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U.S. 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 26, 2000
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 26, 2000 were
$6,090,096.
As of June 19, 2000, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was approximately $39,000,000.
As of June 19, 2000, there were 12,044,348 shares of Class A Common
Stock and 36,135 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
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PART I
ITEM 1. BUSINESS
GENERAL
Advanced Photonix, Inc.(R) (hereafter referred to as the "Company"), 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.
The Company was incorporated under the laws of the State of Delaware on June 22,
1988. The Company believes that its proprietary APD technology represents a
leading-edge advancement in photodetection and imaging that will become an
increasingly important part of its business.
The Company's proprietary technology extends the capability of the traditional
APD by introducing a large surface area silicon device or large area avalanche
photodiode ("LAAPD"). The Company developed the LAAPD as an alternative to the
photomultiplier vacuum tube ("PMT"), which has been used for many years as the
primary technology for certain measurement, control and monitoring applications
in industrial, medical, military, scientific and commercial settings.
The LAAPD is an advanced photodetection device developed for the photonics
industry specifically as a replacement to the outdated PMT. Photodetection
devices sense light of varying intensity and convert the light detected to
electronic signals that cause the systems of which they are a part to respond in
pre-determined ways. The photonics industry includes other devices less complex
than the LAAPD such as PIN (positive-intrinsic-negative) photodiodes. Currently
the bulk of the Company's revenues are derived from the sale of products based
on PIN and other non-proprietary technologies, referred to as the "core
business".
PRODUCTS
The Company designs and manufactures optoelectronic semiconductor based
components and hybrid assemblies. The Company's most notable products include:
- Customer specific assemblies for fiber-optic data and telecommunications,
medical/biological diagnosis, particle measuring and counting
- PIN photodetectors, spectrally enhanced, single and multi-element
- Photodetector hybrids
- Military and commercial aerospace products
- Custom optoelectronic assemblies incorporating light-emitting diodes
("LEDs") and LED displays
- FILTRODE(R) - patented technology integrating optical filters directly on
photodiode chips
- Avalanche photodiodes
- Large area avalanche photodiodes (LAAPDs - discrete, with and without
amplification, and with and without thermoelectric coolers)
The Company supplies detectors for military and commercial aerospace and other
high reliability ("Hi-Rel") applications. 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. Hi-Rel products manufactured by the Company include:
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- Multi-element hybrid assembly used on the U.S. Navy's Rolling Airframe
Missile (RAM) developed by Raytheon
- Narrow and wide field of view detectors used in various TOW missile tracking
systems
- LED arrays for use in thermal image displays in various night sights,
commercial and military
- Quadrant photodetectors used in the autocollimator for airborne
navigation/FLIR POD's and "Smart Bombs"
- Multi-element detector arrays used in the Space Shuttle Arm control system
and satellite systems
- Opto assemblies for biological and blood analysis
- Automotive distance control
The Company's patented FILTRODE(R) technology integrates optical coatings
directly on photodiode chips, replacing conventional technology that requires a
separate filter glass. While the technology offers a simpler design and lower
cost, reliability and performance are improved due to the integrated design.
Special packaging of this technology allows for unique applications whereby both
sides of the detector can be used to detect light.
The Company's small area avalanche photodiodes ("SAAPDs" -- see description of
avalanche photodiode technology below) utilize a silicon epi-planar structure.
SAAPDs have been used for a variety of low-light level applications and are
responsive from 400 nm to 1000 nm. Typical applications include fiber optics and
free space communications, bar code readers and laser range finders.
LARGE AREA AVALANCHE PHOTODIODE TECHNOLOGY
The avalanche photodiode is a specialized silicon photodiode capable of
detecting very low light levels due to an internal gain phenomenon known as
avalanching. This performance characteristic is not present in the common PIN
photodiode.
The APD, developed in the late 1960's, gave promise of a solid state replacement
for the photomultiplier tube, an old and outdated vacuum tube technology, for
sensing low levels of energy. Historically, APDs have been 3mm diameter or
smaller with an internal gain of 50:1 or less. Until now, design and
manufacturing limitations have restricted the size and performance of APDs,
severely limiting their practical use.
The Company has developed and patented various attributes of the LAAPD, most
notably producing diameters up to 25 mm with internal gains of 300:1. The LAAPD
is a high speed detector capable of detecting low light levels from the DEEP UV
(ultraviolet), through the visible spectrum and into the near IR (infrared).
When coupled with a scintillator, the LAAPD can efficiently detect X-ray and
gamma-rays. It is also sensitive to accelerated electrons with potentials
greater than a few thousand electron-volts. The LAAPD offers capabilities well
beyond those of the existing photo-detection devices, such as the PIN
photodiode, the small area APD and the PMT. Advantages over PIN photodiodes
include higher sensitivity at wider bandwidths. Advantages over small area APDs
include larger active areas with much greater sensitivity and gain. The LAAPD's
advantages over PMTs include superior spectral bandwidth, greater sensitivity to
pulses above 500 photons especially in the visible and near IR, greater dynamic
range, and a rugged, solid-state structure suitable for operation in harsh
environments. LAAPDs feature superior quantum efficiency in visible, near IR and
UV regions to that of the PMT. Other features that differentiate the LAAPD from
the PMT include its small package size, immunity to magnetic fields and ease of
temperature control, providing stable operation over temperature gradients. In
addition to a rugged and compact design, their operation requires far less
power, making the LAAPD more advantageous in portable applications.
The Company expects, but there is no assurance, that its proprietary APD
technology, employed in the development of the LAAPD, will form the basis for
continuing the investigation and potential commercial development of other
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lines of advanced silicon avalanche photonics products that will have a broader
range of commercial and military applications than the PMT and PIN arrays. For
example:
- 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.
- Vacuum avalanche photodiode (VAPD) - another patented technology, which
combines a photocathode and an LAAPD in a vacuum tube, functioning as a
detector for high resolution, single photon-counting and low light level
detection.
The Company has identified target markets for its LAAPD products based on
customer evaluations and in-house tests. Evaluation detectors are sold to
original equipment manufacturers ("OEMs"), engineers and scientists who report
information to the Company concerning potential applications and markets, as
well as suggesting improvements and pricing objectives. It is expected, but
there is no assurance, that OEMs who can take advantage of the performance
capabilities of LAAPDs will be the source of repeat business for production
quantities. Targeted markets include:
- Ranging, tracking & imaging - smart image surveillance/security cameras, 3D
collision avoidance cameras, missile guidance, threat warning, underwater
mine detection, and mapping & salvaging.
- Medical imaging - detectors which image human physiology in slices and look
for pathology. Included in this category are PET scanners, CT scanners, bone
densitometers and gamma cameras.
- Industrial scanning/process control - industrial CT inspection, aerospace
ice inspection, drum/flat bed scanning, semiconductor wafer defect scanning
and film to video conversion.
- Analytical chemistry - analyzing the chemical "recipe" of samples, from
glucose levels in the blood to pesticides in ground water.
- Medical diagnostics - human fluids are analyzed to diagnose a medical
pathology or condition. A partial list of conditions which are diagnosed
every day using photonics technology includes diabetes, lipid metabolism
disorders, myocardial infarction, gout, liver diseases, renal diseases,
pancreatitis, anemia, and electrolyte disturbances. It is expected that this
list will grow dramatically in the coming years with the explosion of
methods now available to perform immunodiagnostics. Examples of forthcoming
diagnostics include those targeting thyroid and sexually transmitted disease
conditions and wide field retinal visualization.
- Environmental monitoring - atmospheric meteorology LIDAR (light detection
and ranging), radiation dose monitors, airborne and liquid particle
measurement, optical air data systems, airport wind shear, atmospheric
pollution monitoring.
- Scientific research - high energy physics fiber tracking, space particle
experiments and neutrino experiments.
The Company's products are primarily sold as components or assemblies to OEMs or
other component manufacturers. The Company does not manufacture any end user
products within the above or any other markets.
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RAW MATERIALS
The principal raw materials used by the Company in the manufacture of its
semiconductor chip components and assemblies are silicon wafers, chemicals and
gases used in processing wafers, gold wire, lead frames, metal and plastic
packages that house the chip and the various custom assemblies. 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 between order and delivery of raw
materials.
RESEARCH AND DEVELOPMENT
The Company undertakes both internally funded and customer funded research and
development programs when they are in support of the Company's development
objectives. Since its inception in June 1988, the Company has incurred material
amounts of research and development expenses. During the fiscal years ended in
2000 and 1999, research and development expenses amounted to $.7 million and $.6
million, respectively. Additional research and development funding will be
required for LAAPD arrays and VAPDs if the Company decides to commercialize
these products.
ENVIRONMENTAL REGULATIONS
The photonics industry, similar to the semiconductor industry, is subject to
governmental regulations for the protection of the environment, including those
that relate 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 the Company to
maintain certain environmental permits. The Company believes that it has
obtained all necessary environmental permits to conduct its manufacturing.
Changes in the aforementioned federal and state environmental laws and
regulations or enactment or promulgation of new laws and regulations could
require increases in operating costs and delays or interruptions of operations
and may require additional capital expenditures.
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, with the customer being responsible for all finished
goods, all costs, direct and indirect, incurred by the Company and a reasonable
allowance for anticipated profits. No assurance can be given that such amounts
will be received by the Company after cancellation. The Company had
approximately $5 million of backlog at the end of fiscal 2000 compared with a
backlog of approximately $4.5 million at the end of fiscal 1999. The Company
expects that approximately $3.1 million of the backlog orders will be filled in
fiscal year 2001.
The Company currently supplies core business products in support of satellites,
aircraft and ground vehicle missile guidance and tracking systems. Decreases in
military spending have continued to reduce the Company's revenues in these
markets.
The Company also supplies core business products for use in various analytical
and diagnostic medical equipment. The Company's agreement to provide
LED/detector modules to be used in microbiological testing systems resulted
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in an increase in revenues in the medical segment. Product sales to bioMerieux,
Inc. represent approximately 14% and 8% of the Company's revenues for the fiscal
years ending 2000 and 1999, respectively.
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 staff and through independent sales representatives.
International sales, principally Western Europe, are conducted through foreign
distributors (see Note 1 to Consolidated Financial Statements).
In marketing LAAPD products, the Company has recognized that it must compete
with producers of PMTs, which have dominated low light level detection markets
for many years. Even if the Company can establish that its LAAPDs are a
potential alternative to PMTs for certain commercial applications, and assuming
that testing of the LAAPD currently being conducted by OEMs and other third
parties proves successful, the ability to successfully market its LAAPD devices
on a volume basis will be substantially dependent upon the willingness of
potential customers who currently use PMTs to incur the substantial expense and
expend the time and effort necessary for the redesign of their products to
accommodate the LAAPD devices.
COMPETITION
The Company competes with a range of companies for the custom optoelectronic and
silicon photodetector requirements of vendors of medical instruments, computer
peripherals, a variety of industrial products and specialized military and
commercial aerospace applications. The Company believes 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 Far Eastern manufacturers of standard "off-the-shelf"
optoelectronic components or silicon photodetectors.
The Company believes that the principal competition for its silicon LAAPD
photodetection devices lies with producers of PMTs, the only product currently
available for many of the applications for which the Company's LAAPD products
are designed. The Company believes that there are a number of manufacturers of
PMTs, most of which have significantly greater financial, technological,
marketing and personnel resources than the Company. In addition, several
companies produce solid state detectors based on small area APD technology.
Although a few additional photodetector companies are engaged in developing
APDs, the Company believes that most of these are limited by their technology to
small area APD devices. The Company believes these small area APDs are
considerably less useful than the Company's LAAPD devices in broadening the
applicability of APD technology to imaging and the sensing of extremely low
light levels. The Company's LAAPD products have electronic signal gain of up to
300 (one photoelectron converted to 300 photoelectrons) while typical small area
APD devices have a gain of about 50 and, therefore, are not competitive with the
Company's LAAPD devices in certain applications.
PMTs were first invented in the 1940's. It is possible that existing PMT
manufacturers or other photodetector manufacturers will begin APD development
and eventually manufacture competitive APD devices.
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PROPRIETARY TECHNOLOGY
The Company has been issued patents as follows:
<TABLE>
<CAPTION>
US PATENT NO. DESCRIPTION DATE ISSUED
--------------------- --------------------------------------------- ------------------------
<S> <C> <C>
5,801,430 Solid State Photodetector with September 1998
Light-Responsive Rear Face
5,757,057 Large Area Avalanche Array May 1998
5,477,075 Solid State Photodetector with December 1995
Light-Responsive Rear Face
5,311,044 Avalanche Photomultiplier Tube May 1994
5,146,296 Devices for Detecting and/or Imaging Single September 1992
Photoelectron
5,057,892 Light Responsive Avalanche Diode October 1991
5,021,854 Silicon Avalanche Photodiode Array June 1991
4,717,946 Thin Line Junction Photodiode By predecessor company
4,782,382 High Quantum Efficiency Photodiode Devices By predecessor company
</TABLE>
Other patent submissions are currently under review by the U.S. Patent and
Trademark Office. There can be no assurance that the pending patent applications
will issue as patents, 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 prevent infringement of a patent could be
substantial. If the Company is unable to obtain patents for its proposed
applications, other entities may exploit the Company's developments in APD
technology. Furthermore, there can be no assurance the Company's APD technology
will not infringe patents or other rights owned by others, licenses to which may
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 pertinent
published materials, to the Company's knowledge, its competitors hold no
patents, licenses or other rights to the APD technology which would preclude the
Company from pursuing its intended operations or from obtaining patent
protection for its proposed applications.
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 may arise as to the proprietary
rights to such information which may not be resolved in favor of the Company.
EMPLOYEES
At June 19, 2000, the Company employed 57 full-time employees (including 3
officers), 9 engineering and development personnel, 35 operations personnel
(including 1 officer), 6 sales and marketing personnel, and 7 general
administrative personnel (including 2 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 as
payroll expense.
ITEM 2. PROPERTIES
The Company leases its executive offices, research, marketing and manufacturing
facility which consists of approximately 39,000 square feet in a building
complex located at 1240 Avenida Acaso, Camarillo, California. The
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lease expires in February 2004. The Company believes that its existing facility
is adequate to meet its needs for the foreseeable future.
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". The Company's Class B Common Stock is not
publicly traded.
At June 19, 2000, the Company had 57 holders of record for the Class A Common
Stock, representing approximately 1,200 holders owning shares of Class A Common
Stock in street name. On the same date, there were 6 holders of the Class B
Common Stock.
The following table sets forth high and low closing prices by quarter for fiscal
years 2000 and 1999.
<TABLE>
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Quarterly Stock Market Data
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1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
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2000 1999 2000 1999 2000 1999 2000 1999
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock(1)
High 3/4 1 7/16 3/4 1 3/8 7/8 15/16 16 5/8 7/8
Low 1/2 5/8 1/2 11/16 3/8 1/2 7/8 9/16
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</TABLE>
(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. As of June 19, 2000, 740,000 shares of
Class A Redeemable Convertible Preferred Stock had been converted into 222,000
shares of Class B 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 or
Class B Common Stock.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999
REVENUES
The Company's revenues for the fiscal year ended March 26, 2000 ("2000") were
$6.1 million, a decrease of $1.2 million, or 17%, from revenues of $7.3 million
for the fiscal year ended March 28, 1999 ("1999").
Net product sales made up 100% of the total revenue for 2000. The decrease in
net product sales reflects lower shipments of military aerospace products,
partially offset by higher shipments of commercial products. Volume in military
aerospace products decreased by $1.7 million, or approximately 49% in 2000
compared to 1999. The decrease in military aerospace products was partially
offset by higher shipments of commercial products in the industrial sensing and
medical markets, which increased 28% each in 2000 compared to 1999. During 2000,
shipments of LAAPD products (included in net product sales) rose by 17% over
1999, to $470,000. This level is the highest on record in Company history for
the product line. Sales from LAAPDs represented 8% of total product sales during
2000, as compared to 6% in 1999. The Company anticipates increasing volume from
sales of its proprietary LAAPD products as markets begin to implement newer and
more sophisticated technology.
The Company expects continued increased revenues from the sales of commercial
products in fiscal year 2001. The Company anticipates that net sales in 2001
will exceed what was realized in 2000 and are expected to approximate the sales
levels reached in fiscal 1999.
COSTS AND EXPENSES
Cost of product sales decreased by $180,000 (4%) in 2000 compared to 1999. Cost
of product sales as a percent of net product sales increased by 9% and gross
profit margin on net product sales decreased 9 percentage points to 30% compared
to 1999. Material and labor costs, as a percentage of net sales, remained
constant at 15% and 5%, respectively, for 2000 compared to 1999. Fixed overhead
costs as a percentage of net sales increased to 16% in 2000, from 7% in 1999.
Overall increases in cost of product sales were due to increased overhead rates
resulting from lower overall sales volume. The Company expects gross profit
margin, as a percentage of net sales, to return to approximately the same rate
as was realized in 1999, as sales volume is expected to increase and the Company
does not foresee any notable increases in material or labor costs.
Research and development ("R&D") costs increased by $119,000 (22%) to $671,000
during 2000 compared to 1999. The increase in R&D costs is attributable to
increases in internal R&D efforts as the Company focused on improving its
current line of LAAPD products as well as expanding into new derivatives of the
patented technology. The Company continues development of its next generation
line of LAAPD array products. R&D costs have varied significantly in the past,
and may continue to do so, due to the level of activity associated with
development contracts as well as the number and complexity of new process and
product development projects, the qualification of new process developments and
customer evaluation and acceptance of new products.
Marketing and sales expense increased by $46,000 (5%) to $1,004,000 in 2000. The
increase in marketing and sales expense was due to the recruitment of additional
sales staff, and the resulting increase in sales department salaries, during
2000, which was partially offset by lower commission expenses resulting from
lower sales levels. Marketing and sales expenses are expected to decrease
slightly in 2001 as executive compensation previously reported as marketing and
sales expense is now being reported as administrative expense, due to the
promotion of Brock Koren from Vice President of Sales and Marketing to President
and Chief Executive Officer. The Company has no plans
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to recruit additional sales staff at the executive level during 2001. However,
the Company intends to pursue its plans for growth and commercialization of the
LAAPD family of products and, as such, expects to incur higher commission
expenses as a result of increased sales in 2001.
General and administrative expenses decreased by $123,000 (12%) to $931,000 in
2000 compared to 1999. The reduction in general and administrative expenses was
the result of a decrease in property tax reserve and general cost cutting
efforts. The company expects a slight increase in general and administrative
expenses in fiscal year 2001, to accommodate anticipated increases in sales and
operating activity.
Interest income in 2000 of $136,000 was $21,000 higher than in 1999. The
increase in interest income is due primarily to increased cash reserves and
higher available interest rates. During Q4 2000, cash reserves increased by $3
million, due to the high volume of stock options exercised.
LIQUIDITY AND CAPITAL RESOURCES
At March 26, 2000, the Company had cash, cash equivalents and short-term
investments of $5.3 million, working capital of $7.4 million and an accumulated
deficit of $17.9 million. The Company's cash, cash equivalents and short-term
investments increased $2.7 million during the twelve months ended March 26,
2000. Cash expenditures were impacted by a reduction of $115,000 in accounts
payable and other accrued expenses. The decrease in accrued expenses was
primarily due to reductions in accrued warranty and other miscellaneous
expenses. Accounts receivable increased by $190,000 in 2000, due to increased
sales in Q4 2000, over the same period in 1999. Capital spending during 2000 was
$134,000 compared to $147,000 during 1999.
To enable the Company to meet its capital commitment needs, the Company has
historically supplemented cash provided by operations with proceeds from private
and public sales of capital stock and borrowings. These funds have been used to
grow the core business and finance the development and initial commercialization
of the Company's LAAPD technology. While the Company believes that initial
commercialization has been completed, it continues development of
proof-of-concept, LAAPD pixelized arrays as well as other derivatives of the
base technology. The continued development of LAAPD arrays beyond the
proof-of-concept phase may require additional funds.
The Company's revolving line of credit agreement with a bank for the lesser of
$1,000,000 or 75 percent of eligible trade accounts receivable, as defined by
the agreement, expired on July 16, 1999. The Company does not foresee a need for
borrowing based upon current projections and, therefore, has elected to forego
the costs for maintaining the line at this time. The Company believes that it
would be most efficient to establish a line when the situation warrants.
The Company is exposed to interest rate risk for marketable securities. At March
26, 2000, the Company had $1,723,000 of short-term investments with a weighted
average interest rate of 6.30%, primarily commercial paper, all of which mature
in fiscal year 2001. The Company also has $246,000 in long-term investments,
with a weighted average interest rate of 6.25%. The long term-investments are
made up of two corporate bond holdings, both of which mature in fiscal year
2002.
The Company believes that the moderate rate of inflation over the past few years
has not had a significant impact on the Company's sales or operating results.
YEAR 2000 ISSUES
None
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FORWARD LOOKING STATEMENTS
THIS ANNUAL REPORT 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, 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 (PARTICULARLY ITS LAAPD PRODUCT LINE), AND A DECLINE IN THE GENERAL
DEMAND FOR OPTOELECTRONIC PRODUCTS.
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ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of Advanced Photonix, Inc. are included in
Item 7:
<TABLE>
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Page
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<S> <C>
INDEPENDENT AUDITORS' REPORTS 13-14
FINANCIAL STATEMENTS:
Balance Sheet,
March 26, 2000 15-16
Statements of Operations
for the Years Ended March 26, 2000
and March 28, 1999 17
Statements of Stockholders' Equity
for the Years Ended March 26, 2000 and
March 28, 1999 18
Statements of Cash Flows
for the Years Ended March 26, 2000 and
March 28, 1999 19-20
Notes to Financial Statements 21-28
</TABLE>
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INDEPENDENT AUDITORS' REPORT
June 16, 2000
To the Board of Directors and Shareholders
of Advanced Photonix, Inc.:
We have audited the accompanying balance sheet of Advanced Photonix, Inc. (the
"Company") as of March 26, 2000 and the related statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of the Company at March 26, 2000 and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ Farber & Hass LLP
Oxnard, California
13
<PAGE> 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Advanced Photonix, Inc.:
We have audited the accompanying balance sheet of Advanced Photonix, Inc. (a
Delaware Corporation) as of March 28, 1999 (not presented herein), and the
related statements of operations, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Advanced Photonix, Inc. as of
March 28, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States.
ARTHUR ANDERSEN LLP
Los Angeles, California
May 5, 1999
<PAGE> 15
ADVANCED PHOTONIX, INC.
BALANCE SHEET
AS OF MARCH 26, 2000
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,309,000
Short-term investments 1,969,000
Accounts receivable,
less allowance of $7,000 1,176,000
Inventories 1,517,000
Prepaid expenses and other current assets 108,000
------------
Total current assets 8,079,000
------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost 3,120,000
Less accumulated depreciation and amortization (2,596,000)
------------
Equipment and leasehold improvements, net 524,000
------------
OTHER ASSETS:
Goodwill, net of accumulated amortization
of $286,000 550,000
Patents, net of accumulated amortization
of $33,000 68,000
Other 24,000
------------
Total other assets 642,000
------------
TOTAL ASSETS $ 9,245,000
============
</TABLE>
(Continued)
15
<PAGE> 16
ADVANCED PHOTONIX, INC.
BALANCE SHEET - CONTINUED
AS OF MARCH 26, 2000
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 225,000
Accrued salaries, wages and benefits 334,000
Accrued commissions 35,000
Accrued professional fees 48,000
Other accrued expenses 44,000
------------
Total current liabilities 686,000
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible preferred stock at redemption value;
10,000,000 shares authorized; 40,000 shares issued and outstanding 32,000
Class A common stock, $.001 par value; 50,000,000
shares authorized; 12,039,904 shares issued and outstanding 12,000
Class B common stock, $.001 par value; 4,420,113
shares authorized; 36,135 issued and outstanding
Additional paid-in capital 26,420,000
Accumulated deficit (17,905,000)
------------
Total stockholders' equity 8,559,000
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,245,000
============
</TABLE>
See notes to financial statements.
16
<PAGE> 17
ADVANCED PHOTONIX, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 26, 2000 AND MARCH 28, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
SALES $ 6,090,000 $ 7,310,000
COST OF GOODS SOLD 4,262,000 4,442,000
----------- -----------
GROSS PROFIT 1,828,000 2,868,000
RESEARCH AND DEVELOPMENT EXPENSES 671,000 552,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,935,000 2,012,000
----------- -----------
INCOME (LOSS) FROM OPERATIONS (778,000) 304,000
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 136,000 115,000
Other, net (1,000)
----------- -----------
Other income, net 135,000 115,000
----------- -----------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (643,000) 419,000
PROVISION FOR INCOME TAXES 10,000 8,000
----------- -----------
NET INCOME (LOSS) $ (653,000) $ 411,000
=========== ===========
BASIC EARNINGS (LOSS) PER SHARE $ (0.06) $ 0.04
=========== ===========
</TABLE>
See notes to financial statements.
17
<PAGE> 18
ADVANCED PHOTONIX, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Class A Class B Convertible
Common Stock Common Stock Preferred Stock
For years ended March 26, 2000 --------------------------- ---------------------------- ----------------------------
and March 28, 1999 Shares Amount Shares Amount Shares Amounts
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT MARCH 29, 1998 10,838,260 $ 11,000 76,135 -- 90,000 $ 72,000
Conversion of Redeemable Preferred Stock -- -- 3,000 -- (10,000) (8,000)
Conversion of Class B Common Stock 11,000 -- (11,000) -- -- --
Other -- -- -- -- -- --
Net Income -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 28, 1999 10,849,260 11,000 68,135 -- 80,000 64,000
Conversion of Redeemable Preferred Stock 12,000 (40,000) (32,000)
Conversion of Class B Common Stock 44,000 -- (44,000) -- -- --
Exercise of Options 1,146,644 1,000 -- -- -- --
Return of "Short-Swing" Profit realized
by Insider, pursuant to Section 16(b) -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 26, 2000 12,039,904 $ 12,000 36,135 -- 40,000 $ 32,000
</TABLE>
<TABLE>
<CAPTION>
Additional
For each of the two years in the Paid-in Accumulated
period ended March 26, 2000 Capital Deficit Total
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT MARCH 29, 1998 $ 22,696,000 $(17,662,000) $ 5,117,000
Conversion of Redeemable Preferred Stock 8,000 -- --
Conversion of Class B Common Stock -- -- --
Other -- (1,000) (1,000)
Net Income -- 411,000 411,000
-------------------------------------------------------------------------------------
BALANCE AT MARCH 28, 1999 22,704,000 (17,252,000) 5,527,000
Conversion of Redeemable Preferred Stock 32,000 -- --
Conversion of Class B Common Stock -- -- --
Exercise of Options 2,974,000 -- 2,975,000
Return of "Short-Swing" Profit realized
by Insider, pursuant to Section 16(b) 710,000 710,000
Net loss -- (653,000) (653,000)
-------------------------------------------------------------------------------------
BALANCE AT MARCH 26, 2000 $ 26,420,000 $(17,905,000) $ 8,559,000
</TABLE>
See notes to financial statements.
18
<PAGE> 19
ADVANCED PHOTONIX, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 26, 2000 AND MARCH 28, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (653,000) $ 411,000
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation 121,000 334,000
Amortization 37,000 37,000
Changes in operating assets and liabilities:
Short-term investments (102,000) (890,000)
Accounts receivable (190,000) (20,000)
Inventories 34,000 22,000
Prepaid expenses and other current assets (20,000) (4,000)
Other assets (18,000) (17,000)
Accounts payable and accrued expenses (115,000) (448,000)
----------- -----------
Net cash used by operating activities (906,000) (575,000)
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES -
Capital expenditures (134,000) (147,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES -
Proceeds from exercise of stock options 2,975,000 --
Refund of "short swing" profits from related party 710,000 --
----------- -----------
Net cash provided by financing activities 3,685,000 --
----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 2,645,000 (722,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 664,000 1,386,000
----------- -----------
CASH AND EQUIVALENTS, END OF YEAR $ 3,309,000 $ 664,000
=========== ===========
</TABLE>
(Continued)
19
<PAGE> 20
ADVANCED PHOTONIX, INC.
STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED MARCH 26, 2000 AND MARCH 28, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
------- ------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ -0- $ -0-
Cash paid for taxes $10,000 $8,000
NON-CASH TRANSACTION:
Issuance of shares of common stock upon
the conversion of preferred stock $32,000 $8,000
</TABLE>
See notes to financial statements.
20
<PAGE> 21
ADVANCED PHOTONIX, INC.
NOTES TO FINANCIAL
STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS DESCRIPTION - Advanced Photonix, Inc. (the "Company"), 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.
The Company's large area avalanche photodiode ("LAAPD") technology is
still considered to be a new technology and is subject to risks inherent
in the development of products based on new technologies. These risks
include getting the invention out of the laboratory and into actual use
in the field and stepping up production from the prototype (early)
stages of manufacturing. In order to fund these development efforts, the
Company historically has relied upon proceeds from equity financings,
bank lines-of-credit and loans from stockholders. At March 26, 2000, no
amounts were outstanding under any bank line-of-credit and there were no
stockholder loans to the Company.
RECLASSIFICATIONS - Certain 1999 amounts have been reclassified in order
to conform with 2000 classifications.
FISCAL YEAR-END - The Company's fiscal year ends on the last Sunday in
March. Fiscal years in the two-year period ended March 26, 2000, each
contain fifty-two weeks.
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 headquarters in Camarillo, California.
In fiscal 2000, the Company had export sales of approximately $992,000
to customers in North America, Asia, Australia and Europe.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Based on borrowing rates currently
available to the Company for bank loans with similar terms and
maturities, the fair value of the Company's long-term debt approximates
the carrying value. Furthermore, the carrying value of all other
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 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 liquid portfolio to take advantage of investment
opportunities; therefore, all of the Company's short-term investments
are considered to be available-for-sale. The Company has
21
<PAGE> 22
classified all investments as current assets since it has the intent and
ability to redeem them within the year.
Available-for-sale securities are recorded at market value. Unrealized
holding gains and losses, net of the related income tax effect, on
available-for-sale securities are excluded from earnings and are
reported as a separate component of stockholders' 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.
Short-term investments consist of the following as of March 26, 2000:
<TABLE>
<CAPTION>
Unrealized
Fair Holding
Cost Value Gain/(Losses)
---------- ---------- -------------
<S> <C> <C> <C>
Corporate bonds and notes $ 665,000 $ 661,000 $ (4,000)
Corporate commercial paper 1,304,000 1,308,000 4,000
---------- ---------- ----------
TOTALS $1,969,000 $1,969,000 $ -0-
========== ========== ==========
</TABLE>
Maturities of short-term investments as of March 26, 2000 were as
follows:
<TABLE>
<CAPTION>
Fair
Cost Value
---------- ----------
<S> <C> <C>
Due within one year $1,721,000 $1,723,000
Due thereafter 248,000 246,000
---------- ----------
TOTALS $1,969,000 $1,969,000
========== ==========
</TABLE>
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 26, 2000, the Company had cash equivalents at a financial
institution in excess of Federally insured amounts. The Company invests
in short-term investments, primarily consisting of corporate commercial
paper with high-quality companies. Approximately 40% of the Company's
short-term investments are invested with one company. 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 26, 2000, one customer comprised 37% of
accounts receivable.
SIGNIFICANT CUSTOMER - During the fiscal years ended March 26, 2000 and
March 28, 1999 one customer accounted for 14% and 12%, respectively of
the Company's net sales.
22
<PAGE> 23
INVENTORIES - Inventories, which include material, labor and
manufacturing overhead are stated at the lower of cost (first in, first
out) or market.
Inventories consist of the following at March 26, 2000:
<TABLE>
<S> <C>
Raw material $ 511,000
Work-in-process 684,000
Finished products 322,000
----------
Total $1,517,000
==========
</TABLE>
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 five to eleven years.
Equipment and leasehold improvements consist of the following at March
26, 2000:
<TABLE>
<S> <C>
Machinery and equipment $2,604,000
Furniture and fixtures 93,000
Leasehold improvements 249,000
Data processing equipment 174,000
----------
Total $3,120,000
==========
</TABLE>
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 $4,000 and $3,000 in fiscal 2000 and 1999, respectively.
GOODWILL - The excess of cost over the purchase price of acquired net
assets is amortized on a straight-line basis over a 25 year period.
Amortization expense was $33,000 in fiscal 2000 and 1999. The Company
continually 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.
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.
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. To date, warranty costs have not
23
<PAGE> 24
been material.
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" (SFAS 128). Accordingly, "basic"
net income (loss) per share is computed by dividing net income (loss) by
the weighted average number of shares outstanding for each year
(11,025,000 and 10,916,000 at March 26, 2000 and March 28, 1999,
respectively). "Diluted" net income (loss) per share has not been
presented as the impact is anti-dilutive in 2000 and was not material in
1999.
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" ("SFAS 123"), 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,
"Accounting for Stock Issued to Employees" (APB 25) and complies with
the pro forma disclosure requirements of the new standard (see Note 4).
NEW ACCOUNTING PRONOUNCEMENTS - SFAS No. 130, "Reporting Comprehensive
Income", establishes standards for reporting and displaying
comprehensive income and its components in financial statements. The
Company adopted the provisions of SFAS No. 130 in 1998, but had no
elements of comprehensive income in 2000 or 1999.
SFAS No., 131, "Disclosures About Segments of an Enterprise and Related
Information", establishes a new model for segment reporting, called the
"management approach" and requires certain disclosures for each segment.
The Company adopted the provisions of SFAS No. 131 in 1998, but
currently operates in one industry segment.
2. 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
24
<PAGE> 25
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 $.001 per share. The number of
shares of Class A Preferred Stock issued and outstanding was 40,000 at
March 26, 2000. The Class A Preferred Stock has a liquidation preference
equal to its issue price ($.80 per share). The Class A Preferred Stock
is convertible at any time, at the option of the holder, into .3 shares
of Class B Common Stock for each share of 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 $32,000 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.
3. INCOME TAXES
At March 26, 2000, the Company had net operating loss carryforwards of
approximately $14.6 million for Federal tax purposes that expire at
various dates through fiscal year 2012. 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 26, 2000 are substantially
composed of the Company's net operating loss carryforwards, for which
the Company has made a full valuation allowance.
The valuation allowance decreased approximately $284,000 in the year
ended March 26, 2000, representing primarily net taxable income 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 provision for the years ended March 26, 2000 and March 28, 1999
are composed of Federal alternative minimum tax and California franchise
tax.
4. STOCK OPTIONS
The Company has three stock option plans: the 1990 Incentive Stock
Option and Non-Qualified Stock Option Plan, the 1991 Directors' Stock
Option Plan ("The Directors' Plan") and the 1997 Employee Stock Option
Plan. The Company measures compensation for these plans under APB
Opinion No. 25, under which no compensation cost has been recognized.
Had
25
<PAGE> 26
compensation expense for these plans been determined consistent with
SFAS No. 123, the Company's net loss and net loss per share would have
increased to the following pro forma amounts:
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Net income (loss), as reported $(653,000) $ 411,000
Net (loss) - pro forma $(956,000) $ (42,000)
Basic income (loss) per share, as reported $ (0.06) $ 0.04
Basic (loss) per share - pro forma $ (0.09) $ (0.00)
</TABLE>
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 2000 and 1999,
respectively: risk-free interest rates of 9.0% and 5.68%, expected
volatility of 75% and 69% and expected lives of 10 years in both
periods. No dividends were assumed in the calculations.
The Company's various stock option plans provide for the granting of
non-qualified and incentive stock options to purchase up to 2,200,000
shares of common stock for periods not to exceed 10 years. As of March
26, 2000, no shares were available for future grant under such plans.
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 the years ended March 26, 2000 and March
28, 1999 are summarized as follows:
<TABLE>
<CAPTION>
2000 1999
-------------------- --------------------
Weighted Weighted
Average Average
Shares Exercise Shares Exercise
(000) Price (000) Price
------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of year 2,466 $ 3.13 2,052 $ 3.67
Granted 620 .66 676 1.18
Exercised (1,147) 2.60 -- --
Cancelled (144) 2.81 (262) 2.12
------ ------ ------ ------
Outstanding, end of year 1,795 $ 2.62 2,466 $ 3.13
====== ====== ====== ======
Exercisable, end of year 653 $ 5.52 1,755 $ 3.81
====== ====== ====== ======
Weighted average fair value
of options granted $ 0.47 $ 0.94
====== ======
</TABLE>
26
<PAGE> 27
Information regarding stock options outstanding as of March 26, 2000 is
as follows
<TABLE>
<CAPTION>
Options Outstanding
----------------------------------------------------
Weighted Weighted Average
Average Remaining
Price Range Shares Exercise Price Contractual Life
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ .50 - $6.00 1,795,000 $2.62 6.3 years
</TABLE>
<TABLE>
<CAPTION>
Options Exercisable
--------------------------------------------------
Weighted Weighted
Average Average
Price Range Shares Exercise Price Remaining Life
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ .69 - $6.00 653,000 $5.52 1.6 years
</TABLE>
5. COMMITMENTS
The Company leases its manufacturing and office facility under a
non-cancelable operating lease. Approximate minimum future lease
payments under all non-cancelable operating leases expiring at various
dates through fiscal 2004, are as follows:
<TABLE>
<S> <C>
2001 $ 382,000
2002 390,000
2003 398,000
2004 405,000
----------
Total $1,575,000
==========
</TABLE>
Rent expense was approximately $361,000 and $279,000 in fiscal 2000 and
1999, respectively.
6. 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.
7. 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
27
<PAGE> 28
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 recognized as expense were
approximately $81,000 and $62,000 in fiscal 2000 and 1999, respectively.
8. FOURTH QUARTER ADJUSTMENT
The Company recorded an adjustment in the fourth quarter of fiscal 2000
to reduce inventories approximately $412,000, to properly reflect the
cost of raw materials and valuation of inventories. The effect on
previously reported quarterly earnings is as follows:
<TABLE>
<CAPTION>
Quarter Ended
June 27, 1999
-------------
<S> <C>
NET LOSS:
As previously reported $ (155,000)
As restated $ (343,000)
BASIC LOSS PER SHARE:
As previously reported $ (0.01)
As restated $ (0.03)
</TABLE>
28
<PAGE> 29
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On March 24, 2000, the Board of Directors decided to change independent
accountants and voted to replace Arthur Andersen LLP with Farber & Hass LLP as
the Company's independent auditor. In connection with its audits for the two
most recent fiscal years, there have been no disagreements between the Company
and Arthur Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure. In addition, the
reports of Arthur Andersen LLP on the Company's financial statements contained
no adverse opinions or disclaimers and were not qualified or modified as to
uncertainty, audit scope or accounting principle.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information relating to the directors and officers of
the Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Hayden Leason 69 Chairman of the Board
Brock Koren 36 President and Chief Executive Officer
M. Scott Farese 43 Director
Richard D. Kurtz 48 Director
Stephen P. Soltwedel 53 Director
Susan A. Schmidt 34 Director of Finance and Chief Financial Officer
Paul Sharman 42 Vice President, Operations
</TABLE>
Hayden Leason, Chairman of the Board
Mr. Leason became a director of the Company in July 1995. He served as Chairman
of the Board from October 1996 until October 1997 and as Chief Executive Officer
from November 1996 until October 1997. In October 1999, Mr. Leason was again
appointed Chairman of the Board and is presently serving in that capacity. In
1965, Mr. Leason founded Filtertek Inc., a designer and manufacturer of
specialty filtration elements, which subsequently became a New York Stock
Exchange listed company. He served as Chairman and Chief Executive Officer until
1992 when he sold his interest to Schawk Inc. Since 1992, Mr. Leason has managed
various private investments. Mr. Leason is a 1954 graduate of Northwestern
University where he received his Bachelor of Science degree in Business
Administration.
Brock Koren, President and Chief Executive Officer
Mr. Koren joined the Company in July 1998 and was promoted from Vice President,
Sales and Marketing to President and Chief Executive Officer in October 1999.
From 1992 until 1998, he was a regional sales engineer responsible for technical
sales in Southern California of all Hamamatsu photonic products including
Photomultiplier Tubes. Hamamatsu is a leading manufacturer of devices for
generation and measurement of infrared, visible, and ultraviolet light, and is
the largest manufacturer of PMTs in the world. From 1989 until 1992, he was a
sales engineer/account manager for Tektronix, Inc., a $2.1 billion global
high-technology company based on a portfolio of measurement, color printing and
video and networking businesses. Mr Koren received his Bachelor of Science
Degree in Electrical Engineering from California State University, Long Beach,
California.
29
<PAGE> 30
M. Scott Farese, Director
Mr. Farese became a director of the Company in August 1998. He is currently a
Regional Sales Manager for Filtertek Inc. Mr. Farese joined Filtertek in 1991.
Filtertek is the largest worldwide producer of custom filtration products and
fluid control devices and the world's largest manufacturer of custom molded
filter elements. Filtertek is a subsidiary of ESCO Electronics Corporation. Mr.
Hayden Leason, Chairman of the Board, founded Filtertek which he sold in 1992 to
Schawk Inc. Mr. Farese is the son-in-law of Mr. Leason.
Richard D. Kurtz, Director
Mr.Kurtz became a director of the Company in February 2000. He is currently Vice
President Sales and Marketing for Filtertek Inc. in Hebron, IL. Mr. Kurtz joined
Filtertek in 1988 as a Sales Engineer and was subsequently promoted to
Automotive Sales Manager before assuming his present responsibilities. Prior to
joining Filtertek, Mr. Kurtz held the position of New Products Marketing
Specialist for Amstar Technical Products Group in Jackson, MI. Mr. Kurtz
received his Bachelor of Arts degree in Economics from Michigan State University
and his Master of Business Administration degree from Eastern Michigan
University.
Stephen P. Soltwedel, Director
Mr. Soltwedel became a director of the Company in February 2000. He is currently
Vice President and Chief Financial Officer of Filtertek Inc. Mr. Soltwedel
joined Filtertek in 1972 and was elected Vice President, Secretary and Treasurer
of Filtertek Inc. and its sister corporation, Filtertek de Puerto Rico, Inc. in
1979. Mr Soltwedel held those positions during the time Filtertek Inc. was a
public company, until 1992, when controlling interest in Filtertek was sold to
Schawk Inc., and he was elected Vice President and Chief Financial Officer of
Filtertek Inc., a wholly owned subsidiary of ESCO Electronics. Prior to joining
Filtertek, Mr. Soltwedel was employed by the public accounting firm of Baillies
Denson Erickson & Smith in Lake Geneva, WI. Mr. Soltwedel holds a bachelor's
degree in accounting from Madison Business College.
Susan A. Schmidt, Director of Finance and Chief Financial Officer
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 is a New York-based promoter and producer of live entertainment events. Ms.
Schmidt held financial responsibilities for two southern California
amphitheaters operated by SFX. From 1992 to 1997 she was Controller for Revchem
Plastics, Inc., a full-line distribution company serving the reinforced plastics
industry, and Durall Plastics,Inc., Revchem Plastics Inc.'s sister manufacturing
company in Rialto, CA. Previously, Ms. Schmidt held financial management
positions with Qwik Blinds, Inc. and Marriott Corporation. Ms. Schmidt received
her Bachelor of Science degree in Business Administration-Accounting from
California State University, San Bernardino.
Paul Sharman, Vice President Operations
Mr. Sharman joined API in June 1990. Mr. Sharman started in the Quality
department and has held the positions of Director of Quality and Reliability,
Director of Operations, and in March 2000, he was promoted to Vice President of
Operations. Prior to joining API, Mr. Sharman was Senior Quality Engineer for
Britax UK. He has also served two years lecturing on statistical analysis at
South Downs College UK. During that period, Mr. Sharman wrote and administered
courses in applied statistical analysis. Mr. Sharman holds an HND in Mechanical
engineering from the Rotherham College of Technology and an IQAD in Quality
Assurance from South Downs College.
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
30
<PAGE> 31
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 Sharman to report initial ownership
of securities upon being appointed to an executive office in March 2000, which
was reported on Form 5 in May 2000; the late filing of a Form 4 by Hayden Leason
to report a March 2000 exercise of stock options and sale of stock, which Form 4
was filed in May 2000; and the late filing of a Form 5 by M. Scott Farese to
report a January 2000 option grant and a February 2000 exercise of stock options
and sale of stock, which Form 5 was filed in May 2000.
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
$100,000 for services rendered during the last two fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------------------ ----------------------- --------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($) ($)(1)
--------------------------- -------- -------- -------- ------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hayden Leason 2000 -- -- -- -- -- -- --
Chairman of the Board and 1999 -- -- -- -- -- -- --
Chief Executive Officer(2) 1998 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Brock Koren 2000 175,000 12,500 -- -- 200,000 -- 8,600
President and Chief 1999 135,000 -- -- -- 100,000 -- 5,300
Executive Officer 1998 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Harry Melkonian, 2000 150,000 -- -- -- -- -- 4,500
Chairman of the Board, 1999 150,000 20,600 -- -- 200,000 -- 4,500
President and Chief 1998 150,000 40,000 -- -- -- -- 4,700
Executive Officer(3)
----------------------------------------------------------------------------------------------------------------------------------
Patrick J. Holmes 2000 125,000 -- -- -- 100,000 -- 8,600
Executive Vice 1999 125,000 9,400 -- -- 50,000 -- 8,600
President, CFO, 1998 125,000 15,000 -- -- -- -- 3,900
Secretary and Treasurer(4)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Represents amounts paid by the Company on behalf of the named person in
connection with the Company's 401(k) Retirement Plan, vacation pay and car
allowance.
2 Mr. Leason resigned as Chairman of the Board and Chief Executive Officer in
October 1997, and was re-elected as Chairman of the Board in October 1999.
Options granted as part of plans provided to outside directors of the
Company have been excluded from the table (0 in 2000 and 1,000 in 1999).
3 Mr. Melkonian was elected Chief Executive Officer in October, 1997, and
Chairman of the Board in April 1998, and resigned from the Company in
October 1999. Compensation continued under employment agreement.
4 Mr. Holmes was employed by the Company through March 2000. Compensation
continued under employment agreement.
Employment Agreements
The Company has employment and termination agreements with certain employees,
under which the employees may receive severance pay through the end of the term
of the contract or up to twelve months. Total compensation under these
agreements in the event of employment through the full term would be
approximately $175,000 and $135,000 for fiscal years ending 2001 and 2002,
respectively.
Stock Options
The following table sets forth certain information concerning stock options
granted to the persons named in the Summary Compensation Table during the last
fiscal year and unexercised stock options held by such persons at the end of
such fiscal year.
31
<PAGE> 32
OPTION GRANTS IN FISCAL 2000
Individual Grants
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Granted in Fiscal Base Price Expiration
Name(1) (#) Year ($/Sh) Date
--------------------------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Hayden Leason -- -- -- --
Brock Koren 200,000 32% $.563 / $.75(2) 11/11/09
Harry Melkonian -- -- -- --
Patrick J. Holmes 100,000 16% $.563 / $.75(3) 11/11/09
</TABLE>
1 See "Summary Compensation Table" and Item 9 "Directors and Executive
Officers" for principal position.
2 Options granted in two lots of 100,000 each, having exercise prices of $.563
per share and $.75 per share, respectively.
3 Options granted in two lots of 50,000 each, having exercise prices of $.563
per share and $.75 per share, respectively.
The following tables set forth certain information concerning stock options
granted to and exercised by the persons named in the Summary Compensation Table
during the last fiscal year and unexercised stock options held by such persons
at the end of such fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Shares
Acquired Number of Securities Value of Unexercised In-
on Underlying Unexercised Options the-Money Options at
Exercise Value at Fiscal Year End (#) Fiscal Year End ($)
Name(1) (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
----------------- ---------- ---------- ------------------------------ -------------------------
<S> <C> <C> <C> <C>
Hayden Leason 35,500 $ 490,000 -/500 -/$3,100
Brock Koren 25,000 $ 193,000 -/275,000 -/-
Harry Melkonian -- -- -/- -/-
Patrick J. Holmes 156,000 1,372,000 144,000/- $834,000/-
</TABLE>
1 See "Summary Compensation Table" and Item 9 "Directors and Executive
Officers" for principal position.
Compensation of Directors
In October 1995, the Board of Directors eliminated the accrual or payment of all
fees including all annual fees, meeting fees and any payment for services as the
Chairman or Member of any Committee of the Board of Directors except for
reasonable travel expenses. In March 2000, the Board of Directors voted to
re-establish a directors' fee in the amount of $2,500, payable to each director,
for each meeting attended. The fee is paid to each non-employee director, with
the exception of Hayden Leason, Chairman of the Board, who has voluntarily
waived his fee. 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 eligible for grants of stock
options upon their appointment to the Board of Directors under the 1991 Special
Directors Stock Option Plan and on an annual basis so long as they remain on the
Board. In January 1998, the Board reinstated participation in the 1991 Special
Directors Stock Option Plan, which had also been suspended in October 1995,
other than initial grants for new directors. Directors who are also officers of
the Company or its affiliates 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 March 26, 2000, 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
32
<PAGE> 33
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. The outstanding
Class B Common Stock represents only 0.3% of the total outstanding shares.
<TABLE>
<CAPTION>
Class A Common Stock
----------------------------------------
Shares Under
Shares Exercisable Percent
Owned Options/Warrants(1) Voting(2)
-------- ------------------- --------
<S> <C> <C> <C>
James A. Delaney III(3) 632,800 -- 5.0
Patrick J. Holmes -- 144,000 1.2
Brock Koren(4) -- 40,000 .3
Paul Sharman(4) -- 20,400 .2
Hayden Leason(5) 10,500 -- --
M. Scott Farese(6) 10,500 -- --
Susan A. Schmidt(4) 500 -- --
Richard A. Kurtz(4) -- -- --
Harry Melkonian -- -- --
Stephen P. Soltwedel(4) -- -- --
Directors & Officers as a Group 11,000 204,400 1.8
</TABLE>
1 Includes shares under options exercisable on March 26, 2000 and options
which become exercisable within 60 days thereafter.
2 Represents combined voting power of both Class A and Class B Common Stock,
assuming beneficial owner exercises all exercisable options and warrants.
None of the named beneficial owners owned Class B Common Stock and there are
no Class B derivatives outstanding
3 The address of this shareholder is 633 Ardsley Road, Winnetka, IL 60093
4 The address of this shareholder is c/o Advanced Photonix, Inc. 1240 Avenida
Acaso, Camarillo, CA 93012.
5 The address of this shareholder is c/o Advanced Photonix, Inc. 1240 Avenida
Acaso, Camarillo, CA 93012. Includes 10,000 shares owned by Mr. Farese (see
footnote 6). Mr. Farese is the son-in-law of Mr. Leason.
6 The address of this shareholder is c/o Advanced Photonix, Inc. 1240 Avenida
Acaso, Camarillo, CA 93012. Includes 500 shares owned by Mr. Leason (see
footnote 5). Mr. Farese is the son-in-law of Mr. Leason.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Item 10. Executive Compensation.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following is a list of the financial statement 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.
33
<PAGE> 34
(3) Reports on Form 8-K: The Company filed form 8-K, dated March 24, 2000,
indicating a change in independent accountants from Arthur Andersen
LLP to Farber & Hass LLP.
(4) Exhibits:
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
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 - incorporated by reference to
the Registrant's March 31, 1996 Annual Report on Form 10-K
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 Employment Agreement dated June 1, 1998, between Advanced Photonix,
Inc. and Patrick J. Holmes - incorporated by reference to Exhibit
10.5 to the Registrant's March 29, 1998 Annual Report on Form 10-K
10.5.1 Employment Agreement dated January 1, 2000, between Advanced
Photonix, Inc. and Patrick J. Holmes
10.6 Employment Agreement dated June 1, 1998, between Advanced Photonix,
Inc. and Harry Melkonian - incorporated by reference to Exhibit 10.6
to the Registrant's March 29, 1998 Annual Report on Form 10-K
10.7 Form of Non-Qualified Stock Option granted to Advanced Detectors,
Inc., formerly Xsirius, Inc. - incorporated by reference to Exhibit
10.13 to Amendment No. 3 to the Registrant's Registration Statement
on Form S-1, filed with the Securities and Exchange Commission on
February 11, 1991
10.8 Employment Agreement dated January 1, 2000, between Advanced
Photonix, Inc. and Brock Koren
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
</TABLE>
34
<PAGE> 35
<TABLE>
<S> <C>
10.10.1 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
16 Notice of Change in Certifying Accountants - incorporated by
reference to the Registrant's March 24, 2000 8-K filing
21 List of Subsidiaries of Registrant - incorporated by reference to
Exhibit 22 to the Registrant's March 31, 1993 Annual Report on Form
10-K
23.1 Consent of Arthur Andersen LLP, independent public accountants
23.2 Consent of Farber & Hass LLP, independent public accountants
</TABLE>
* Constitutes a compensation plan or arrangement required to be filed as part of
this report.
35
<PAGE> 36
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/ BROCK KOREN
-------------------------------------
Brock Koren, President &
Date: June 22, 2000 Chief Executive Officer
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ HAYDEN LEASON Chairman of the Board June 22, 2000
----------------------------
Hayden Leason
/s/ BROCK KOREN President and Chief Executive Officer June 22, 2000
----------------------------
Brock Koren
/s/ M. SCOTT FARESE Director June 22, 2000
----------------------------
M. Scott Farese
/s/ RICHARD D. KURTZ Director June 22, 2000
----------------------------
Richard D. Kurtz
/s/ STEPHEN P. SOLTWEDEL Director June 22, 2000
----------------------------
Stephen P. Soltwedel
/s/ SUSAN A. SCHMIDT Director of Finance and Chief Financial June 22, 2000
---------------------------- Officer
Susan A. Schmidt (Principal Financial and Accounting Officer)
</TABLE>
36
<PAGE> 37
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
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 - incorporated by reference to
the Registrant's March 31, 1996 Annual Report on Form 10-K
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 Employment Agreement dated June 1, 1998, between Advanced Photonix,
Inc. and Patrick J. Holmes - incorporated by reference to Exhibit
10.5 to the Registrant's March 29, 1998 Annual Report on Form 10-K
10.5.1 Employment Agreement dated January 1, 2000, between Advanced
Photonix, Inc. and Patrick J. Holmes
10.6 Employment Agreement dated June 1, 1998, between Advanced Photonix,
Inc. and Harry Melkonian - incorporated by reference to Exhibit 10.6
to the Registrant's March 29, 1998 Annual Report on Form 10-K
10.7 Form of Non-Qualified Stock Option granted to Advanced Detectors,
Inc., formerly Xsirius, Inc. - incorporated by reference to Exhibit
10.13 to Amendment No. 3 to the Registrant's Registration Statement
on Form S-1, filed with the Securities and Exchange Commission on
February 11, 1991
10.8 Employment Agreement dated January 1, 2000, between Advanced
Photonix, Inc. and Brock Koren
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
10.10.1 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
16 Notice of Change in Certifying Accountants - incorporated by
reference to the Registrant's March 24, 2000 8-K filing
21 List of Subsidiaries of Registrant - incorporated by reference to
Exhibit 22 to the Registrant's March 31, 1993 Annual Report on Form
10-K
23.1 Consent of Arthur Andersen LLP, independent public accountants
23.2 Consent of Farber & Hass LLP, independent public accountants
</TABLE>
