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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1995 or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number 0-16106
APA OPTICS, INC.
(exact name of small business issuer as specified in its charter)
Minnesota 41-1347235
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2950 N.E. 84th Lane, Blaine, Minnesota 55449
(Address of principal executive offices and zip code)
Issuer's telephone number, including area code: (612) 784-4995
Indicate whether the issuer (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 issuer was required
to file such reports), and (2) has been subject to the filing requirement for
the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class: Outstanding at September 30, 1995
Common stock, par value $.01 7,986,007
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PART 1, FINANCIAL INFORMATION
ITEM 1, FINANCIAL STATEMENTS
APA OPTICS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30 March 31
1995 1995
CURRENT ASSETS: (Unaudited) (Audited)*
<S> <C> <C>
Cash and short-term investments $1,924,854 $401,034
Accounts receivable 782,965 421,943
Inventories:
Raw Materials 25,206 61,791
Work-in-process & finished goods 162,314 146,414
Prepaid expenses 15,200 31,225
Bond reserve funds 16,667 63,333
TOTAL CURRENT ASSETS 2,927,206 1,125,740
PROPERTY AND EQUIPMENT, NET 1,332,632 1,492,282
OTHER ASSETS 478,613 445,075
$ 4,738,451 $ 3,063,097
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 100,000 $ 95,000
Accounts payable 89,777 97,584
Accrued expenses (7,772) 40,476
TOTAL CURRENT LIABILITIES 182,005 233,060
LONG TERM DEBT 345,000 445,000
SHAREHOLDERS' EQUITY
Undesignated shares; 5,000,000 shares
authorized; none issued --- ---
Common stock, $.01 par value; 15,000,000
shares authorized; 7,986,007 & 7,376,923
issued 79,860 73,769
Paid-in-capital 6,944,302 5,122,292
Retained earnings (deficit) (2,812,716) (2,811,024)
4,211,446 2,385,037
$ 4,738,451 $ 3,063,097
* Derived from audited financial statements
/TABLE
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APA OPTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
REVENUES $ 682,828 $ 445,679 $ 1,274,845 $ 895,901
COSTS AND EXPENSES:
Cost of sales and
services 547,409 360,701 992,735 682,046
Selling, general &
administrative 126,732 144,890 279,359 274,178
Research & development --- 66,551 2,467 164,226
674,141 572,142 1,274,561 1,120,450
Gain/Loss from Operations 8,687 (126,463) 284 (224,549)
INTEREST INCOME & EXPENSE:
Interest Income 15,465 3,021 17,910 4,548
Interest Expense ( 9,107) (10,793) (19,386) (22,612)
6,358 ( 7,772) ( 1,476) (18,064)
INCOME (LOSS)
BEFORE INCOME TAXES 15,045 (134,235) ( 1,192) (242,613)
INCOME TAX EXPENSE
(BENEFIT) 250 --- 500 250
NET INCOME (LOSS) $ 14,795 $(134,235) $( 1,692) $(242,863)
EARNINGS (LOSS) PER
COMMON & COMMON EQUIVALENT
SHARE (EXHIBIT 11) $ .00 $(.02) $(.00) $(.03)
WEIGHTED AVERAGE SHARES
OUTSTANDING 7,623,839 7,276,010 7,482,477 7,275,469
</TABLE>
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APA OPTICS, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
September 30
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (loss) $ ( 1,692) $ (242,863)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 215,689 219,131
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (361,021) 29,603
(Increase) decrease in inventories and
prepaid expenses 83,375 (45,956)
Increase (decrease) in accounts payable and
accrued expenses (56,055) (40,150)
Other (57,538) (31,008)
Net cash provided by (used in) operating
activities (177,242) (111,243)
INVESTING ACTIVITIES
Purchases of property and equipment (32,039) * 81,555
Net cash provided by (used in) investing activities (32,039) 81,555
FINANCING ACTIVITIES
Proceeds from sale of common stock 1,828,101 260,000
Repayment of long-term debt (95,000) (85,000)
Net cash provided by financing activities 1,733,101 175,000
Increase (decrease) in cash 1,523,820 145,312
Cash at Beginning of Period 401,034 274,204
Cash at End of Period $1,924,854 $ 419,516
NOTE TO CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the information furnished reflects all
adjustments which are necessary to a fair statement of the results of the
interim periods presented. All adjustments were of a normal recurring nature.
The result of any interim period are not necessarily indicative of results
for the full year.
* Includes $125,000 from the sale of used equipment.
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations:
Revenues for the second quarter of fiscal 1996 ended
September 30, 1995 were $682,828, an increase of 53% from the
second quarter of fiscal 1995 ended September 30, 1994. The second
quarter revenues of fiscal 1996 are also up 15% as compared to the
first quarter of fiscal 1996. While production revenues decreased
by $192,382 during the first two quarters of fiscal year 1996 as
compared to the first two quarters of fiscal 1995, contract
revenues increased by $571,326 resulting in an overall increase in
revenues of $378,944 for the first two quarters of fiscal 1996.
This shift is consistent with the Company's overall plans to focus
upon production and marketing of products based upon its research
and development activities. The increased contract revenues also
resulted in reducing the Company's paid internal research and
development expenses to $2,467 during the first two quarters of
fiscal year 1996 from $164,226 for the first two quarters of fiscal
year 1995.
The substantial increase in government contract revenues for
the first two quarters of fiscal 1996 as compared to the first two
quarters of fiscal 1995 is a result of the Company's efforts in
winning new government contracts in fiscal 1995. The Company's
backlog of unfinished government contracts is approximately $3.2
million.
For the second quarter of fiscal 1996, the Company is
reporting a profit of $14,795 after writing off raw materials
associated with the Interferometer for aspheric testing (IAT). The
Company decided to write off these materials due to lack of
revenues from these products. The $14,795 profit for the second
quarter of fiscal 1996, compares to a net loss of ($134,235) for
the second quarter of fiscal 1995. This improvement is mainly due
to significant reduction in company paid research and development
expenses and increased contract revenues. The quarters results mark
the first profitable quarter for the Company in the past five
years. The Company anticipates it will continue to show a profit
next quarter.
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Liquidity and Capital Resources:
The Company's cash balance at September 30, 1995 is
$1,924,854. The Company's current ratio is over sixteen to one. The
receivables are up this quarter end, due to delays in receiving
government payments due to the government's year end. These
payments will be received during the third quarter. The Company
raised approximately $1.8 million in a private placement of 600,000
shares of the Company's common stock. These funds will be used to
supplement the $6.5 million of assistance from the State of South
Dakota and the city of Aberdeen for the construction of a new
optoelectronic product manufacturing facility in Aberdeen, South
Dakota.
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PART II. OTHER INFORMATION
ITEMS 1 - 5. Not Applicable.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11: Statement RE: Computation of per share earnings.
(b) Exhibit 27: Financial Data Schedules
There were no reports on Form 8-K filed during the three months ended
September 30, 1995.
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934,
the issuer has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
APA OPTICS, INC.
October 26, 1995 s/s Anil K. Jain
Date Anil K. Jain
President
Principal Executive Officer
Treasurer & Principal Financial
Officer
October 26, 1995 s/s Randal J. Becker
Date Randal J. Becker
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-1-1996
<PERIOD-END> SEP-30-1995
<CASH> 1,924,854
<SECURITIES> 0
<RECEIVABLES> 782,965
<ALLOWANCES> 0
<INVENTORY> 187,520
<CURRENT-ASSETS> 2,927,206
<PP&E> 1,332,632
<DEPRECIATION> 215,689
<TOTAL-ASSETS> 4,738,451
<CURRENT-LIABILITIES> 182,005
<BONDS> 0
<COMMON> 79,860
0
0
<OTHER-SE> 4,131,586
<TOTAL-LIABILITY-AND-EQUITY> 4,738,451
<SALES> 1,274,845
<TOTAL-REVENUES> 1,274,845
<CGS> 992,735
<TOTAL-COSTS> 992,735
<OTHER-EXPENSES> 281,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,386
<INCOME-PRETAX> (1,192)
<INCOME-TAX> 500
<INCOME-CONTINUING> (1,692)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,692)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
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EXHIBIT 11
APA OPTICS, INC.
<TABLE>
<CAPTION>
Statement RE: Computation
of Per Share Earnings
Three months ended Six months ended
Septmeber 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Average common
shares outstanding 7,583,161 7,276,010 7,482,477 7,275,469
Dilutive stock options
and warrants (A) 40,678 0 0 0
Total 7,623,839 7,276,010 7,482,477 7,275,469
Net income (loss) $ 14,795 $(134,235) $( 1,692) $(242,863)
Per share amount $ .00 $(.02) $(.00) $(.03)
(A) Calculated using the "treasury stock" method.
</TABLE>
