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
For the fiscal year ended March 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-11056
ADVANCED PHOTONIX, INC.(R)
(Exact name of registrant as specified in its charter)
Delaware 33-0325826
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1240 Avenida Acaso, Camarillo, CA 93012
(Address of principal executive offices) (Zip Code)
(805) 987-0146
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.001 Par Value
Class A Common Stock
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Total revenues for registrant's fiscal year ended March 30, 2003 were
$9,146,743.
As of June 19, 2003, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $13,800,000.
As of June 19, 2003 there were 13,376,092 shares of Class A Common Stock
and 31,691 shares of Class B Common Stock outstanding.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in any definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. __
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business
General
-------
Advanced Photonix, Inc. (R) (the "Company"), was incorporated under the laws of
the State of Delaware in June 1988. The Company is engaged in the development
and manufacture of custom optoelectronic solutions, serving a variety of global
Original Equipment Manufacturer (OEM) markets. While the Company specializes in
silicon-based custom photodiode assemblies, its product families range from
custom light detection assemblies, including its patented Avalanche Photodiode
technology, to light emitting diode (LED) assemblies. The Company supports the
customer from the initial concept and design phase of the product, through to
full-scale production and test. The Company has two manufacturing and wafer
fabricating facilities; one in Camarillo, CA and one in Dodgeville, WI.
Products & Technologies
-----------------------
The Company designs and manufactures silicon-based optoelectronic components and
assemblies for a global OEM customer base. The core technology used in the
majority of the Company's products is silicon-based photodiodes. Photodiodes
sense light of varying wavelengths and intensity and convert that light into
electrical signals. The Company manufactures photodiodes of varying complexity,
from basic PIN (positive-intrinsic-negative) photodiodes to the more
sophisticated LAAPD (large area avalanche photodiode). The avalanche photodiode
is a specialized silicon photodiode capable of detecting very low light levels
due to an internal gain phenomenon known as avalanching. All devices are
designed by our experienced engineering staff, and fabricated in two
state-of-the-art clean rooms. The Company's basic products and technologies
include the following:
o PIN photodetectors - spectrally enhanced, both single and multi-element
o Silicon High Resistivity p-type Detectors
o Photodetector hybrids, which include signal amplification circuitry within the
detector package
o Custom light-emitting diode ("LED") assemblies and LED displays
o FILTRODE(R) - patented technology integrating optical filters directly on
photodiode chips
o Small area avalanche photodiodes (SAAPDs)
o Large area avalanche photodiodes (LAAPDs) - discrete, with and without
thermoelectric coolers, and with integrated modules
Markets
-------
These products serve customers in a variety of global markets. The target
markets and applications served by the Company are as follows:
Military & Aerospace:
o Missile guidance
o Laser range finders
o Optical proximity fuse
o Heads-up displays
o Satellite positioning
2
Industrial & Commercial:
o Optical encoders
o Laboratory Instrumentation
o X-ray baggage scanners
o Bar code scanners
o Laser positioning systems
Medical:
o Blood analysis
o Medical diagnostics
o Medical imaging
Automotive:
o Laser detectors and jammers
o Collision avoidance
o Automatic power windows
Communications:
o Feedback detectors for laser diodes
o InGaAs optical monitors
o Wireless communications
One of the key competitive advantages held by the Company is its ability to
supply detector assemblies for high reliability ("Hi-Rel") applications,
including military and commercial aerospace. Hi-Rel devices are designed,
manufactured and tested to function in severe environmental conditions. The
Company has many years of experience in supplying Hi-Rel devices that demand
modern wafer fabrication techniques, a dedicated assembly area, and a
sophisticated test lab. These assembly and test capabilities meet several
military approvals, including MIL-PRF-19500, MIL-STD-883 and MIL-STD-750. Hi-Rel
products manufactured by the Company include:
o Multi-element hybrid assemblies used on the U.S. Navy's Rolling Airframe
Missile (RAM) developed by Raytheon
o Narrow and wide field of view detectors used in various Tube-launched
Optically-tracked Wire-guided (TOW) missile tracking systems
o LED arrays for use in thermal image displays in military night sight
applications
o Quadrant photodetectors used in the autocollimator for airborne
navigation/FLIR (Forward Looking Infrared) pods and "smart bombs"
o Opto assemblies for biological and blood analysis
o Assemblies used in automotive distance control systems
Raw Materials
-------------
The principal raw materials used by the Company in the manufacture of its
semiconductor components and sensor assemblies are silicon wafers, chemicals and
gases used in processing wafers, gold wire, lead frames, and a variety of
packages and substrates, including metal, printed circuit board, flex circuits,
ceramic and plastic packages. All of these raw materials can be obtained from
several suppliers. From time to time, particularly during periods of increased
industry-wide demand, silicon wafers and other materials have been in short
supply. However, the Company has not been materially affected by such shortages.
As is typical in the industry, the Company allows for a significant lead-time (2
months or greater) between order and delivery of raw materials.
3
Research and Development
------------------------
Since its inception in June 1988, the Company has incurred material research and
development expenses, with the intent of commercializing these investments into
profitable new standard and custom product offerings. During the fiscal years
ended in 2003 and 2002, research and development expenses amounted to $511,000
and $467,000 respectively. The Company expects that continued research and
development funding will be required for new projects as well as the continuing
development of new derivatives of the Company's current product line, and for
the commercialization of these products. The Company has in the past, and may in
the future, undertake customer funded, as well as internally funded, research
and development projects when they are in support of the Company's development
objectives.
As the Company has completed the initial development and commercialization of
its LAAPD technology, it has reduced outlays for research and development. The
Company continues to conduct research on avalanche photodiodes. Much of the
emphasis in APD development has shifted toward established markets for this
technology, leveraging the development knowledge already held by the Company. It
is also pursuing ways to reduce the cost of manufacturing the LAAPD, and to
improve its performance, lending it increased adaptability for customers who
currently use photomultiplier tubes (PMTs).
Projects currently underway in research and development include:
o LAAPD arrays - the Company's patented technology in which the rear surface
of an LAAPD is segmented to create isolated pixels, each with a separate
electronic lead to be accessed in parallel fashion for imaging
applications.
o Silicon PIN diodes, which are being developed to meet unique customer
requirements, such as higher speeds, lower electrical noise, and unique
multi-element geometries.
o Additional applications leveraging the Company's patented Filtrode(TM)
family, integrating a variety of filters onto a detector chip
o Position Sensitive Devices - the Company is broadening its offering of
these devices with improved performance for industrial sensing markets.
Environmental Regulations
-------------------------
The photonics industry, as well as the semiconductor industry in general, is
subject to governmental regulations for the protection of the environment,
including those relating to air and water quality, solid and hazardous waste
handling, and the promotion of occupational safety. Various federal, state and
local laws and regulations require that the Company maintain certain
environmental permits. The Company believes that it has obtained all necessary
environmental permits required to conduct its manufacturing processes. Changes
in the aforementioned laws and regulations or the enactment of new laws,
regulations or policies could require increases in operating costs and
additional capital expenditures and could possibly entail delays or
interruptions of operations.
4
Backlog and Customers
---------------------
The Company's sales are made primarily pursuant to standard purchase orders for
delivery of products. However, by industry practice, orders may be canceled or
modified at any time. In such cases the customer is responsible for all finished
goods, all costs, direct and indirect, incurred by the Company, as well as a
reasonable allowance for anticipated profits. No assurance can be given that the
Company will receive these amounts after cancellation. The current backlog
contains only those orders for which the Company has received a confirmed
purchase order and also includes contracts which have scheduled shipping dates
beyond the upcoming fiscal year. As such, the current backlog represents only a
portion of expected annual revenues for fiscal year 2004. At the end of fiscal
2003, the Company had approximately $7.8 million in backlog as compared to
backlog of approximately $10.5 million at the end of fiscal 2002. The reduction
in backlog during fiscal 2003 can be attributed to orders that were removed from
the backlog after Management's assessment that these orders, primarily from the
telecom sector, are no longer valid.
Customers normally purchase the Company's products and incorporate them into
products that they in turn sell in their own markets on an ongoing basis. As a
result, the Company's sales are dependent upon the success of its customers'
products and its future performance is dependent upon its success in finding new
customers and receiving new orders from existing customers.
Marketing
---------
The Company markets its products in the United States and Canada through its own
technical sales engineers and through independent sales representatives.
International sales, primarily to Europe and the Pacific Rim, are conducted
through foreign distributors (see Note 1 to the Financial Statements). The
Company's products are primarily sold as components or assemblies to original
equipment manufacturers (OEM's). The Company markets it products and
capabilities through industry specific channels, both on the internet and in
print through trade journals.
Competition
-----------
The Company competes with a range of companies for the custom optoelectronic and
silicon photodetector requirements of customers in its target markets. The
Company believes that its principal competitors for sales of custom devices are
small to medium size companies. Because the Company specializes in custom
devices requiring a high degree of engineering expertise to meet the
requirements of specific applications, it generally does not compete to any
significant degree with other large United States, European or Pacific Rim
manufacturers of standard "off the shelf" optoelectronic components or silicon
photodetectors.
Proprietary Technology
----------------------
The Company utilizes proprietary design rules and processing steps in the
development and fabrication of its PIN photodiodes and avalanche photodiodes. In
addition, the Company owns the following patents:
US PATENT NO. DESCRIPTION DATE ISSUED
------------- ----------- -----------
6,111,299 Active Large Area Avalanche Photodiode Array August 2000
6,005,276 Solid State Photodetector with Light Responsive Rear Face December 1999
5,801,430 Solid State Photodetector with Light Responsive Rear Face September 1998
5,757,057 Large Area Avalanche Array May 1998
5,477,075 Solid State Photodetector with Light Responsive Rear Face December 1995
5,311,044 Avalanche Photomultiplier Tube May 1994
5,146,296 Devices for Detecting and/or Imaging Single Photoelectron September 1992
5.057,892 Light Responsive Avalanche Diode October 1991
5,021,854 Silicon Avalanche Photodiode Array June 1991
4,782,382 High Quantum Efficiency Photodiode Devices November 1988 (by Predecessor Co.)
4,717,946 Thin Line Junction Photodiode January 1988 (by Predecessor Co.)
5
There can be no assurance that any issued patents will provide the Company with
significant competitive advantages, or that challenges will not be instituted
against the validity or enforceability of any patent owned by the Company, or,
if instituted, that such challenges will not be successful. The cost of
litigation to uphold the validity and to prevent the infringement of a patent
could be substantial. Furthermore, there can be no assurance that the Company's
APD technology will not infringe on patents or rights owned by others, licenses
to which might not be available to the Company. Based on limited patent
searches, contacts with others knowledgeable in the field of APD technology, and
a review of the published materials, the Company believes that its competitors
hold no patents, licenses or other rights to the APD technology which would
preclude the Company from pursuing its intended operations.
In some cases, the Company may rely on trade secrets to protect its innovations.
There can be no assurance that trade secrets will be established, that secrecy
obligations will be honored or that others will not independently develop
similar or superior technology. To the extent that consultants, key employees or
other third parties apply technological information independently developed by
them or by others to Company projects, disputes might arise as to the
proprietary rights to such information which may not be resolved in favor of the
Company.
Employees
---------
At June 19, 2003 the Company had 75 full time employees (including 3 officers)
and 8 part time employees. Included are 7 engineering and development personnel,
7 sales and marketing personnel, 61 operations personnel, and 8 general and
administrative personnel (including 3 officers). The Company may, from time to
time, engage personnel to perform consulting services and to perform research
and development under third party funding. In certain cases, the cost of such
personnel may be included in the direct cost of the contract rather than in
payroll expense.
Item 2. Properties
The Company leases its executive offices, research, marketing and manufacturing
facilities that consist of approximately 55,000 square feet in two facilities.
One is located at 1240 Avenida Acaso in Camarillo, California, leased through
February 2004. The Company fully expects to extend the lease and is currently
negotiating the terms of such lease extension. A second manufacturing facility
is located at 305 County YZ, Dodgeville, Wisconsin, with a lease through
November 2007. The Company also holds a lease on the prior Texas Optoelectronics
facility in Garland, Texas. The facility is no longer operational, and the
Company has terminated the lease effective September 2003. The Company believes
that its existing facilities are adequate to meet its needs for the foreseeable
future.
6
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Class A Common Stock is traded on the American Stock Exchange
("AMEX") under the symbol "API".
At June 19, 2003, the Company had 105 holders of record for the Class A Common
Stock (including shares held in street name), representing approximately 6,500
beneficial owners of the Class A Common Stock. On the same date, there were 6
holders of record of the Class B Common Stock (none of which were held in street
name).
The following table sets forth high and low closing prices by quarter for fiscal
years 2003 and 2002.
Quarterly Stock Market Data
---------------------------- -------------------- -------------------- -------------------- --------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
2003 2002 2003 2002 2003 2002 2003 2002
---------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Common Stock(1)
High 1.66 1.35 1.00 1.09 .94 .82 1.50 1.20
Low .95 .61 .60 .70 .66 .60 .82 .66
---------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
1 Price ranges on the American Stock Exchange
The Company has not paid any cash dividends on its capital stock. The Company
intends to retain earnings, if any, for use in its business and does not
anticipate that any funds will be available for the payment of cash dividends on
its outstanding shares in the foreseeable future. The holders of Common Stock
will not be entitled to receive dividends in any year until the holders of the
Class A Redeemable Convertible Preferred Stock receive an annual non-cumulative
dividend preference of $.072 per share. To date, a total of 740,000 shares of
Class A Redeemable Convertible Preferred Stock have been converted into 222,000
shares of Class A Common Stock, leaving outstanding 40,000 shares of Class A
Redeemable Convertible Preferred Stock. The aggregate non-cumulative annual
dividend preference of such Class A Redeemable Convertible Preferred Stock is
$2,880. There is no public market for the Company's Class A Redeemable
Convertible Preferred Stock or Class B Common Stock; however, such stock is
convertible into Class A Common Stock at the option of the holder and upon
transfer by the holder of the Class A Redeemable Convertible Preferred Stock.
7
Item 6. Management's Discussion and Analysis
Application of Critical Accounting Policies
-------------------------------------------
Application of our accounting policies requires management to make judgments and
estimates about the amounts reflected in the financial statements. Management
uses historical experience and all available information to make these estimates
and judgments, although differing amounts could be reported if there are changes
in the assumptions and estimates. Estimates are used for, but not limited to,
the accounting for the allowance for doubtful accounts, inventory allowances,
restructuring costs, impairment costs, depreciation and amortization, sales
discounts and returns, warranty costs, taxes and contingencies. Management has
identified the following accounting policies as critical to an understanding of
our financial statements and/or as areas most dependent on management's judgment
and estimates.
Revenue Recognition
-------------------
We generally recognize revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the price is fixed or readily determinable, and
collectibility is probable. Sales are recorded net of sales returns and
discounts. We recognize revenue in accordance with Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements."
Impairment of Long-Lived Assets
-------------------------------
We continually review the recoverability of the carrying value of long-lived
assets using the methodology prescribed in Statement of Financial Accounting
Standards (SFAS) 144, "Accounting for the Impairment and Disposal of Long-Lived
Assets." We also review long-lived assets and the related intangible assets for
impairment whenever events or changes in circumstances indicate that the
carrying value of such assets may not be recoverable. Upon such an occurrence,
recoverability of these assets is determined by comparing the forecasted
undiscounted net cash flows to which the assets relate, to the carrying amount.
If the asset is determined to be unable to recover its carrying value, then
intangible assets, if any, are written down first, followed by the other
long-lived assets to fair value. Fair value is determined based on discounted
cash flows, appraised values or management's estimates, depending on the nature
of the assets.
Deferred Tax Asset Valuation Allowance
--------------------------------------
We record a deferred tax asset in jurisdictions where we generate a loss for
income tax purposes. Due to our history of operating losses, we have recorded a
full valuation allowance against these deferred tax assets in accordance with
SFAS 109, "Accounting for Income Taxes," because, in management's judgment, the
deferred tax assets may not be realized in the foreseeable future.
Inventories
-----------
Our inventories are stated at standard cost (which approximates the first-in,
first-out method) or market. Slow moving and obsolete inventories are analyzed
quarterly. To calculate a reserve for obsolescence, we compare the current
on-hand quantities with both the projected usages for a two-year period and the
actual usage over the past 12 months. On-hand quantities greater than projected
usage are calculated at the standard unit cost. The production, engineering and
purchasing departments review the initial list of slow-moving and obsolete items
to identify items that have alternative uses in new or existing products. These
items are then excluded from the analysis. The remaining amount of slow-moving
and obsolete inventory is then reserved for. Additionally, non-cancelable open
purchase orders for parts we are obligated to purchase where demand has been
reduced may be reserved. Reserves for open purchase orders where the market
price is lower than the purchase order price are also established.
8
Accounts Receivable and Allowance for Doubtful Accounts
-------------------------------------------------------
The Allowance for Doubtful Accounts is established by analyzing each account
that has a balance over 90 days past due. Each account is individually assigned
a probability of collection. The total amount determined to be uncollectible in
the 90-days-past-due category is then reserved fully. The percentage of this
reserve to the 90-days-past-due total is then established as a guideline and
applied to the rest of the non-current accounts receivable balance where
appropriate. When other circumstances suggest that a receivable may not be
collectible, it is immediately reserved for, even if the receivable is not yet
in the 90-days-past-due category.
RESULTS OF OPERATIONS
Fiscal year 2003 Compared to Fiscal Year 2002
REVENUES
--------
The Company's revenues for the fiscal year ended March 30, 2003 ("2003") were
$9.147 million, an increase of $2.216 million, or 32%, from revenues of $6.931
million for the fiscal year ended March 31, 2002 ("2002").
The increase in net product sales reflects significant increases in shipments to
customers in the industrial sensing, military/aerospace and medical segments,
and is primarily attributable to revenues added as a result of the Company's
acquisitions of Silicon Sensors, Inc. and Texas Optoelectronics, Inc., both of
which occurred during fiscal 2003. During 2003, sales to the industrial sensing
markets, which represent 44% of total revenues, increased 31% to $4.02 million,
as compared to $3.06 million for fiscal year 2002. Sales to the
military/aerospace markets, representing 36% of total revenues, increased 31% to
$3.30 million, as compared to $2.52 million, during fiscal 2002. Likewise, sales
to the medical markets, which represent 17% of total revenues, increased 29% to
$1.52 million, compared to $1.18 million in fiscal year 2002.
The Company is pleased with the market diversification and stability that has
been achieved as a result of the two acquisitions and continues to expect strong
revenue growth in the military and medical markets. As the year end results
include only a fractional year of revenue for both subsidiaries, we anticipate
overall revenue growth of approximately 40% in the upcoming year, based on
annualized sales projections of all divisions, and specific new projects coming
on line during fiscal year 2004, through both existing and new customers. The
current backlog and shipping schedule indicate that the majority of the growth
will be realized during the latter half of the year.
COSTS AND EXPENSES
------------------
Cost of product sales increased to $6.45 million in 2003 from $4.17 million in
2002. Cost of product sales as a percent of net sales increased by ten
percentage points and gross profit margin on net product sales decreased 10
percentage points to 30% as compared to 40% in 2002. The reduction in gross
margin is primarily attributable to increased material and overhead costs
experienced throughout the Company, part of which are inherent costs assumed
through the acquisition of subsidiaries. Material and labor costs as a
percentage of net sales increased to 30% and 7%, respectively, as compared to
21% and 5% in the prior year. The company-wide increases in material costs are
attributable to heightened competitiveness in the marketplace over the past year
which has caused us to absorb increases in certain material costs while
maintaining existing pricing in our efforts to generate new business as well as
retain existing business. In addition, inherited cost structures of certain
subsidiary contracts contributed to the overall increase in material costs. The
costs of maintaining three manufacturing facilities resulted in increased labor
and overhead costs which the Company plans to reduce in the upcoming year. As
the Company has completed the closing of the Garland, Texas facility and has
only building lease obligations through September 2003, it has absorbed the
manufacturing processes of that facility into the Dodgeville, Wisconsin and
Camarillo, California locations and expects to see improved overhead rates as a
result of improved asset utilization and operational efficiencies. Company
management also expects to realize future improvements in material costs through
leveraging our buying power through consolidation of operations and overall
improvements in cost of sales through our continued efforts to increase sales
and control both direct and indirect costs of manufacturing. The Company expects
these savings from consolidation to provide the foundation for profitable
operations in the future.
9
Research and development ("R&D") costs increased by $44,000 (9%) to $511,000
during 2003 compared to 2002. R & D costs have fluctuated slightly over the past
two years as we implemented planned reductions in overall R&D expenditures
during fiscal year 2002. During 2003, R & D expenditures were focused primarily
on developing value added enhancements and additional product offerings to our
line of PIN and core technology products as well as on improvements to the
current line of LAAPD array products. In the past, the primary use of R&D
resources has been to develop a base family of proprietary LAAPD products. As
the primary development phase of the LAAPD technology has been completed, we
have narrowed our LAAPD expenditures to those products which will satisfy
existing needs in the marketplace. In the upcoming year, the Company will go
forward with its planned reductions and expects to further reduce R & D
expenditures as resources are shifted toward the support of custom
optoelectronic projects in our target markets. However, the possibility exists
that R&D costs may fluctuate or even increase, as they have in the past, should
the level of activity associated with customer-requested development contracts
increase significantly.
Marketing and sales expenses increased by $117,000 (12%) to $1.085 million in
2003. The increase in marketing and sales expense is due primarily to increased
absorption of expenses resulting from the Company's acquisitions during the
current fiscal year (see Note 2). Excluding the impact of the subsidiary
expenses, year to date marketing and sales expenses were $46,000 less than the
prior year, a result of decreased recruitment, advertising, marketing and
outside representative sales commission expenses which were partially offset by
increases in benefits and bad debt expenses. To insure that we can adequately
serve our consolidated customer base, we expect that marketing and sales
expenses will remain at the same level throughout the upcoming year.
Total general and administrative expenses increased by $162,000 (9%) to $1.974
million in 2003 as compared to $1.812 million in 2002 (which included
acquisition investigation expenses of $616,000). Total general and
administrative expenses for 2003 include non-recurring charges totaling $237,000
which relate to the resignation and severance agreement with the Company's
former President and Chief Executive Officer, who resigned in February 2003.
Excluding the impact of additional expenses directly attributable to the
Company's subsidiaries ($427,000) and one-time charges described above
($237,000), general and administrative expenses were $1.31 million, or $114,000
higher than the $1.196 million reported in 2002 (exclusive of non-recurring
charges during that year of $616,000). The net increase in general and
administrative expenses is primarily due to increased legal and insurance costs.
The Company's legal fees increased $65,000 over the prior year due to the
development and implementation of a shareholder rights agreement and other
miscellaneous issues. As noted throughout the year, the Company has continued to
realize increases in liability insurance premiums and experienced a $48,000
increase in its Directors & Officers liability premiums during 2003. General and
administrative expenses are expected to remain at approximately the same level
during fiscal year 2004.
Interest income for 2003 totaled $70,000, a decrease of $133,000 over 2002.
Interest expense for the year was $13,000, as compared to $0 in 2002. The
decrease in interest income is primarily due to consistently lower interest
rates in addition to lower cash reserves available for investment. The increase
in interest expense is due to obligations assumed through the acquisition of
Texas Optoelectronics, Inc.
Net loss for fiscal year 2003 was ($803,000), or $519,000 greater than the net
loss of ($284,000) reported in fiscal year 2002. Excluding the impact of the
one-time severance charges, net loss for 2003 would be ($566,000), or $282,000
greater than net loss reported for 2002.
10
LIQUIDITY AND CAPITAL RESOURCES
At March 30, 2003, the Company had cash, cash equivalents and short-term
investments of $2.3 million, working capital of $4.8 million and an accumulated
deficit of $19.0 million. The Company's cash, cash equivalents and short-term
investments decreased $2.181 million during the twelve months ended March 30,
2003. $76,000 was obtained through the issuance and exercise of stock options
and $390,000 was used by operating activities. Operating cash flow was impacted
by a decrease in inventories of $891,000, due to the usage of materials
purchased in the prior year to meet several long-term production contracts which
began to ship in 2003, and by increases in accounts receivable and other assets
totaling $506,000.
$1.799 million was expended during the year as the Company formed a new
subsidiary, Silicon Sensors, Inc., and purchased the business (including
selected net assets and liabilities) of Silicon Sensors, LLC, a privately owned
manufacturer of optoelectronic devices, located in Dodgeville, Wisconsin (see
Note 2).
Other capital spending during 2003 totaled $68,000 compared to $417,000 during
2002. All capital expenditures during 2003 were due to necessary equipment
upgrades and/or replacements. The amount expended for capital items in 2002 was
primarily due to the purchase of a new Enterprise Resource Planning (ERP)
system, which was installed during that year. The Company anticipates that cash
outlays for capital items will be approximately $200,000 during fiscal year
2004, the largest portion of which will be for production equipment upgrades and
enhancements. The remainder will be spent on the installation of both hardware
and software components of a wide area network (WAN) communication system which
will be utilized to enhance efficiencies between the two facilities.
The Company is exposed to interest rate risk for marketable securities. Due to
continually declining interest rates available to the Company pursuant to its
investment policy, the Company was able to achieve the best yields on liquid
money market and equity fund accounts and thus transferred the majority of its
available cash reserves from longer term investment instruments to such accounts
during the year. At March 30, 2003, the Company held $1.4 million in a highly
liquid equity fund account which carried an average interest rate of 1.3%.
During 2004, the Company will continue to monitor available interest rates and
will attempt to utilize the best possible avenues of investment for its excess
liquid assets.
FORWARD LOOKING STATEMENTS
The information contained herein includes forward looking statements that are
based on assumptions that management believes to be reasonable but are subject
to inherent uncertainties and risks including, but not limited to, risks
associated with the integration of newly acquired businesses, unforeseen
technological obstacles which may prevent or slow the development and/or
manufacture of new products, limited (or slower than anticipated) customer
acceptance of new products which have been and are being developed by the
Company, the availability of other competing technologies and a decline in the
general demand for optoelectronic products.
11
Item 7. Financial Statements and Supplementary Data
The following financial statements of Advanced Photonix, Inc. are included in
Item 7:
Page
INDEPENDENT AUDITORS' REPORT 13
FINANCIAL STATEMENTS:
Balance Sheet,
March 30, 2003 14-15
Statements of Operations
for the Years Ended March 30, 2003
and March 31, 2002 16
Statements of Shareholders' Equity
for the Years Ended March 30, 2003 and
March 31, 2002 17
Statements of Cash Flows
for the Years Ended March 30, 2003 and
March 31, 2002 18-19
Notes to Financial Statements 20-27
-----------------------------------------------------------------
12
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
of Advanced Photonix, Inc.:
We have audited the accompanying consolidated balance sheet of Advanced
Photonix, Inc. (the "Company") as of March 30, 2003 and the related consolidated
statements of operations, shareholders' equity and cash flows for the years
ended March 30, 2003 and March 31, 2002. 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. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the financial position of the Company at March
30, 2003 and the results of its operations and its cash flows for the years
ended March 30, 2003 and March 31, 2002 in conformity with accounting principles
generally accepted in the United States.
/s/ Farber & Hass LLP
June 6, 2003
13
ADVANCED PHOTONIX, INC.
CONSOLIDATED BALANCE SHEET
MARCH 30, 2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 902,000
Short-term investments 1,400,000
Accounts receivable,
less allowance of $92,000 2,204,000
Inventories 2,628,000
Prepaid expenses and other current assets 317,000
------------
Total current assets 7,451,000
------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost 4,754,000
Less accumulated depreciation and amortization (3,212,000)
------------
Equipment and leasehold improvements, net 1,542,000
------------
OTHER ASSETS:
Goodwill, net of accumulated amortization
of $353,000 2,410,000
Patents, net of accumulated amortization
of $44,000 19,000
Non-Compete Agreement, net of accumulated amortization
Of $44,000 106,000
Security deposits 24,000
------------
Total other assets 2,559,000
------------
TOTAL ASSETS $ 11,552,000
============
(Continued)
14
ADVANCED PHOTONIX, INC.
CONSOLIDATED BALANCE SHEET - Continued
MARCH 30, 2003
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of Credit $ 1,200,000
Accounts payable 536,000
Accrued salaries, wages and benefits 430,000
Current portion of capital lease payable 43,000
Note Payable 12,000
Other accrued expenses 419,000
------------
Total current liabilities 2,640,000
------------
Capital Lease Payable, net of current portion 22,000
------------
COMMITMENTS AND CONTINGENCIES
Class A Redeemable Convertible Preferred Stock,
$.001 par value; 780,000 shares authorized;
40,000 shares issued and outstanding 32,000
------------
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value;
10,000,000 shares authorized; 780,000 shares
designated Class A redeemable convertible;
no shares issued and outstanding --
Class A common stock, $.001 par value;
50,000,000 shares authorized;
13,369,258 shares issued and outstanding;
5,807,992 shares reserved for future issuance 13,000
Class B common stock, $.001 par value;
4,420,113 shares authorized; 31,691 shares
issued and outstanding --
Additional paid-in capital 27,625,000
Accumulated deficit (18,780,000)
-------------
Total shareholders' equity 8,858,000
-------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,552,000
============
See notes to consolidated financial statements.
15
ADVANCED PHOTONIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002
2003 2002
---- ----
SALES $9,147,000 $6,931,000
COST OF GOODS SOLD 6,448,000 4,170,000
---------- ----------
GROSS PROFIT 2,699,000 2,761,000
RESEARCH AND DEVELOPMENT EXPENSES 511,000 467,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,058,000 2,165,000
ACQUISITION INVESTIGATION EXPENSES -- 616,000
---------- ----------
LOSS FROM OPERATIONS (870,000) (487,000)
---------- ----------
OTHER INCOME (EXPENSE):
Interest income 70,000 203,000
Interest expenses (13,000) --
Other, net 5,000 2,000
---------- ----------
Other income, net 62,000 205,000
---------- ----------
LOSS BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES (808,000) (282,000)
PROVISION (BENEFIT) FOR INCOME TAXES (5,000) 2,000
---------- ----------
NET LOSS $ (803,000) $ (284,000)
========== ==========
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE $ (0.06) $ (0.02)
========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 12,356,349 12,208,992
========== ==========
See notes to consolidated financial statements.
16
ADVANCED PHOTONIX, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002
Additional Accumulated
Class A Class B Paid-in Other
Common Stock Common Stock Capital Accumulated Comprehensive
Shares Amount Shares Amount Amount Deficit Income Total
------ ------ ------ ------ ------ ------- ------ -----
BALANCE, MARCH 25, 2001 12,207,648 $12,000 31,691 $ -0- $26,573,000 $(17,693,000) $ 29,000 $8,921,000
EXERCISE OF OPTIONS 4,000 3,000 3,000
UNREALIZED GAIN ON
INVESTMENTS
NET LOSS (284,000) (284,000)
(29,000) (29,000)
NET COMPREHENSIVE LOSS ---------- ------- ------ ------ ----------- ------------- ---------- -----------
BALANCE, MARCH 31, 2002 12,211,648 12,000 31,691 -0- 26,576,000 (17,977,000) -0- 8,611,000
OPTIONS ISSUED TO ACQUIRE SSI
(Below market price) 5,000 5,000
EXERCISE OF OPTIONS 98,500 71,000 71,000
SHARES ISSUED TO ACQUIRE
TOI ASSETS 1,059,110 1,000 973,000 974,000
NET LOSS (803,000) (803,000)
---------- ------- ------ ------ ----------- ------------- ---------- -----------
BALANCE, MARCH 30, 2003 13,369,258 $13,000 31,691 $ -0- $27,625,000 $(18,780,000) $ -0- $8,858,000
========== ======= ====== ====== =========== ============= ========== ===========
See notes to consolidated financial statements.
17
ADVANCED PHOTONIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (803,000) $ (284,000)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation 192,000 201,000
Amortization 48,000 37,000
Provision for doubtful accounts 40,000 --
Provision for obsolete inventory (14,000) --
Changes in operating assets and liabilities:
Short-term investments (398,000) 80,000
Accounts receivable (359,000) (139,000)
Inventories 891,000 (844,000)
Prepaid expenses and other current assets (79,000) 23,000
Other assets (147,000) --
Accounts payable 146,000 73,000
Accrued expenses 93,000 16,000
----------- -----------
Net cash used by operating activities (390,000) (837,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (68,000) (417,000)
Intangible assets acquired -- (3,000)
Purchase of selected net assets of Silicon Sensors, LLC (1,799,000) 430,000
----------- -----------
Net cash provided by (used by) investing activities (1,867,000) 10,000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise and issuance of stock options 76,000 3,000
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,181,000) (824,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 3,083,000 3,907,000
----------- -----------
CASH AND EQUIVALENTS, END OF YEAR $ 902,000 $3,083,000
=========== ==========
(Continued)
18
ADVANCED PHOTONIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002
2003 2002
---- ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 13,000 $ -0-
Cash paid for taxes $ 1,600 $ 1,600
NON-CASH FINANCING ACTIVITY: In January 2003, the Company purchased all of the
issued and outstanding common stock of Texas Optoelectronics Inc. (see Note 2).
In connection with the purchase, the Company incurred a secured debt of
$1,200,000 with an investment brokerage company.
See notes to consolidated financial statements.
19
ADVANCED PHOTONIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description - Advanced Photonix, Inc. (the "Company" or "API"), is
engaged in the development and manufacture of optoelectronic
semiconductor based components, hybrid assemblies and other
proprietary solid state light and radiation detection devices,
including proprietary advanced solid state silicon photodetection
devices which utilize Avalanche Photodiode ("APD") technology. API is
located in Camarillo, California.
The Company's wholly-owned subsidiary, Silicon Sensor, Inc. ("SSI")
(see Note 2 - Acquisitions) manufactures silicon photodiodes and
optical sub-assemblies in a manufacturing facility in Dodgeville,
Wisconsin.
The Company's wholly-owned subsidiary, Texas Optoelectronics, Inc.
("TOI") (see Note 2 - Acquisitions), manufactured optical
sub-assemblies in a facility in Garland, Texas. The Company shut down
the Garland facility in May 2003 and relocated the TOI assets to the
Company's facilities in Dodgeville, Wisconsin and Camarillo,
California.
Principles of Consolidation - The consolidated financial statements include
the financial statements of the Company and its wholly-owned
subsidiaries. All significant inter-company balances and transactions
have been eliminated in consolidation.
Fiscal Year-End - The Company's fiscal year ends on the last Sunday in
March. Fiscal years in the two-year period ended March 30, 2003,
contain fifty-three weeks and fifty-two weeks, respectively.
Operating Segment Information - The Company predominantly operates in one
industry segment, light and radiation detection devices. Substantially
all of the Company's assets and employees are located at the Company's
facilities in Camarillo, California and Dodgeville, Wisconsin.
In fiscal 2003 and 2002, the Company had export sales of approximately
$1,848,000 and $1,590,000, respectively, to customers in North
America, Asia, Australia and Europe.
Fair Value of Financial Instruments - The carrying value of all financial
instruments potentially subject to valuation risk (principally
consisting of cash equivalents, accounts receivable and accounts
payable) also approximates fair value.
Cash and Cash Equivalents - The Company considers all highly liquid
investments, with an original maturity of three months or less when
purchased, to be cash equivalents.
Short-Term and Long-Term Investments - SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", requires that all
debt and marketable equity securities be classified in one of three
categories: trading, available-for-sale, or held-to-maturity. It is
the Company's intent to maintain a diverse portfolio to take advantage
of investment opportunities. The Company has classified all
investments as current assets, which includes available-for-sale and
held-to-maturity. Available-for-sale investments are redeemable within
one year. Held-to-maturity securities are callable government issues;
however, market rates make the call remote and the Company has the
intent and ability to not redeem the issue.
20
Available-for-sale securities are recorded at market value. Unrealized
holding gains and losses, net of the related income tax effect, are
excluded from earnings and are reported as a separate component of
shareholders' equity until realized. The amortized cost of debt
securities is adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization and accretion are included in
interest income. At the time of sale, any realized gains or losses,
calculated by the specific identification method, are recognized as a
component of operating results.
Held-to-maturity securities are carried at amortized cost.
Short-term and long-term investments consist of the following as of
March 30, 2003:
Fair Holding
Cost Value Gain/(Losses)
---- ----- -------------
Cash $ 493,000 $-0-
Mutual Funds $ 6,000 6,000 -0-
Equity securities 1,400,000 1,400,000 -0-
---------- ---------- ----
Totals $1,406,000 $1,899,000 $-0-
========== ========== ====
All of the Company's short-term investments as of March 30, 2003 are
due within one year.
Concentration of Credit Risk - Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of cash equivalents, short-term investments and accounts
receivable. The Company maintains cash balances at a financial
institution that is insured by the Federal Deposit Insurance
Corporation up to $100,000. As of March 30, 2003, the Company had cash
equivalents at a financial institution in excess of Federally insured
amounts. The Company invests in short-term and long-term investments,
primarily consisting of Mutual Funds and Government Securities.
Approximately 0.3% of the Company's investments are invested in Mutual
Funds. Accounts receivable are unsecured and the Company is at risk to
the extent such amount becomes uncollectible. The Company performs
periodic credit evaluations of its customers' financial condition and
generally does not require collateral. As of March 30, 2003, two
customers comprised 13% and 13%, respectively, of accounts receivable.
Accounts Receivable - Accounts receivable are reported at the customers'
outstanding balances less any allowance for doubtful accounts.
Interest is not accrued on overdue accounts receivable. The Company
does require advance payments on certain large orders.
Allowance for Doubtful Accounts - The allowance for doubtful accounts on
accounts receivable is charged to income in amounts sufficient to
maintain the allowance for uncollectible accounts at a level
management believes is adequate to cover any probable losses.
Management determines the adequacy of the allowance based on
historical write-off percentages and information collected from
individual customers. Accounts receivable are charged off against the
allowance when collectibility is determined to be permanently impaired
(bankruptcy, lack of contact, account balance over one year old, etc.)
21
Inventories - Inventories, which include material, labor and manufacturing
overhead, are stated at standard cost (which approximates the first
in, first out method) or market.
Inventories consist of the following at March 30, 2003:
Raw material $2,498,000
Work-in-process 656,000
Finished products 483,000
------------
Total inventories 3,637,000
Less reserve (855,000)
Progress bill inventory (154,000)
------------
Inventories, net $2,628,000
============
Equipment and Leasehold Improvements - Equipment and leasehold improvements
are stated at cost. Depreciation and amortization are computed using
the straight-line method over the estimated useful lives of the assets
or lease term ranging from three to nine years.
Equipment and leasehold improvements consist of the following at March
30, 2003:
Machinery and equipment $3,738,000
Furniture and fixtures 163,000
Leasehold improvements 271,000
Data processing equipment 249,000
Vehicles 26,000
Capitalized software 258,000
Construction-in-process 49,000
----------
Total $4,754,000
==========
Long-Lived Assets - The Company recognizes impairment losses on long-lived
assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. In such
circumstances, those assets are written down to estimated fair value.
Long-lived assets consist primarily of goodwill and fixed assets.
Patents - Patents represent costs incurred in connection with patent
applications. Such costs are amortized using the straight-line method
over the useful life of the patent once issued, or expensed
immediately if any specific application is unsuccessful. Amortization
expense was approximately $3,000 in fiscal 2003 and 2002,
respectively.
Goodwill - The Company adopted Statement of Financial Accounting Standards
("SFAS") 142, Goodwill and Other Intangible Assets on April 1, 2002.
Accordingly, on that date the Company ceased amortizing Goodwill and
other intangible assets with an indefinite life. Prior to April 1,
2002 the Company amortized the excess of cost over the purchase price
of acquired net assets on a straight-line basis over a 25-year period.
Goodwill amortization expense was $33,000 in fiscal 2002. In
accordance with SFAS 142, The Company annually evaluates the
recoverability of goodwill by assessing whether the recorded value of
the goodwill will be recovered through future expected operating
results.
Revenue Recognition - Revenues from research and development cost
reimbursement-type contracts are recorded as costs are incurred based
upon the relationship between actual costs incurred, total estimated
costs, and the amount of the contract or grant award. Estimation of
costs are reviewed periodically and any anticipated losses are
recognized in the period in which they first become determinable.
22
The Company uses the unit of delivery method for recognizing sales and
cost of sales under production contracts. Provision for estimated
losses, if any, is made in the period in which such losses are
determined.
Advertising Expense - Advertising costs are expensed as incurred.
Advertising expense was approximately $106,000 and $122,000 in fiscal
2003 and 2002, respectively.
Warranties - The Company typically warrants its products against defects in
material and workmanship for a period of 90 days from the date of
shipment. A provision for estimated future warranty costs is recorded
when products are shipped. Warranty costs were approximately $15,000
and $13,000 in fiscal 2003 and 2002, respectively.
Net Income (Loss) Per Share - Net income (loss) per share calculations are
in accordance with Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share". Accordingly, basic earnings
(loss) per share is computed by dividing net income (loss) by the
weighted average number of shares outstanding for each year. Diluted
earnings (loss) per share has not been presented in fiscal 2003 and
2002 as the impact is anti-dilutive.
Research and Development Costs - The Company charges all research and
development costs, including costs associated with development
contract revenues, to expense when incurred. Manufacturing costs
associated with the development of a new fabrication process or a new
product are expensed until such times as these processes or products
are proven through final testing and initial acceptance by the
customer. Costs related to revenues on non-recurring engineering
services billed to customers are generally classified as cost of
product sales.
Pervasiveness of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Accounting for Stock Option Based Compensation - SFAS No. 123, "Accounting
for Stock Based Compensation", sets forth accounting and reporting
standards for stock based employee compensation plans. As allowed by
SFAS 123, the Company continues to measure compensation cost under
Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for
Stock Issued to Employees" and complies with the pro forma disclosure
requirements of the standard (see Note 5).
New Accounting Pronouncements - In June 2002, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force ("EITF")
Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)". The provisions of this
Statement are effective for exit or disposal activities that are
initiated after December 31, 2002, with early application encouraged.
The Company adopted this Statement on January 1, 2003.
23
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". This Statement
amends SFAS No. 123, "Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method
used on reported results. The alternative methods of transition of
SFAS 148 are effective for fiscal years ending after December 15,
2002. The Company follows APB 25 in accounting for its employee stock
options. The disclosure provision of SFAS 148 is effective for years
ending after December 15, 2002 and have been incorporated into these
consolidated financial statements and accompanying footnotes. In May
2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This
Statement establishes standards for how an issuer of debt classifies
and measures certain financial instruments with characteristics of
both liabilities and equity. It requires that an issuer classify
certain financial instruments as a liability (or an asset in some
circumstances) instead of equity. The Statement is effective for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The Company will adopt this Statement
on July 1, 2003. The Company does not believe that any of these recent
accounting pronouncements will have a material impact on their
financial position or results of operations.
2. ACQUISITION
In August 2002, SSI, a newly formed wholly-owned subsidiary of the Company,
purchased substantially all of the assets and selected liabilities of
Silicon Sensors LLC, a closely-held manufacturer of opto-electronic
semiconductor based components located in Dodgeville, Wisconsin. The
financial purchase price was $1,718,675 in cash, plus the assumption of the
Seller's trade accounts payable and accrued liabilities, amounting to
approximately $282,000. The Company incurred $79,000 of expenses in
connection with this acquisition. In addition, the Company entered into a 3
year $225,000 non-compete agreement with the majority member of Silicon
Sensors, LLC and is recording monthly amortization expense of $6,250.
In January 2003, the Company purchased all of the issued and outstanding
shares of common stock of TOI, a privately owned custom manufacturer of
opto-electric components and assemblies. The purchase price was 1,059,110
shares of API Class A Common Stock (issued at $0.92 per share) and
repayment of a debt of TOI in the amount of $1,200,000 representing
principal and interest.
3. CAPITALIZATION
The Company's Certificate of Incorporation provides for two classes of
common stock, a Class A for which 50,000,000 shares are authorized for
issuance and a Class B for which 4,420,113 shares are authorized for
issuance. The par value of each class is $.001. Subject to certain limited
exceptions, shares of Class B Common Stock are automatically converted into
an equivalent number of Class A shares upon the sale or transfer of the
Class B Common Stock by the original holder. The holder of each share of
Class A and Class B Common Stock is entitled to one vote per share.
The Company has authorized 10,000,000 shares of Preferred Stock, of which
780,000 shares have been designated Class A Redeemable Convertible
Preferred Stock with a par value of $.001 per share. 40,000 shares of Class
A Redeemable Convertible Preferred Stock ("Class A Preferred") were issued
and outstanding at March 25, 2001. The Class A Preferred Stock has a
liquidation preference equal to its issue price ($.80 per share) and is
convertible at any time, at the option of the holder, into .3 shares of
Class B Common Stock for each share of Class A Preferred Stock converted.
The Class A Preferred Stock is subject to redemption at the Company's
option for $.80 per share at any time. The Company would be required to pay
approximately $25,000 to redeem these shares. The holders of the Class A
Preferred Stock are entitled to an annual non-cumulative dividend
preference of $.072 per share when the Company's net earnings per share of
Class A Preferred Stock equals or exceeds $.072. The Class A Preferred
stockholders do not have voting rights except as required by applicable
law.
24
4. INCOME TAXES
At March 30, 2003, the Company had net operating loss carryforwards of
approximately $23 million for Federal income tax purposes and $4.1 million
for state income tax purposes that expire at various dates through fiscal
year 2022. The tax laws related to the utilization of loss carryforwards
are complex and the amount of the Company's loss carryforward that will
ultimately be available to offset future taxable income may be subject to
annual limitations resulting from changes in the ownership of the Company's
common stock.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at March 30, 2003 are substantially
composed of the Company's net operating loss carryforwards, for which the
Company has made a full valuation allowance.
The valuation allowance increased approximately $803,000 in the year ended
March 30, 2003, representing primarily the net taxable loss for tax return
purposes. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment.
The tax benefit for the year ended March 30, 2003 is primarily composed of
the California franchise tax credits.
5. STOCK OPTIONS
The Company has four stock option plans: The 1990 Incentive Stock Option
and Non-Qualified Stock Option Plan, the 1991 Directors' Stock Option Plan
("The Directors' Plan"), the 1997 Employee Stock Option Plan and the 2000
Stock Option Plan. The Company measures compensation for these plans under
APB Opinion No. 25. No compensation cost has been recognized as all options
were granted at the fair market value or the greater of the underlying
stock at the date of grant. Had compensation expense for these plans been
determined consistent with SFAS No. 123, the Company's net income (loss)
and net income (loss) per share would be as follows:
2003 2002
---- ----
Net income (loss), as reported $(803,000) $(284,000)
Net income (loss), pro forma $(942,910) $(310,000)
Basic income (loss) per share,
as reported $ (0.06) $ (0.02)
Basic income (loss) per share -
pro forma $ (0.07) $ (0.03)
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to April 3, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in
future years. The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in 2003 and 2002,
respectively: risk-free interest rates of 4% and 6%, expected volatility of
2.5% and 5% and expected lives of 10 years in all periods. No dividends
were assumed in the calculations.
25
The Company's various stock option plans provide for the granting of
non-qualified and incentive stock options to purchase up to 3,700,000
shares of common stock for periods not to exceed 10 years. Options
typically vest at the rate of 25% per year over four years, except for
options granted under The Directors' Plan, which typically vest at the rate
of 50% per year over two years. Under these plans, the option exercise
price equals the stock's market price on the date of grant. Options may be
granted to employees, officers, directors and consultants. The Company has
also granted options, under similar terms as above, under no specific
shareholder approved plan.
Stock option transactions for 2003 are summarized as follows:
Weighted
Average
Shares Exercise
(000) Price
------ --------
Outstanding, beginning of year 2,090 $1.44
Granted 245 $0.63
Exercised (99) $0.72
Cancelled (432) $1.17
-----
Outstanding, end of year 1,804 $1.44
===== =====
Exercisable, end of year 1,463 $1.59
===== =====
Information regarding stock options outstanding as of March 30, 2003 is as
follows:
Options Outstanding
--------------------------------------------------
(in 000s) Weighted Average Weighted Average
Price Range Shares Exercise Price Remaining Life
-----------------------------------------------------------------------
$0.50 - $1.25 1,256 $0.73 6.25 years
$1.63 - $2.50 146 $1.98 4.66 years
$3.09 - $5.34 402 $3.45 6.72 years
Options Exercisable
----------------------------------------
(in 000s) Weighted Average
Price Range Shares Remaining Life
------------------------------------------------------------
$0.50 - $1.25 962 7.16 years
$1.63 - $2.50 100 5.10 years
$3.09 - $5.34 401 7.03 years
6. LINE OF CREDIT
The Company has a line of credit from an investment brokerage company which
provides for borrowings up to 90% of the amount on deposit with that
brokerage company ($1,899,000 at March 30, 2003). Minimum payments of a
variable interest rate of 2.80% which is 1.50% above "LIBOR" (London
Interbank Offered Rate). The line of credit is repayable upon demand and is
secured by a brokerage account balance.
26
7. CAPITALIZED LEASE OBLIGATION
The Company has various capitalized lease obligations which provide for
monthly payments of $6,037. The leases mature at varying dates through
fiscal 2007 and are collateralized by certain equipment with a net book
amount of approximately $82,000. Future payments on the lease obligation
are as follows:
2004 $56,000
2005 18,000
2006 15,000
2007 2,000
-------
Total minimum lease payments $91,000
Less interest (26,000)
-------
Present value of net minimum lease payments $65,000
=======
8. NOTE PAYABLE
The Company entered into an agreement with a finance company to finance
certain insurance premiums. The agreement calls for monthly payments of
$3,991 including 8.0% interest. The note matures in June, 2003.
9. COMMITMENTS
The Company leases its manufacturing and office facility and certain office
equipment under non-cancelable operating leases. Minimum future lease
payments under all non-cancelable operating leases expiring at various
dates through fiscal 2007, are as follows:
2004 $422,961
2005 74,220
2006 46,470
2007 7,620
--------
Total $551,271
========
Rent expense was approximately $362,000 and $349,000 in fiscal 2003 and
2002, respectively.
10. LEGAL
The Company is, from time to time, subject to legal and other matters in
the normal course of its business. While the results of such matters cannot
be predicted with certainty, management does not believe that the final
outcome of any pending matters will have a material effect on the financial
position and results of operations of the Company.
11. EMPLOYEES' RETIREMENT PLAN
The Company maintains a 401(k) Plan which is qualified under the Internal
Revenue Code. All full-time employees are eligible to participate in the
Plan. Employees may make voluntary contributions to the Plan which are
matched by the Company at the rate of $.50 for every $1.00 of employee
contribution, subject to certain limitations. The Company contributions and
administration costs recognized as expense were approximately $64,000 and
$62,000 in fiscal 2003 and 2002, respectively.
27
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 9. Directors and Executive Officers
Set forth below is certain information relating to the directors and officers of
the Company.
Name Age Position
------------------------ --- --------------------------
Richard D. Kurtz 51 Chairman of the Board and
Chief Executive Officer
M. Scott Farese 46 Director
Ward Harper 50 Director
Stephen P. Soltwedel 56 Director
Paul D. Ludwig 40 President
Susan A. Schmidt 37 Chief Financial Officer
and Secretary
Richard D. Kurtz, Chairman of the Board and Chief Executive Officer
-------------------------------------------------------------------
Mr. Kurtz became a Director of the Company in February 2000, was elected
Chairman of the Board in July 2000, and was appointed Chief Executive Officer in
February 2003. Prior to joining Advanced Photonix, he was Director of Client
Services and Strategic Planning for Quantum Compliance Systems Inc. a privately
owned software company specializing in the development and installation of
Environmental Health and Safety Management systems. Mr. Kurtz continues as an
equity owner in Quantum and was employed there from July 2001 through February
2003. Prior to joining Quantum, Mr. Kurtz's career reflects 25 years in sales,
marketing and strategic planning for various aerospace, automotive, distribution
and medical companies. Most recently, he was Vice President of Sales and
Marketing for Filtertek Inc. an ESCO Technology company for over 13 years.
M. Scott Farese, Director
-------------------------
Mr. Farese became a director of the Company in August 1998. He is currently a
Business Unit Director for Filtertek Inc. Mr. Farese joined Filtertek in 1991.
Filtertek, a subsidiary of ESCO Technologies, is the largest worldwide producer
of custom filtration products and fluid control devices and the world's largest
manufacturer of custom molded filter elements.
Ward Harper, Director
---------------------
Mr. Harper became a director of the Company in May 2003. He is currently an
attorney in private solo practice in Utah. Mr. Harper has been a practicing
attorney for the past 14 years before the U.S. Court and U.S. Court of Appeals,
Tenth Circuit. Prior to going into private practice, Mr. Harper was an
Attorney/Advisor for U.S. Administrative Law Judges and was also the Attorney in
charge of public benefits litigation for the Salt Lake City Office of Legal
Services Corporation.
28
Stephen P. Soltwedel, Director
------------------------------
Mr. Soltwedel became a director of the Company in February 2000. Since 1972, he
has been employed by Filtertek, Inc. and is currently Vice President and Chief
Financial Officer. Prior to joining Filtertek, Mr. Soltwedel was employed by the
public accounting firm of Baillies Denson Erickson & Smith in Lake Geneva, WI.
Paul D. Ludwig, President
-------------------------
Mr. Ludwig joined the Company in August 2002 through the acquisition of Silicon
Sensors, LLC, where he was President and co-owner since 1996. Mr. Ludwig became
the Chief Operating Officer of Advanced Photonix, Inc. at the time of
acquisition and was promoted to President in February 2003. Prior to joining
Silicon Sensors, Mr. Ludwig spent 11 years at Honeywell, Inc. holding sales,
marketing and management responsibilities in their Sensing and Control group.
Susan A. Schmidt, Chief Financial Officer and Secretary
-------------------------------------------------------
Ms. Schmidt joined the Company in March 2000. From 1997 to 2000, she was
Director of Finance - Amphitheaters for SFX Entertainment, Inc. in Encino, CA.
SFX was a New York-based promoter and producer of live entertainment events.
From 1992 to 1997 she was Controller for Revchem Plastics, Inc., a privately
held distribution company serving the reinforced plastics industry, and Durall
Plastics, Inc., Revchem Plastics Inc.'s sister manufacturing company in Rialto,
CA.
Directors serve annual terms until the next annual meeting of stockholders and
until their successors are elected and qualified. Officers serve at the pleasure
of the Board of Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively the "Reporting Persons")
to file reports of beneficial ownership and changes in beneficial ownership of
the Company's equity securities with the Securities and Exchange Commission and
to furnish the Company with copies of these reports. Based solely on its review
of the copies of the forms received by it, the Company believes that all of its
officers and directors complied with all filing requirements applicable to them,
except with respect to the late filing of Form 3 by Paul Ludwig to report
initial ownership of securities upon being appointed Chief Operating Officer on
August 21, 2003, which was reported on September 10, 2003.
29
Item 10. Executive Compensation
The following table sets forth compensation paid or accrued by the Company for
services rendered to the Company's Chief Executive Officer and to each of the
other executive officers of the Company whose cash compensation exceeded
$100,000 for services rendered during the last three fiscal years.
SUMMARY COMPENSATION TABLE
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
----------------------------- ------------------------ -------
Other Securities
Annual Restricted Underlying LTIP All Other
Fiscal Salary Bonus Compensation Stock Awards Options Payouts Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($) ($) (1)
--------------------------- ------ ------ ----- ------------ ------------ ----------- ------- --------------
Richard D. Kurtz 2003 22,000 - 11,500 - - - 100
Chairman of the Board and 2002 n/a n/a 10,000 - 245,000 - n/a
Chief Executive Officer (2) 2001 n/a n/a 10,000 - 150,000 - n/a
-------------------------------------------------------------------------------------------------------------------------
Paul D. Ludwig 2003 97,000 - 4,000 - 100,000 - 7,000
President 2002 n/a n/a n/a n/a n/a n/a n/a
2001 n/a n/a n/a n/a n/a n/a n/a
-------------------------------------------------------------------------------------------------------------------------
Brock Koren 2003 155,000 - - - - - 86,000
President and Chief Executive 2002 175,000 - - - 100,000 - 16,300
Officer (3) 2001 175,000 - - - 50,000 - 9,400
-------------------------------------------------------------------------------------------------------------------------
(1) Represents amounts paid by the Company on behalf of the named person in
connection with the Company's benefits plans, 401(k) Retirement Plan,
vacation pay and car allowance.
(2) Mr. Kurtz was appointed to the office of Chief Executive Officer in February
2003, following the resignation of Mr. Koren. Other annual compensation and
securities underlying options reflect Director's fees and options granted as
part of plans provided to outside directors.
(3) Mr. Koren resigned from his position as President in February 2003.
Compensation continues through December 2003 under a severance agreement.
Employment Agreements
---------------------
The Company has employment and termination agreements with certain current and
former employees under which the employees may receive severance pay through the
end of the term of the contract. The contract terms vary from 6 months to 3
years. Total compensation under these agreements in the event of unemployment
through the full term would be approximately $562,000 in fiscal year 2004.
Stock Options
-------------
The following tables set forth certain information concerning stock options
granted to the persons named in the Summary Compensation Table during the last
fiscal year and unexercised stock options held by such persons at the end of
such fiscal year.
Option Grants in Fiscal 2003
Individual Grants
--------------------------------- ------------------- ------------------- --------------------- ----------------------
Number of Securities % of Total
Underlying Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (1) (#) Fiscal Year ($/Sh) Date
Richard D. Kurtz - - - -
Paul D. Ludwig 100,000 41% $.61 8/21/12
Brock Koren - - - -
----------------------------------------------------------------------------------------------------------------
(1) See "Summary Compensation Table" and Item 9 "Directors and Executive
Officers" for principal position.
30
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at Fiscal In-the-Money Options
Acquired on Value Year End (#) at Fiscal Year End ($)
Name (1) Exercise (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
------------------- ------------ -------- ------------------------------- -------------------------
Richard D. Kurtz - - 420,000 / - $57,200 / -
Paul D. Ludwig - - 20,000 / 80,000 $7,000 / $28,000
Brock Koren 60,000 $8,500 - / - - / -
-------------------------------------------------------------------------------------------------------------------
(1) See "Summary Compensation Table" and Item 9 "Directors and Executive
Officers" for principal position.
Compensation of Directors
-------------------------
During 2003, each independent member of the Board of Directors received an
annual retainer in the amount of $4,000, plus directors' fees in the amount of
$1,000 for each board meeting attended, plus $500 for each committee meeting
attended. In addition, all directors, including employee directors, are
reimbursed for reasonable travel expenses incurred in connection with their
attending meetings of the Board of Directors and committees. Each of the
directors who is not an employee of the Company is also eligible for grants of
stock options upon their appointment to the Board of Directors and all directors
are eligible for stock option grants on a discretionary basis so long as they
remain on the Board under the Advanced Photonix 2000 Stock Option Plan.
Directors who are also officers of the Company do not receive cash compensation
in consideration for their services as directors.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of June 20, 2003, certain information
concerning the holdings of each person who was known by the Company to be the
beneficial owner of more than five percent (5%) of the outstanding shares of
Class A or Class B Common Stock of the Company, by each director and executive
officers and by all directors and officers as a group.
Class A Common Stock
----------------------------------------
Shares Under
Shares Exercisable Percent
Owned Options/Warrants(1) Voting(2)
------- ------------------- ---------
Burke, Mayborn Co., Ltd.(3) 823,800 -- 6.2
Richard D. Kurtz(4) 45,000 420,000 3.4
Stephen P. Soltwedel(4) 14,000 300,000 2.3
M. Scott Farese(4) 15,000 289,000 2.2
Paul D. Ludwig(4) 71,100 20,000 .7
Susan A. Schmidt(4) 500 77,334 .6
Directors & Officers as a 145,600 1,106,334 8.6
Group
(1) Includes shares under options exercisable on March 30, 2003 and options
which become exercisable within 90 days thereafter.
(2) Represents voting power assuming beneficial owner exercises all exercisable
options and warrants.
(3) Includes shares owned beneficially by Burke, Mayborn Co., Ltd. and Frank M.
Burke, Jr. The address of this shareholder is 5500 Preston Road, Suite 315,
Dallas, TX 75205.
(4) The address of this shareholder is c/o Advanced Photonix, Inc.
1240 Avenida Acaso, Camarillo, CA 93012.
31
The following table sets forth, as of March 30, 2003, the aggregated information
pertaining to all securities authorized for issuance under the Company's equity
compensation plans:
Number of
Securities to be
issued upon Weighted-average
exercise of exercise price Number of
outstanding of outstanding securities
options, options, remaining
warrants and warrants and available for
Plan Category rights rights future issuance
------------- ------ ------ ---------------
Equity compensation plans 1,804,034 $1.44 757,889
approved by shareholders
Equity compensation plans
not approved by shareholders - - -
Total 1,804,034 $1.44 757,889
Item 12. Certain Relationships and Related Transactions
See Item 10. Executive Compensation.
Item 13. Exhibits and Reports on Form 8-K
(a) The following is a list of the financial statements, schedules and
exhibits filed herewith.
(1) Financial Statements: No financial statements have been filed
with this Form 10-KSB other than those listed in Item 7.
(2) Financial Statement Schedules: Schedules for which provisions are
made in the applicable accounting regulations of the Securities
and Exchange Commission are not required under the related
instructions, or are disclosed in the accompanying consolidated
financial statements, or are inapplicable and, therefore, have
been omitted.
(3) Exhibits:
Exhibit
No. Description
------- -----------
3.1 Certificate of Incorporation of the Registrant, as
amended- incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1, filed
with the Securities and Exchange Commission on
November 23, 1990
3.1.1 Amendment to Certificate of Incorporation of the
Registrant, dated October 29, 1992-incorporated by
reference to the Registrant's March 31, 1996 Annual
Report on Form 10-K
3.1.2 Amendment to Certificate of Incorporation of the
Registrant, dated September 9, 1992-incorporated by
reference to the Registrant's March 31, 1996 Annual
Report on Form 10-K
3.2 By-laws of the Registrant, as amended
4.1 Rights Agreement, dated September 19, 2002 by and
between the Company and Continental Stock Transfer and
Trust Company, Certificate of Designations for the
Company's Series B Junior Preferred Stock - incorporated
by reference to Exhibits 4.1 and 4.2 to the Registrant's
Form 8-K filed with the Securities and Exchange
Commission on September 26, 2002
32
10.1* Advanced Photonix, Inc. 1991 Special Directors
Stock Option Plan - incorporated by reference to
Exhibit 10.9 to the Registrant's March 31, 1991 Annual
Report on Form 10-K
10.2* Advanced Photonix, Inc. 1990 Incentive Stock Option and
Non-Qualified Stock Option Plan - incorporated by
reference to Exhibit No. 10.11 to the Registrant's
Registration Statement on Form S-1, filed with the
Securities and Exchange Commission on November 23, 1990
10.3* Advanced Photonix, Inc. 1997 Employee Stock Option Plan
- incorporated by reference to Exhibit 10.13 to the
Registrant's March 30, 1997 Annual report on Form 10-K
10.4* Amendment No. 1 to 1997 Employee Stock Option
Plan of Advanced Photonix, Inc. - incorporated by
reference to Exhibit 10.14 to the Registrant's
December 28, 1997 Quarterly report on Form 10-Q
10.5* Advanced Photonix, Inc. 2000 Stock Option Plan -
incorporated by reference to Exhibit 10.1 to the
Registrant's Registration Statement on Form S-8,
filed with the Securities and Exchange Commission on
March 15, 2001
10.9 Lease Agreement dated February 23, 1998 between Advanced
Photonix, Inc. and High Tech No. 1, Ltd. - incorporated
by reference to Exhibit 10.9 to the Registrant's
March 29, 1998 Annual Report on Form 10-K
10.10 Form of Indemnification Agreement provided to
Directors and Principal Officers of Advanced
Photonix, Inc. - incorporated by reference to Exhibit
10.15 to the Registrant's December 28, 1997
Quarterly report on Form 10-Q
10.11* Employment Agreement dated August 21, 2002 between
Advanced Photonix, Inc. and Paul D. Ludwig -
incorporated by reference to Exhibit 10.1 to the
Registrant's Form 8-K as filed with the Securities and
Exchange Commission on September 5, 2002
10.12* Employment Agreement dated February 10, 2003 between
Advanced Photonix, Inc. and Richard D. Kurtz
21.1 List of Subsidiaries of Registrant
99.1 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Additional Certifications of the Registrant's
Chief Executive Officer, President, and Chief
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
*Constitutes a compensation plan or arrangement required to be filed as
part of this report.
(3) Reports on Form 8-K:
The Company filed forms 8-K and 8-K/A on January 31, 2003 and April 2,
2003, respectively, to report the acquisition of Texas
Optoelectronics, Inc. on January 17, 2003. The filings included the
purchase agreement, financial statements and proforma financial
information, as required.
33
Item 14. Controls and Procedures
Our Chief Executive Officer, President, and Chief Financial Officer (the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for the Company. The Certifying Officers have
designed such disclosure controls and procedures to ensure that material
information is made known to them, particularly during the period in which this
report was prepared. The Certifying Officers have evaluated the effectiveness of
the Company's disclosure controls and procedures within 90 days of the date of
this report and believe that the Company's disclosure controls and procedures
are effective based on the required evaluation. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ADVANCED PHOTONIX, INC.
By: /s/ Paul D. Ludwig
----------------------------
Date: June 26, 2003 Paul D. Ludwig, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Signature Title Date
/s/ Richard D. Kurtz Chairman of the Board
------------------------ and Chief Executive Officer June 26, 2003
Richard D. Kurtz -------------
/s/ M. Scott Farese Director June 26, 2003
------------------------ -------------
M. Scott Farese
/s/ Ward Harper Director June 26, 2003
------------------------ -------------
Ward Harper
/s/ Stephen P. Soltwedel Director June 26, 2003
------------------------ -------------
Stephen P. Soltwedel
/s/ Susan A. Schmidt Chief Financial Officer June 26, 2003
------------------------ and Secretary -------------
Susan A. Schmidt (Principal Financial and
Accounting Officer)
34