UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file no. 1-11056
ADVANCED PHOTONIX, INC.
Incorporated pursuant to the Laws of Delaware
IRS Employer Identification No. 33-0325826
1240 Avenida Acaso, Camarillo, CA 93012
(805) 987-0146
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 [ ]
On November 3, 2000, 12,199,648 shares of Class A Common Stock, $.001 par value,
and 31,691 shares of Class B Common Stock, $.001 par value, were outstanding.
<PAGE>
ADVANCED PHOTONIX, INC.
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3 - 6
Balance Sheet at September 24, 2000 3 - 4
Statements of Operations for the three
and six month periods ended September 24, 2000 5
and September 26, 1999
Statements of Cash Flows for the six month
periods ended September 24, 2000 and 6
September 26, 1999
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 8 - 9
PART II OTHER INFORMATION 10
SIGNATURES 11
2
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<TABLE>
ADVANCED PHOTONIX, INC.
BALANCE SHEET
(UNAUDITED)
<CAPTION>
At September 24, 2000
--------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,524,000
Short-term investments 3,550,000
Accounts receivable, less allowance of $5,000 1,019,000
Inventories 1,682,000
Prepaid expenses and other current assets 500,000
-----------------------
Total Current Assets 8,275,000
-----------------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost 3,158,000
Less accumulated depreciation and amortization (2,709,000)
-----------------------
Total Equipment and Leasehold Improvements 449,000
-----------------------
OTHER ASSETS
Goodwill, net of accumulated amortization of $303,000 533,000
Patents, net of accumulated amortization of $37,000 64,000
Other 24,000
-----------------------
Total Other Assets 621,000
-----------------------
TOTAL ASSETS $ 9,345,000
=======================
</TABLE>
See notes to financial statements.
3
<PAGE>
<TABLE>
ADVANCED PHOTONIX, INC.
BALANCE SHEET
(UNAUDITED)
<CAPTION>
At September 24, 2000
--------------------------------------------------------------------------------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 157,000
Accrued expenses:
Salaries and employee benefits 232,000
Warranty 17,000
Other 13,000
-----------------------
Total Current Liabilities 419,000
-----------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Convertible Preferred Stock at redemption value; 32,000
authorized 10,000,000 shares;
40,000 shares issued and outstanding
Class A Common Stock, par value $.001 per share; 12,000
authorized 50,000,000 shares;
12,199,648 shares issued and outstanding
Class B Common Stock, par value $.001 per share; -
authorized 4,420,113 shares;
31,691 shares issued and outstanding
Additional paid-in capital 26,568,000
Accumulated Deficit (17,686,000)
-----------------------
Total Stockholders' Equity 8,926,000
-----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,345,000
=======================
</TABLE>
See notes to financial statements.
4
<PAGE>
<TABLE>
ADVANCED PHOTONIX, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------------------- ---------------------------------------------
September 24, 2000 September 26,1999 September 24, 2000 September 26,1999
---------------------- ---------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
NET SALES $1,768,000 $1,608,000 $3,431,000 $3,128,000
Cost of sales 1,138,000 1,148,000 2,100,000 2,182,000
---------------------- ---------------------- ---------------------- ---------------------
GROSS PROFIT 630,000 460,000 1,331,000 946,000
OPERATING COSTS & EXPENSES:
Research and development 126,000 239,000 235,000 402,000
Marketing and sales 246,000 259,000 472,000 512,000
General and administrative 301,000 433,000 547,000 682,000
---------------------- ---------------------- ---------------------- ---------------------
673,000 931,000 1,254,000 1,596,000
---------------------- ---------------------- ---------------------- ---------------------
OPERATING INCOME (LOSS) (43,000) (471,000) 77,000 (650,000)
---------------------- ---------------------- ---------------------- ---------------------
OTHER INCOME
Interest income 72,000 27,000 146,000 53,000
Other, net (4,000) 1,000 (4,000) (1,000)
---------------------- ---------------------- ---------------------- ---------------------
TOTAL OTHER INCOME 68,000 28,000 142,000 52,000
---------------------- ---------------------- ---------------------- ---------------------
NET INCOME (LOSS) $ 25,000 $ (443,000) $ 219,000 $ (598,000)
====================== ====================== ====================== =====================
Basic and Diluted Earnings (Loss)
Per Share $ .00 $ (.04) $ .02 $ (.05)
====================== ====================== ====================== =====================
Weighted Average Number
of Common Shares Outstanding 12,223,000 10,917,000 12,154,000 10,917,000
====================== ====================== ====================== =====================
</TABLE>
See notes to financial statements.
5
<PAGE>
<TABLE>
ADVANCED PHOTONIX, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the six month period ended September 24, 2000 September 26, 1999
----------------------------------------------------------------------------- -------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 219,000 $ (598,000)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation 113,000 124,000
Amortization 21,000 19,000
Changes in assets and liabilities:
Short-term investments (1,581,000) 1,133,000
Accounts receivable 157,000 174,000
Inventories (165,000) (22,000)
Prepaid expenses and other assets (392,000) 20,000
Accounts payable and accrued expenses (267,000) 180,000
--------------------- ---------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,895,000) 1,030,000
--------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (38,000) (103,000)
--------------------- ---------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (38,000) (103,000)
--------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 148,000 -
--------------------- ---------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 148,000 -
--------------------- ---------------------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS (1,785,000) 927,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,309,000 664,000
--------------------- ---------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,524,000 $ 1,591,000
===================== =====================
</TABLE>
See notes to financial statements.
6
<PAGE>
ADVANCED PHOTONIX, INC.
NOTES TO FINANCIAL STATEMENTS
September 24, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X and Regulation S-B. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
have been included. Operating results for the six month period ended September
24, 2000, are not necessarily indicative of the results that may be expected for
the fiscal year ending March 25, 2001. For further information, refer to the
financial statements and notes thereto included in the Advanced Photonix, Inc.
Annual Report on Form 10-KSB for the fiscal year ended March 26, 2000.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Income (Loss) Per Share: Net income (loss) per share is based on the
weighted average number of common shares outstanding. Net income (loss) per
share calculations are in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share". Accordingly, "basic" net
income (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares outstanding for the period. "Diluted" net
income (loss) per share has not been presented as the impact is either not
material or anti-dilutive.
Inventories: Inventories at September 24, 2000 consist of the following:
Raw materials $ 575,000
Work in progress 736,000
Finished products 371,000
--------------------
$ 1,682,000
====================
7
<PAGE>
Item 2. Management's Discussion and Analysis
RESULTS OF OPERATIONS
The Company's net sales for the second quarter ("Q2 01") and six month period
("YTD 01") ended September 24, 2000, were $1.8 million and $3.4 million,
respectively. Net Sales for the Q2 01 and YTD 01 period were up 10% for both
periods, when compared to $1.6 million and $3.1 million in the comparable
periods of the prior year ("Q2 00" and "YTD 00"). The increase in net sales was
primarily due to higher volume in military aerospace and industrial sensing
products which increased by approximately 36% for Q2 01 and 23% for YTD 01 when
compared to the same periods in the prior year.
Cost of sales decreased by $10,000 (1%) during Q2 01 and by $82,000 (4%) during
YTD 01 compared to Q2 00 and YTD 00, respectively. Gross profit increased by 7
percentage points in Q2 01 compared to Q2 00 and by 9 percentage points in YTD
01 compared to YTD 00 due to a number of factors, including greater efficiencies
associated with higher sales volume and an increase in engineering design
revenues, which utilize existing staffing and labor and have lower material
costs.
Research and development costs have continued to decrease in FY 01 as compared
to FY 00, due primarily to a reduction in staffing as well as general cost
cutting efforts. In Q2 01, research and development costs were $126,000, a
decrease of $113,000 or 47% as compared to Q2 00. Research and development costs
for the YTD 01 period were $235,000, a decrease of $167,000 or 42% when compared
to YTD 00. While the Company believes that the development and initial
commercialization of its LAAPD technology has been completed and has reduced
overall expenditures for research and development, it continues development of
other derivatives of the base technology. R&D costs have fluctuated
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 expenses decreased by $13,000 (5%) to $246,000 in Q2 01
compared to Q2 00 and by $40,000 (8%) to $472,000 in YTD 01 compared to YTD 00.
The YTD decrease is attributable to a decrease in staffing, due to a management
restructuring which occurred in Q3 00, and is partially offset by overall
increases in advertising and marketing expenses. The Company continues to focus
on its plan of increased print media advertising and trade show attendance and
does not anticipate any notable fluctuations in marketing and sales expenses for
the remainder of the year.
General and administrative expenses decreased by $132,000 (30%) to $301,000 in
Q2 01 compared to Q2 00 and by $135,000 (20%) to $547,000 in YTD 01 compared to
YTD 00. The decrease was primarily due to a one time expense of severance costs
associated with a management change in Q2 00, which increased overall general
and administrative expenses for that period. Excluding the impact of severance
costs, general and administrative expenses increased by $48,000 (19%) and
$45,000 (9%) in Q2 01 and YTD 01, respectively, when compared to the same
periods of the prior year. The increase was primarily due to much higher costs
associated with the Company's annual proxy statement and mailing. The number of
8
<PAGE>
shareholders requiring proxy information in FY 01 represented approximately 800%
of the number requiring information in FY 00. The Company does not anticipate
any notable fluctuations in general and administrative expenses for the
remainder of the year, except for those expenses which may arise as a result of
the Company's investigation of potential acquisitions.
Interest income in Q2 01 was $72,000, or $45,000 higher than Q2 00. Interest
income for YTD 01 was $146,000, or $93,000 higher than the same period in the
prior year. The increase in interest income is due to substantially higher cash
reserves available for investment over the prior year, due to the high volume of
stock options exercised during Q4 00.
Net income for Q2 01 was $25,000, or $468,000 higher than the net loss of
($443,000) in Q2 00. YTD 01 net income of $219,000 is $817,000 higher than the
net loss of ($598,000) reported for the same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
At September 24, 2000, the Company had cash, cash equivalents and short-term
investments of $5.1 million and working capital of $7.9 million. The Company's
cash, cash equivalents and short-term investments decreased by $204,000 during
the six months ended September 24, 2000. $148,000 was obtained through the
exercise of stock options. $314,000 was used for operating activities (before
cash provided by short-term investments). $38,000 was used for capital
equipment, compared to $103,000 during the comparable period of the prior year.
The Company anticipates that cash outlays for capital items will increase during
the remainder of the year, as plans to purchase additional machinery and
computer equipment upgrades are scheduled throughout the remainder of fiscal
2001, amounting to approximately $210,000.
Prepaid expenses and other current assets increased by $431,000 to $500,000 for
the current period, as compared to the same period of the prior year. Of that
amount, approximately $406,000 represents costs incurred by the Company in
connection with the examination of a possible business combination with Jenner
Biotherapies, Inc.. The investigation is continuing and the costs incurred in
connection with the potential transaction will be expensed if the deal is not
consummated.
The Company previously maintained a 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, which expired during fiscal year 2000.
Based on current projections and available cash reserves, the Company does not
foresee an immediate need for borrowing and has therefore 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 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.
9
<PAGE>
FORWARD LOOKING STATEMENTS
The information contained herein includes forward looking statements that are
based on assumptions that management believes to be reasonable but are subject
to inherent uncertainties and risks including, but not limited to, 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), the availability of other
competing technologies and a decline in the general demand for optoelectronic
products.
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders:
----------------------------------------------------
The Company's Annual Stockholders Meeting was held on August 25, 2000.
1. The following persons were re-elected to the Company's Board of
Directors to serve until the next Annual Meeting of Stockholders and until their
respective successors have been duly elected and qualified.
FOR WITHHELD
------------------ -------------------
Richard D. Kurtz 10,473,642 241,887
Brock Koren 10,495,400 220,129
M. Scott Farese 10,506,553 209,076
Stephen P. Soltwedel 10,503,185 212,344
2. Proposal to approve the Advanced Photonix, Inc. 2000 Stock Option Plan
FOR: 1,225,329 AGAINST: 530,817 WITHHELD: 25,385 NOT VOTED: 8,933,998
Item 5 Other Information
(a) In accordance with the requirements of Rule 14a-4(c) promulgated under
the Securities Exchange Act of 1934 (the "Exchange Act"), in order for
shareholder proposals submitted outside Rule 14a-8 (which includes
proposals that the regulations under the Exchange Act generally do not
require to be included in the Company's definitive proxy statement for
its annual meeting of shareholders) to be timely for purposes of the
Company's 2001 Annual Meeting of Shareholders within the meaning of
Rule 14a-4(c) under the Exchange Act, such proposals must be received
by the Company no later than the close of business on April 20, 2001.
10
<PAGE>
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements 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.
-------------------------------
(Registrant)
Date: November 6, 2000 /s/ Susan A. Schmidt
---------------- -------------------------------
Susan A. Schmidt
Chief Financial Officer and Secretary
/s/ Brock Koren
-------------------------------
Brock Koren
President & Chief Executive Officer
11
