual Life     Exercise Price                  Exercisable       Exercise Price
      --------------   --------------------------------------------------------       --------------------- ---------------------

     <S>                  <C>             <C>                   <C>                           <C>                <C>
      $1.25 to $2.49       182,876         7.6 years             $1.79                         74,229             $1.74
      $2.50 to $5.00       359,982         8.9 years             $3.08                         25,843             $3.82
      $5.01 to $7.94        40,000         7.1 years             $7.53                         22,500             $7.40
                       ---------------                                                ---------------------
                           582,858         8.1 years             $2.99                        122,572             $3.24
                       ===============                                                =====================
</TABLE>

                                       28
<PAGE>


                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998



        There were 913,516 shares reserved for issuance under all plans at
December 31, 2000. The per-share weighted-average fair value of stock options
granted in 2000, 1999 and 1998 was $2.91, $1.64 and $4.07, respectively, on the
date of grant using the Black Scholes option-pricing model with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
                        Expected            Risk-Free         Expected           Expected
        Year        Dividend Yield       Interest Rate      Option Life       Volatility Factor
    --------------------------------------------------------------------------------------------------

       <S>               <C>                <C>              <C>                 <C>
        2000              0%                 5.65%            5 years             98.2%
        1999              0%                 5.89%            5 years             93.1%
        1998              0%                 5.50%            5 years             85.4%
</TABLE>


        The Company applies APB Opinion No. 25 in accounting for its plans and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its options under SFAS No.
123, the Company's net earnings (loss) would have been reduced (increased) to
the pro forma amounts indicated below.

<TABLE>
<CAPTION>
                                                                                       2000             1999              1998
                                                                                ----------------- ---------------- -----------------

            <S>                                                                     <C>              <C>             <C>
             Net earnings (loss) as reported                                         $(800,270)       $5,366,695      $(3,811,272)
             Earnings (loss) per share of common stock - diluted, as reported           $(0.12)            $0.82           $(0.59)
             Net earnings (loss) pro forma                                           $(920,063)       $4,467,018      $(4,068,390)
             Earnings (loss) per share of common stock - diluted, pro forma             $(0.14)            $0.70           $(0.63)
</TABLE>

        Pro forma net earnings (loss) reflect only options granted after 1995.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net earnings (loss) amounts
presented above for 1999 and 1998 because compensation cost is reflected over
the options' vesting period of five years and compensation cost for options
granted prior to January 1, 1995 is not considered.

(9)     SALE OF ASSETS

        On December 30, 1999, the Company sold substantially all of the assets
of its optoelectronics business for cash proceeds of $12,910,003. The assets
that were sold to the purchaser included machinery, equipment and technology.
Until December 30, 2004 the Company may not compete with the purchaser's
optoelectronics business. However, the restrictions on competition do not
prevent the Company from engaging in optoelectronics business activities in
conducting its terrestrial photovoltaic business relating to terrestrial solar
cells and related components, or in conducting its biomedical business relating
to implanted medical devices and related instrumentation and components. The
Company will continue to perform the project management element of its U.S.
government optoelectronics research and development contracts until they are
completed through 2001. The Company has entered into a subcontract with the
purchaser under each of the remaining government contracts for a portion of the
research and development services. In addition, the Company will continue to bid
on new optoelectronics U.S. government funded research and development contracts
which may include additional subcontracts with the purchaser.

        Revenues for the optoelectronics business amounted to $2,664,000,
$4,419,00 and $6,106,000 for the years ended December 31, 2000, 1999 and 1998,
respectively. Operating income (loss) for the optoelectronics business was
$1,145,000, (1,047,000) and ($1,421,000) for the years ended December 31, 2000,
1999 and 1998, respectively.

        The sale of the assets of the Optoelectronics business resulted in a
pre-tax net gain of $9,918,189.


                                       29

<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998



 (10)   INCOME TAXES

        Total federal and state income tax expense (benefit) for the years ended
 December 31, 2000, 1999 and 1998, consists of the following:

<TABLE><CAPTION>
                                            2000                 1999                 1998
                                        -----------           -----------          -----------
                  <S>                   <C>                   <C>                  <C>
                  Current:

                       State            $     6,000           $   317,234          $     9,000
                       Federal             (343,619)              752,766               49,578
                                        -----------           -----------          -----------
                                        $  (337,619)          $ 1,070,000          $    58,578
                                        -----------           -----------          -----------
                  Deferred:
                       State            $      --             $      --            $    46,474
                       Federal             (260,000)                 --                253,526
                                        -----------           -----------          -----------
                                           (260,000)                 --                300,000
                                        -----------           -----------          -----------
                                        $  (597,619)          $ 1,070,000          $   358,578
                                        ===========           ===========          ===========
</TABLE>

Actual income tax expense (benefit) for the years ended December 31, 2000, 1999
and 1998 differs from the "expected" income tax expense (benefit) for the year
(computed by applying the U.S. federal corporate income tax rate of 34% to
earnings (loss) before income taxes) as follows:

<TABLE><CAPTION>
                                                                                2000                  1999                  1998
                                                                            -----------           -----------           -----------
            <S>                                                             <C>                   <C>                   <C>
                  Computed "expected" income tax expense (benefit)          $  (475,282)          $ 2,188,477           $(1,114,746)
                  State tax, net of federal benefit                               3,960               404,401               (89,660)
                  Increase (decrease) in valuation allowance                    234,658            (1,667,514)            1,582,790
                  Permanent differences                                          12,152                 4,446                 8,194
                  Utilization of tax credit carryforwards                      (337,619)                 --                 (28,000)
                  Other                                                          36,488               140,190                  --
                                                                            -----------           -----------           -----------
                                                                            $  (597,619)          $ 1,070,000           $   358,578
                                                                            ===========           ===========           ===========
</TABLE>

        The amount recorded as a deferred income tax asset as of December 31,
2000 represents the amount of tax benefits of existing deductible temporary
differences that are more likely than not to be realized through the generation
of sufficient future taxable income within the carryforward period. The federal
net operating loss in 2000 may be carried back to 1999 and generate a tax
refund. As a result, a deferred tax asset has been recognized in amount equal to
the recoverable tax.

        The tax effects of temporary differences that give rise to significant
portions of net deferred tax assets at December 31, 2000 and 1999 are presented
below:

<TABLE><CAPTION>
                                                                                   2000                   1999
                                                                                -----------           -----------
               <S>                                                              <C>                  <C>
                  Deferred tax assets:
                    Charitable contributions                                    $     2,965           $      --
                    Accounts receivable                                              45,834                43,089
                    Accruals                                                        187,856                95,310
                    Inventories                                                     160,355               103,636
                    Federal and state net operating loss carryforwards              536,460                  --
                    General business credit carryforwards                              --                 222,923
                    Alternative minimum tax credit carryforwards                    322,956               342,030
                    Foreign tax credit                                               50,578                  --
                         Total gross deferred tax assets                          1,307,004               806,988
                         Less: valuation allowance                                 (895,428)             (504,531)
                                                                                -----------           -----------
                         Net deferred tax assets                                    411,576               302,457
                                                                                -----------           -----------
                  Deferred tax liabilities:
                    Property and equipment                                         (151,576)             (302,457)
                                                                                -----------           -----------
                         Total gross deferred tax liabilities                      (151,576)             (302,457)
                                                                                -----------           -----------
                    Net deferred tax assets                                     $   260,000           $      --
                                                                                ===========           ===========
</TABLE>

                                       30

<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


        The valuation allowance for deferred tax assets as of December 31, 2000
was $895,428. The net change in the total valuation allowance for the year ended
December 31, 2000 and 1999 was an increase of $390,897 and a decrease of
$1,667,574, respectively.

        Subsequently recognized tax benefits relating to the valuation allowance
for deferred tax assets as of December 31, 2000 will be allocated to income tax
benefit in the amount of $739,189 and to paid in capital in the amount of
$156,239.

        At December 31, 2000, the Company had approximately $1,316,000 in net
operating loss carryforwards for both federal and state purposes. The losses
will expire in 2020 for federal purposes and in 2005 for state purposes. The
Company also had $322,956 in alternative minimum tax credits to offset future
taxable income with no expiration date.

(11)    COMMITMENTS AND CONTINGENCIES

        The Company subleases the majority of its facilities from a company that
leases the building from a trust; the principal beneficiary of the trust is the
principal stockholder of the Company. The sublease originally was for a period
of ten years, after which the Company exercised its options to extend for
additional five-year periods expiring on November 30, 2005. The agreement
provides for minimum rental payments plus annual increases linked with the
Consumer Price Index. Total rent expense under this lease was $675,000, $922,000
and $907,000 in 2000, 1999 and 1998, respectively. The Company has entered into
a sublease with the purchaser of its Optoelectronics business. The sublease
expires on November 30, 2005. The purchaser subleases approximately 29% of the
total facility.

        The Company has also entered into other noncancelable operating leases.
Total rent expense charged to these noncancelable leases was $142,000, $133,000,
and $128,000 in 2000, 1999 and 1998, respectively.

        Future minimum lease payments under operating
         leases are as follows:
               2001                                        677,000
               2002                                        677,000
               2003                                        677,000
               2004                                        677,000
               2005 and beyond                             620,000
                                                      ------------
                                                        $3,328,000
                                                      ============

        The Company is subject to legal proceedings and claims arising out of
its business that cover a wide range of matters including trade regulation,
contracts, environmental issues, product liability, patent matters and taxes.
Management, after review and consultation with counsel, considers that any
liability from all of these pending lawsuits and claims would not materially
affect the consolidated financial position, results of operations or liquidity
of the Company.

(12)    PROFIT SHARING PLAN

        In 1985, the Company adopted a profit sharing plan under Section 401(k)
of the Internal Revenue Code. This plan allows employees to defer up to 17.5% of
their income up to certain dollar limits on a pretax basis through contributions
to the plan. In the years ended December 31, 2000 and the December 31, 1998, the
Company contributed its Common Stock in an amount equal to 40% of the employee's
contribution up to a maximum of 15% of the employee's cash compensation. The
Company temporarily suspended such contribution beginning in 1999 and had
reinstituted matching effective January 1, 2000. Expense recognized under the
plan in 2000, 1999 and 1998 was $93,000, $0 and $46,000, respectively.


                                       31

<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


 (13)   EARNINGS (LOSS) PER SHARE

        The following table provides a reconciliation of the denominators of
        diluted earnings (loss) per share computations for the years ended
        December 31:

<TABLE><CAPTION>
                                                                                      2000               1999               1998
                                                                                    ---------          ---------          ---------
               <S>                                                                  <C>                <C>               <C>
                  Weighted average number of common shares outstanding              6,628,667          6,492,224          6,470,542
                  Add net additional common shares upon exercise of common
                      stock options                                                      --               57,202               --
                                                                                    ---------          ---------          ---------
                  Adjusted weighted average common shares outstanding               6,628,667          6,549,426          6,470,542
                                                                                    =========          =========          =========
</TABLE>

       At December 31, 2000 and 1998, 582,858 and 479,700 shares of common stock
issuable under stock options, respectively, were not included in the calculation
diluted earnings per share because their effects would be antidilutive.

(14)     OTHER OPERATING CHARGES

        Other operating charges in 1998, which included expenses of a
non-recurring nature, consisted of the following:

<TABLE><CAPTION>
              <S>                                                                                              <C>
               Settlement of Government claim                                                                   $ 547,000
               Legal costs incurred in settlement of Government claim                                             158,895
               Legal costs incurred in enforcing non-competition agreements  with former employees                294,489
               Severances and associated fringe benefit costs incurred in downsizing Company                      243,605
                                                                                                              -----------
                                                                                                               $1,243,989
                                                                                                              ===========
</TABLE>

(15)    OPERATING SEGMENTS AND RELATED INFORMATION

        The following table presents certain operating division information in
accordance with the provisions of SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information", which was adopted in 1998.

<TABLE><CAPTION>
                             Solar             Solar             Biomedical        Biophotonics                           Total
                           Equipment          Systems             Division           Division            Other           Company
                        ----------------- ---------------- ------------------- ------------------- ---------------- ----------------
December 31, 2000
<S>                        <C>                <C>                <C>                <C>                   <C>           <C>
Net sales and revenues     $ 5,057,200        $ 848,464          $4,315,393         $ 2,663,572           $   --        $12,884,629
Earnings (loss) from
   operations                 (863,584)        (683,827)           (622,209)            290,140               --         (1,879,480)
Identifiable assets          3,595,536        1,015,909           2,010,025           1,145,115        8,675,782         16,442,367
Capital expenditures           151,636           35,211             176,467              12,410          208,712            584,436
Depreciation                    83,650            2,418             136,010               2,944          194,689            419,711

December 31, 1999
Net sales and revenues     $ 3,851,663           $   --          $3,695,394         $ 4,353,711           $   --        $11,900,768
Loss from operations         (1,644,499)             --            (689,103)         (1,046,647)              --         (3,380,249)
Identifiable assets          3,204,553               --           1,620,609             755,192       11,783,111         17,363,465
Capital expenditures           119,929               --             146,588              30,620           54,385            351,522
Depreciation                    50,660               --             191,795             453,771          148,569            844,795

December 31, 1998
Net sales and revenues     $ 3,948,878           $   --          $4,088,342         $ 6,106,023           $   --        $14,143,243
Loss from operations         (1,465,350)             --            (570,668)         (1,420,681)              --         (3,456,699)
Identifiable assets          3,821,904               --           1,942,166           3,690,078        1,319,695         10,773,843
Capital expenditures           150,262               --             256,816             262,624          128,952            798,654
Depreciation                    95,539               --             246,190             515,731               --            857,465
Other operating charges        395,848               --             351,225             496,916               --          1,243,983
</TABLE>


                                       32
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


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

                          2000                1999                 1998
                  --------------------- ------------------ ---------------------

   Foreign              $2,577,000           $2,619,000          $2,404,000
   United States        10,308,000            9,282,000          11,739,000
                  --------------------- ------------------ ---------------------
                       $12,885,000          $11,901,000         $14,143,000
                  ===================== ================== =====================

        During 2000, the Company's operations were focused on two primary
business areas: Spire Solar (comprised of two distinct segments, Solar Equipment
and Solar Systems) and Spire Biomedical. Both areas operated out of the
Company's facility in Bedford, Massachusetts. Operations in the Company's
Biophotonics Division (previously known as Optoelectronics) continued during
2000, however this segment has been deemphasized since the sale of the
Optoelectronics assets at the end of 1999.

        The Solar Equipment segment develops, manufactures and markets
photovoltaic module manufacturing equipment and production lines. The Solar
Systems segment began operations in 2000 and is currently limited to operations
in the City of Chicago. This segment manufactures and installs complete
photovoltaic systems and also works with Energy Service Providers ("ESP") with
photovoltaic businesses by providing turnkey factories and business systems. The
Spire Biomedical area uses ion beam technology to provide processing services to
the medical industry by treating the surfaces of products such as orthopedic
devices and catheters used in the human body. On December 30, 1999, the Company
sold substantially all the assets of its optoelectronics area.

        Each operating area is individually managed and has separate financial
results that are reviewed by the Board of Directors, Chief Executive Officer,
and the vice president and general manager of each operating division.

        Profit (loss) from operations is net sales less cost of sales, selling,
general and administrative expenses and other operating charges (Note 14), but
is not affected either by non-operating income or by income taxes. Non-operating
income consists principally of net interest income. In calculating profit from
operations for individual operating divisions, substantial administrative
expenses incurred at the operating level that are common to more than one
statement are allocated on a net sales basis. Certain corporate expenses of an
operational nature are also allocated to the divisions based on factors
including occupancy, employment, and purchasing volume. All intercompany
transactions have been eliminated.

        Revenues from contracts with United States government agencies for the
years ended December 31, 2000, 1999 and 1998 were $4,098,000, $4,381,000 and
$6,092,000 or 32%, 37% and 43% of consolidated net sales and revenues,
respectively. In 2000, 1999 and 1998, export revenues were $2,515,000,
$2,610,000 and $2,400,000, respectively, or 20%, 22% and 17% of consolidated net
sales and revenues, respectively.

(16)    QUARTERLY FINANCIAL DATA (UNAUDITED)

        The following is a summary of the consolidated quarterly results for the
years ended December 31, 2000 and 1999:

<TABLE><CAPTION>
                                                                                      2000
                                                                                Three Months Ended
                                                ------------------------------------------------------------------------------------
                                                       March 31              June 30           September 30          December 31
                                                -------------------- -------------------- -------------------- ---------------------

           <S>                                       <C>                  <C>                  <C>                   <C>
            Net sales and revenues                    $4,531,620           $3,159,114           $2,826,244            $2,367,651
            Costs and expenses                         4,183,901            3,748,639            3,371,979             3,459,591
            Earnings (loss) before income taxes          472,812             (472,014)            (426,016)             (972,671)
            Income tax expense (benefit)                 205,600             (205,600)            (298,619)             (299,000)
            Net earnings (loss)                          267,212             (266,414)            (127,397)             (673,671)
            Net earnings (loss) per share                   0.04                (0.04)               (0.02)                (0.10)
</TABLE>

                                       33
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998

<TABLE><CAPTION>
                                                                                           1999
                                                                                    Three Months Ended
                                                 -----------------------------------------------------------------------------------
                                                       March 31              June 30           September 30          December 31
                                                 --------------------- -------------------- -------------------- -------------------
           <S>                                         <C>                  <C>                  <C>                   <C>
            Net sales and revenues                      $3,817,716           $2,681,578           $2,722,028            $2,679,446
            Costs and expenses                           3,940,070            3,218,571            3,550,823             4,571,553
            Earnings (loss) before income taxes           (149,153)            (558,306)            (862,104)           (1,810,686)
            Gain on sale of assets                              --                   --                   --             9,918,189
            Income tax expense                                  --                   --                   --             1,070,000
            Net earnings (loss)                           (149,153)            (558,306)            (862,104)            6,936,259
            Net earnings (loss) per share                    (0.02)               (0.09)               (0.13)                 1.07
</TABLE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
--------------------------------------------------------------------------------

        None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
--------------------------------------------------------------------------------

        Information concerning the directors and executive officers of the
Company is set forth under "Election of Directors" and "Executive Officers" in
the Proxy Statement for the Special Meeting in Lieu of 2001 Annual Meeting of
Stockholders ("Proxy Statement") and is incorporated herein by reference.
Information concerning compliance with Section 16(a) of the Exchange Act during
2000 is set forth under "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in the Proxy Statement and is incorporated herein by
reference.

ITEM 10.  EXECUTIVE COMPENSATION.
--------------------------------

        Information concerning executive compensation is set forth under
"Executive Compensation" in the Proxy Statement and is incorporated herein by
reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
------------------------------------------------------------------------

        Information concerning security ownership of certain beneficial owners
and management is set forth under "Ownership of Securities" in the Proxy
Statement and is incorporated herein by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------

        Information concerning certain relationships and related transactions is
set forth under "Other Transactions and Relationships" in the Proxy Statement
and is incorporated herein by reference.

                                       34
<PAGE>

                       SPIRE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                        DECEMBER 31, 2000, 1999 AND 1998


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.
------------------------------------------

(1)     EXHIBITS

        The following Exhibits are either filed herewith or are incorporated by
reference as may be indicated.

        3 (a)     Articles of Organization as amended, incorporated by reference
                  to Exhibit 3 (a) to the Company's Form 10-QSB for the quarter
                  ended June 30, 1997.

        3 (b)     By-Laws, as amended, incorporated by reference to Exhibit 3
                  (b) to the Company's Form 10-K for the year ended December 31,
                  1989.

        10 (a)    Sublease Agreement with Millipore Corporation as landlord
                  for facility at Bedford, Massachusetts dated November 25,
                  1985, incorporated by reference to Exhibit 10 (a) to the
                  Company's Form 10-K for the year ended December 31, 1985
                  ("1985 10-K").

        10 (b)    Amendment to Sublease Agreement with Millipore Corporation as
                  landlord for facility at Bedford, Massachusetts dated December
                  30, 1999.

        10 (c)    Sublease Agreement with Methode Electronics, Inc. as tenant
                  for portion of facility at Bedford, Massachusetts dated
                  December 29, 1999.

        10 (d)    Asset Purchase Agreement dated as of November 18, 1999 with
                  Methode Electronics, Inc. and Methode Massachusetts, Inc.,
                  incorporated by reference to Exhibit 1 to the Company's Form
                  8-K dated December 29, 1999.

        10 (e)    Employment Agreement with Roger G. Little dated October 3,
                  1983, as amended.

        Employee and Director Benefit Plans
        -----------------------------------

        10 (f)    Spire Corporation 1985 Incentive Stock Option Plan
                  incorporated by reference to Exhibit 10 (d) to the Company's
                  Form 10-K for the year ended December 31, 1984 ("1984 10-K").

        10 (g)    Spire Corporation 401(k) Profit Sharing Plan, including
                  Adoption Agreement, incorporated by reference to Exhibit 10
                  (e) to the 1984 10-K.

        10 (h)    Spire Corporation Directors' Stock Option Plan, incorporated
                  by reference to Exhibit 10 (f) to the 1985 10-K.

        10 (i)    Spire Corporation 1996 Equity Incentive Plan, incorporated by
                  reference to Exhibit 99 to Registration Statement 333-22223,
                  filed February 21, 1997.

        11        Statement Regarding Computation of Per Share Earnings (Loss).

        21        Subsidiaries of the Company.

        23.1      Accountants' Consent.


(2)   REPORTS ON FORM 8-K

      None.

                                       35
<PAGE>

                                     PART IV

                                      11-K

        Supplemental Information Pursuant to Rule 15d-21 Regarding Annual Report
of Employee Benefit Plans for the fiscal year ended December 31, 2000.

                  Spire Corporation 401(k) Profit Sharing Plan
                              Financial Statements
                           December 31, 2000 and 1999
                                      with
                          Independent Auditors' Report
































                                       36

<PAGE>


                  SPIRE CORPORATION 401(K) PROFIT SHARING PLAN

                          INDEX TO FINANCIAL STATEMENTS
                                                                        Page
                                                                       Number
                                                                       ------

Independent Auditors' Report                                             38

Financial Statements:

      Statements of Net Assets Available for Plan Benefits               39

      Statements of Changes in Net Assets Available for Plan Benefits    40

      Notes to the Financial Statements                                  41



































                                       37


<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Participants and Administrator of
Spire Corporation 401(k) Profit Sharing Plan
Bedford, Massachusetts


We have audited the accompanying statements of net assets available for plan
benefits of the Spire Corporation 401(k) Profit Sharing Plan as of December 31,
2000 and 1999, and the related statements of changes in net assets available for
plan benefits for each of the three years in the period ended December 31, 2000.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits at December
31, 2000 and 1999, and the changes in net assets available for plan benefits for
each of the three years in the period ended December 31, 2000, in conformity
with generally accepted accounting principles.


CARLIN, CHARRON & ROSEN LLP

Boston, Massachusetts
March 16, 2001


                                       38

<PAGE>


                  SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
              STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS

                           DECEMBER 31, 2000 AND 1999


                                                     2000               1999
                                                  ----------          ----------
ASSETS

INVESTMENTS:
    At fair value:
        Common stock - Spire Corporation          $1,601,440          $1,293,359
        Mutual funds                               4,290,451           5,467,156

    At contract value:
        Hartford Fixed Income Fund                   297,626             287,724
                                                  ----------          ----------

             TOTAL INVESTMENTS                     6,189,517           7,048,239

RECEIVABLES:
    Employer's contribution                           13,806                --
    Participants' contribution                        32,283              39,843
    Participants' loan receivables                   144,149             149,292
                                                  ----------          ----------

        TOTAL RECEIVABLES                            190,238             189,135

CASH                                                      20                  10
                                                  ----------          ----------

TOTAL ASSETS                                      $6,379,775          $7,237,384
                                                  ==========          ==========

NET ASSETS AVAILABLE FOR BENEFITS                 $6,379,775          $7,237,384
                                                  ==========          ==========


                 See accompanying notes to financial statements.





                                       39
<PAGE>


                  SPIRE CORPORATION 401(K) PROFIT SHARING PLAN

         STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE><CAPTION>
                                                                     2000            1999             1998
                                                                 -----------      -----------      -----------
<S>                                                              <C>              <C>              <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:

Investment income:

Interest and dividends                                           $    70,928      $    36,383      $    77,965
Interest-other                                                        11,890           14,675           13,732
Realized gains                                                       168,541           14,161          148,391
Net appreciation (depreciation) in fair value of investments
    as determined by quoted market price                             231,415        1,751,184       (2,387,089)
                                                                 -----------      -----------      -----------
                                                                     482,774        1,816,403       (2,147,001)
Contributions:
    Employer                                                         116,872               48           97,517
    Employees                                                        290,898          394,873          509,294
                                                                 -----------      -----------      -----------

Total additions                                                      890,544        2,211,324       (1,540,190)
                                                                 -----------      -----------      -----------


DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:

Benefits paid to participants                                     (1,748,173)        (529,469)        (494,203)
                                                                 -----------      -----------      -----------

Total deductions                                                  (1,748,173)        (529,469)        (494,203)
                                                                 -----------      -----------      -----------

Net increase (decrease)                                             (857,629)       1,681,855       (2,034,393)

Net assets available for plan benefits:
    Beginning of year                                              7,237,384        5,555,529        7,589,922
                                                                 -----------      -----------      -----------
    End of year                                                  $ 6,379,755      $ 7,237,384      $ 5,555,529
                                                                 ===========      ===========      ===========
</TABLE>

                 See accompanying notes to financial statements.


                                       40
<PAGE>


                  SPIRE CORPORATION 401(K) PROFIT SHARING PLAN

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

1.      PLAN DESCRIPTION

        The following description of the Spire Corporation (Company) 401(k)
        Profit Sharing Plan (the "Plan") provides only general information.
        Participants should refer to the Plan agreement for a more complete
        description of the Plan's provisions.

        GENERAL

        The Plan is a salary reduction (401(k)) plan covering all full-time
        employees of the Company who have three months of service and are age
        twenty-one or older. It is subject to the provisions of the Employee
        Retirement Income Security Act of 1974 (ERISA).

        CONTRIBUTIONS

        1.   Employer Contribution
             The Company will contribute to the Plan an amount equal to 40% of
             an employee's contributions up to a maximum of 6% of an employee's
             cash compensation. The Company's contribution will always be used
             to purchase/acquire Company common stock on the open market. The
             Company has reinstated the employer contribution effective January
             1, 2000.

        2.   Employee Contribution
             Employees electing to participate in the Plan may defer receipt of
             up to 17.5% of their compensation subject to the limitation imposed
             by the Internal Revenue Code in any one calendar year, by directing
             the Company to invest the deferred amount in various investment
             vehicles. The investment choices are the Company's common stock,
             several mutual funds and a fixed income fund offered by Hartford
             Life Insurance Company.

        PARTICIPANTS' ACCOUNTS

        Each participant's account is credited with the participant's
        contribution and the Company's match contribution, plus an allocation of
        (a) Plan earnings, and (b) forfeitures of terminated participants'
        nonvested accounts. The benefit to which a participant is entitled is
        the benefit that can be provided from the participant's account.

        VESTING

        Participants are immediately vested in their voluntary contributions
        plus actual earnings thereon. Vesting in other amounts is based on years
        of continuous service. A participant is 100 percent vested after six
        years of credited service.

        PARTICIPANT LOANS

        Participants may borrow from their fund accounts a loan up to a maximum
        equal to the lesser of $50,000 or 50% of their vested account balance.
        Loan transactions are treated as a transfer from the investment fund to
        the Participant Loan fund. Loan terms range from 1-5 years or up to 25
        years for the purchase of a primary residence. The loans are secured by
        the balance in the participant's account and bear interest at a rate
        commensurate with local prevailing rates as determined by the Plan
        administrator. Interest rates range from 8% to 11%. Principal and
        interest is paid ratably through payroll deductions.

                                       41
<PAGE>

        PAYMENTS OF BENEFITS

        On termination of service, a participant may elect to receive either a
        lump-sum amount equal to the value of his or her account, or annual
        installments over a period no longer than ten years.

        In addition, a participant is eligible to receive distributions under
        financial hardship rules for medical, housing and education needs.

        FORFEITED ACCOUNTS

        At December 31, 2000 and 1999, forfeited nonvested accounts totaled zero
        and $38,335 respectively. During 2000, the Company re-allocated the
        forfeitures to reduce employer contributions in accordance with the plan
        document.

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        INVESTMENT VALUATION

        The Plan's investments are stated at fair value. Shares of registered
        investment companies are valued at quoted market prices which represent
        the net asset value of shares held by the Plan at year-end. Participant
        notes receivable are valued at cost which approximated fair value.

        The fixed income fund and group annuity contracts are stated at contract
        value, which approximates fair value, as reported to the Plan by
        Hartford.

        PAYMENT OF BENEFITS

        Benefits are recorded when paid.

        USE OF ESTIMATES

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires the Plan administrator to make
        estimates and assumptions that affect certain reported amounts and
        disclosures. Accordingly, actual results could differ from those
        estimates.

        CONCENTRATION OF CREDIT RISK

        Financial instruments which subject the Plan to concentration of credit
        risk consist principally of guaranteed investment contracts. The Plan
        restricts investment of guaranteed investment contracts to financial
        institutions with high credit standing.

3.      INVESTMENTS AND ADMINISTRATION OF PLAN ASSETS

        The Plan trustees entered into an agreement with USI Consulting Group to
        provide investment options and record keeping for the participants of
        the Plan. Under the terms of the agreement, certain assets of the Plan
        are held in a Deposit Administration Account for the benefit of the
        participants. The Deposit Administration Account consists of:

        (a)    The Fixed Income Fund, which includes amounts allocated to
               Hartford's General Investment Account. These amounts are
               guaranteed as to principal and minimum interest earnings. The
               interest rate guaranteed for the year ended December 31, 2000 was
               4.7%.

        (b)    The Direct Participation Account, which consists of amounts
               allocated to Separate Investment Accounts. The Separate
               Investment Accounts include investments in international and
               domestic equity growth funds, balanced funds, income funds and
               money market funds. The amounts invested in the Direct
               Participation Account are not guaranteed as to principal or
               minimum interest earnings.

                                       42
<PAGE>


        The common shares of the Company and the mutual fund shares are valued
        at fair value on December 31 of each year. Fair value is determined by
        using quoted market values. The fixed income fund and group annuity
        contracts are stated at contract value, which approximates fair value,
        as reported to the Plan by Hartford. During the years ended December 31,
        the Plan's investments appreciated (depreciated) in value by $231,415 in
        2000, $1,751,184 in 1999 and ($2,387,089) in 1998.

        Investments that represent 5% or more of the Plan's net assets are as
        follows:

<TABLE><CAPTION>
                                                                  2000           1999
                                                               ----------     ----------
               <S>                                             <C>            <C>
                  Franklin California Growth Fund              $1,456,645     $2,117,695
                  Washington Mutual Investors Fund                464,410        484,680
                  Spire Company Stock                           1,601,440      1,293,359
                  Oppenheimer Quest Opportunity Value Fund      1,360,060           --
                  Oppenheimer Quest Value Fund                       --        1,745,798
                  All funds less than 5% of net assets          1,497,220      1,595,852
                                                               ----------     ----------
                                                               $6,379,775     $7,237,384
                                                               ==========     ==========
                  </TABLE>

4.      PLAN TERMINATION

        Although they have not expressed any intent to do so, the Company has
        the right under the Plan to discontinue their contributions at any time
        and to terminate the Plan subject to the provisions of ERISA. In the
        event of Plan termination, participants will become 100 percent vested
        in their accounts.

5.      INCOME TAX STATUS

        The Plan qualifies for certain tax benefits under Section 401(a) and
        401(k) of the Internal Revenue Code. The Federal tax consequences to
        employees participating in the Plan, and to the Company, under present
        tax laws are as follows:

        Salary reductions designated by employees to be contributed to the Plan
        from their compensation are not includable in employees' taxable income
        and are not subject to Federal tax withholding at the time such
        contributions are made.

        Additionally, interest, dividends and other earnings on such
        contributions are not subject to tax when earned. Employees will be
        taxed on such contributions and earnings at the time such amounts are
        returned as withdrawals or distributions.

6.      RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

        Certain contributions receivable at December 31, 1999 as shown in the
        Form 5500 are reclassified to investments in the financial statements
        based on investment reports prepared and certified by the insurance
        company. This has no effect on total net assets available for benefits.

        The following is a reconciliation of total investments per the
        accompanying 2000 and 1999 financial statements to Form 5500.

<TABLE><CAPTION>
                                                                              2000             1999
                                                                          -----------      -----------
                  <S>                                                     <C>              <C>
                  Total investments per financial statements              $ 6,379,775      $ 7,237,384
                  Participant contributions receivable at end of year         (32,283)         (39,843)
                  Employer contribution receivable at end of year             (13,806)            --
                                                                          -----------      -----------
                       Total investments per Form 5500                    $ 6,333,686      $ 7,197,541
                                                                          ===========      ===========
                  </TABLE>

                                       43

<PAGE>


                                   SIGNATURES


        In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                          SPIRE CORPORATION
                          (Registrant)


                          By:   /s/ Roger G. Little               March 30, 2001
                              ------------------------------------
                                Roger G. Little
                                President, Chief Executive Officer
                                and Chairman of the Board


        In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

<TABLE><CAPTION>

             Signature                                              Title                                             Date

<S>                                                 <C>                                                         <C>
  /s/ Roger G. Little                               President ,Chief Executive Officer                          March 30, 2001
------------------------------------------          and Chairman of the Board
Roger G. Little


  /s/ Richard S. Gregorio                           Vice President and Chief Financial                          March 30, 2001
--------------------------------------              Officer, Treasurer, Clerk,
Richard S. Gregorio                                 Principal Accounting Officer


  /s/ Michael T. Eckhart                            Director                                                    March 30, 2001
---------------------------------------
Michael T. Eckhart


  /s/ Udo Henseler                                  Director                                                    March 30, 2001
----------------------------------------
Udo Henseler


  /s/ Roger W. Redmond                              Director                                                    March 30, 2001
-----------------------------------
Roger W. Redmond


  /s/ John A. Tarello                               Director                                                    March 30, 2001
------------------------------------------
John A. Tarello


 /s/ Anthony G. Viscogliosi                         Director                                                    March 30, 2001
------------------------------------------
Anthony G. Viscogliosi
</TABLE>
                                       44
<PAGE>


                                  EXHIBIT INDEX

                                                                           Page
Exhibit                      Description                                  Number
-------                      -----------                                  ------

11          Statement Regarding Computation of Per Share Earnings (Loss).   46

21          Subsidiaries of the Company.                                    47

23.1        Accountants' Consent.                                           48





























                                       45