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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 December 31, 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 December 31, 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 Decmeber 31 March 31
1995 1995
<S> <C> <C>
CURRENT ASSETS: (Unaudited) (Audited)*
Cash and short-term investments $2,167,855 $ 401,034
Accounts receivable 484,952 421,943
Inventories:
Raw Materials 24,244 61,791
Work-in-process & finished goods 199,253 146,414
Prepaid expenses 35,977 31,225
Bond reserve funds 41,667 63,333
TOTAL CURRENT ASSETS 2,953,948 1,125,740
PROPERTY AND EQUIPMENT, NET 1,238,461 1,492,282
OTHER ASSETS 603,609 445,075
$ 4,796,018 $ 3,063,097
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 100,000 $ 95,000
Accounts payable 42,065 97,584
Accrued expenses 80,723 40,476
TOTAL CURRENT LIABILITIES 222,788 233,060
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 6,927,192 5,122,292
Retained earnings (deficit) (2,778,822) (2,811,024)
4,228,230 2,385,037
$ 4,796,018 $ 3,063,097
</TABLE>
* Derived from audited financial statements
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APA OPTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE> (UNAUDITED)
<CAPTION>
Three months ended Nine months ended
December 31 December 31
1995 1994 1995 1994
<S> <C> <C>
REVENUES $ 592,018 $ 568,971 $ 1,866,863 $ 1,464,872
COSTS AND EXPENSES:
Cost of sales and
services 456,282 488,124 1,449,017 1,170,170
Selling, general &
administrative 112,774 117,879 392,133 392,057
Research & development 0 19,688 2,467 183,914
569,056 625,691 1,843,617 1,746,141
Gain/Loss from Operations 22,962 (56,720) 23,246 (281,269)
INTEREST INCOME & EXPENSE:
Interest Income 19,703 5,467 37,613 10,015
Interest Expense (8,521) (10,279) (27,907) (32,891)
11,182 ( 4,812) 9,706 (22,876)
INCOME (LOSS)
BEFORE INCOME TAXES 34,144 (61,532) 32,952 (304,145)
INCOME TAX EXPENSE
(BENEFIT) 250 500 750 750
NET INCOME (LOSS) $ 33,894 $ (62,032) $ 32,202 $(304,895)
EARNINGS (LOSS) PER
COMMON & COMMON EQUIVALENT
SHARE (EXHIBIT 11) $ .00 $(.01) $ .00 $(.04)
WEIGHTED AVERAGE SHARES
OUTSTANDING 8,029,569 7,376,575 7,651,545 7,309,294
</TABLE>
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APA OPTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
December 31
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (loss) $ 32,202 $ (304,895)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 303,708 330,168
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (63,009) (102,270)
(Increase) decrease in inventories and
prepaid expenses 1,622 (30,282)
Increase (decrease) in accounts payable and
accrued expenses (15,271) (94,492)
Other (194,534) (47,715)
Net cash provided by (used in) operating
activities 64,718 (249,486)
INVESTING ACTIVITIES
Purchases of property and equipment (13,888) * 54,629
Net cash provided by (used in) investing activities (13,888) 54,629
FINANCING ACTIVITIES
Proceeds from the sale of common stock 1,810,991 242,920
Repayment of long-term debt (95,000) (85,000)
Net cash provided by (used in) financing activities 1,715,991 157,920
Increase (decrease) in cash 1,766,821 (36,937)
Cash at Beginning of Period 401,034 274,204
Cash at End of Period $2,167,855 $ 237,267
</TABLE>
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 results of any interim period are not necessarily indicative of
results for the full year.
* Includes $125,000 from the sale of used equipment.
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ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations:
Both revenues and profits improved for the third quarter of
fiscal 1996 ended December 31, 1995 as compared to the third
quarter of fiscal 1995.
Revenues for the third quarter of fiscal 1996 increased 4%
as compared to the third quarter of fiscal 1995. Revenues for the
third quarter were, however, 13% lower as compared to the
revenues for the second quarter of 1996 due mainly to: i) annual
shut down during the year end holidays and ii) delays in billing
on a government contract due to delays in funding authorization.
The profits for the third quarter of fiscal 1996 increased 129%
as compared to the profits for second quarter of fiscal 1996,
despite the reduction in revenues.
Revenues of $1,866,863 for the first nine months of fiscal
1996 are 27% higher than the revenues of $1,464,872 for the same
period of fiscal 1995, due mainly to increase in contract
revenues. Whereas the contract revenues increased by $635,109,
the Company experienced a reduction in production revenues of
$233,117 during the first nine months of fiscal 1996 as compared
to the same period of fiscal 1995. The Company continues to work
towards its goal of improving production revenues by
manufacturing and marketing of products based on its own
technology.
The Company is reporting a net profit of $33,894 for the
third quarter of fiscal 1996 as compared to a net loss of
($62,032) for the third quarter of fiscal 1995. For the first
nine months of fiscal 1996 the Company is reporting a profit of
$32,202 as compared to losses of ($304,895) for the first nine
months of fiscal 1995. The high cash balance has contributed to
the Company's profit, through interest income. The Company's
backlog of uncompleted contracts continues to improve,
approximately $4.6 million at December 31, 1995. The Company
continues to win new government contracts. Also, development
continues on the new product to be manufactured in our planned
Aberdeen facility.
Liquidity and Capital Resources:
The Company's cash balance at December 31, 1995 is
$2,167,855. The Company's current ratio is over thirteen to one.
The Company raised approximately $1.8 million in a private
placement of 600,000 shares of the Company's common stock late in
the second quarter of fiscal 1996. 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
December 31, 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.
2/07/96 s/s Anil K. Jain
Date Anil K. Jain
President
Principal Executive Officer
Treasurer & Principal Financial
Officer
2/07/96 s/s Randal J. Becker
Date Randal J. Becker
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,167,855
<SECURITIES> 0
<RECEIVABLES> 484,952
<ALLOWANCES> 0
<INVENTORY> 223,497
<CURRENT-ASSETS> 2,953,948
<PP&E> 1,238,948
<DEPRECIATION> 303,708
<TOTAL-ASSETS> 4,796,018
<CURRENT-LIABILITIES> 222,788
<BONDS> 0
<COMMON> 79,860
0
0
<OTHER-SE> 4,148,370
<TOTAL-LIABILITY-AND-EQUITY> 4,796,018
<SALES> 1,866,863
<TOTAL-REVENUES> 1,866,863
<CGS> 1,449,017
<TOTAL-COSTS> 1,449,017
<OTHER-EXPENSES> 394,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,907
<INCOME-PRETAX> 32,952
<INCOME-TAX> 750
<INCOME-CONTINUING> 32,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,202
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
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EXHIBIT 11
APA OPTICS, INC.
<TABLE>
<Cation>
Statement RE: Computation
of Per Share Earnings
Three months ended Nine months ended
December 31 December 31
1995 1994 1995 1994
<S> <C> <C>
Average common
shares outstanding 7,986,007 7,376,575 7,651,545 7,309,294
Dilutive stock options
and warrants (A) 43,562 0 0 0
Total 8,029,569 7,376,575 7,651,545 7,309,294
Net income (loss) $ 33,894 $ (62,032) $ 32,202 $(304,895)
Per share amount $ .00 $(.01) $ .00 $(.04)
</TABLE>
(A) Calculated using the "treasury stock" method.
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