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 December 29, 2002
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 February 7, 2003, 13,243,648 shares of Class A Common Stock, $.001 par value,
and 31,691 shares of Class B Common Stock, $.001 par value, were outstanding.
ADVANCED PHOTONIX, INC.
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet at December 29, 2002 3 - 4
Statements of Operations for the three and nine month periods ended
December 29, 2002 and December 23, 2001 5
Statements of Cash Flows for the nine month periods ended
December 29, 2002 and December 23, 2001 6
Notes to Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis 11 - 14
Item 3. Controls and Procedures 14
PART II OTHER INFORMATION 15
SIGNATURES 15
-2-
ADVANCED PHOTONIX, INC.
CONSOLIDATED BALANCE SHEET
AT DECEMBER 29, 2002
(UNAUDITED)
---------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,224,000
Short-term investments 1,002,000
Accounts receivable, less allowance of $72,000 1,685,000
Inventories 2,779,000
Prepaid expenses and other current assets 315,000
-----------------------------
Total Current Assets 7,005,000
-----------------------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost 4,366,000
Less accumulated depreciation and amortization (3,193,000)
-----------------------------
Total Equipment and Leasehold Improvements 1,173,000
-----------------------------
OTHER ASSETS
Goodwill, net of accumulated amortization of $353,000 963,000
Patents, net of accumulated amortization of $43,000 20,000
Other 157,000
-----------------------------
Total Other Assets 1,140,000
-----------------------------
TOTAL ASSETS $ 9,318,000
=============================
See notes to consolidated financial statements.
-3-
ADVANCED PHOTONIX, INC.
CONSOLIDATED BALANCE SHEET
AT DECEMBER 29, 2002
(UNAUDITED)
----------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 606,000
Accrued expenses:
Salaries and employee benefits 245,000
Other 8,000
---------------------------
Total Current Liabilities 859,000
---------------------------
COMMITMENTS AND CONTINGENCIES
Class A redeemable convertible preferred stock, $.001 par value; 780,000 32,000
shares authorized; 40,000 shares issued and outstanding
SHAREHOLDERS' EQUITY
Preferred stock, $.001 par value; 10,000,000 shares authorized;
780,000 shares designated Class a redeemable convertible; --
no shares issued and outstanding
Class A common stock, $.001 par value; 50,000,000 shares authorized; 12,000
12,219,648 shares issued and outstanding
Class B common stock, $.001 par value; 4,420,113 shares authorized; --
31,691 shares issued and outstanding
Additional paid-in capital 26,586,000
Accumulated Deficit (18,171,000)
---------------------------
Total Shareholders' Equity 8,459,000
---------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,318,000
===========================
See notes to consolidated financial statements.
-4-
ADVANCED PHOTONIX, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
---------------------------------------------- ----------------------------------------------
December 29, 2002 December 23, 2001 December 29, 2002 December 23, 2001
---------------------- ---------------------- ---------------------- ----------------------
SALES $2,603,000 $1,629,000 $5,989,000 $5,268,000
Cost of goods sold 1,737,000 975,000 3,961,000 2,993,000
---------------------- ---------------------- ---------------------- ----------------------
GROSS PROFIT 866,000 654,000 2,028,000 2,275,000
Research and development expenses 107,000 102,000 392,000 356,000
Marketing and sales expenses 271,000 220,000 728,000 690,000
General and administrative expenses 454,000 282,000 1,175,000 837,000
Acquisition investigation expenses -- (14,000) -- 616,000
---------------------- ---------------------- ---------------------- ----------------------
INCOME (LOSS) FROM OPERATIONS 34,000 64,000 (267,000) (224,000)
---------------------- ---------------------- ---------------------- ----------------------
OTHER INCOME
Interest income 20,000 34,000 68,000 171,000
Other, net 7,000 -- 5,000 (2,000)
---------------------- ---------------------- ---------------------- ----------------------
TOTAL OTHER INCOME 27,000 34,000 73,000 169,000
---------------------- ---------------------- ---------------------- ----------------------
NET INCOME (LOSS) $ 61,000 $ 98,000 $ (194,000) $ (55,000)
====================== ====================== ====================== ======================
Basic and Diluted Earnings (Loss) $ .00 $ .01 $ (.02) $ (.00)
Per Share
Weighted Average Number 12,251,000 12,243,000 12,250,000 12,241,000
of Common Shares Outstanding
See notes to consolidated financial statements.
-5-
ADVANCED PHOTONIX, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine month period ended December 29, 2002 December 23, 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($ 194,000) ($ 55,000)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation 173,000 151,000
Amortization 28,000 25,000
Write off of prepaid acquisition costs, net of $200,000 cash expended -- 430,000
Provision for Doubtful Accounts 35,000 --
Provision for Obsolete Inventory 68,000 --
Changes in assets and liabilities:
Short-term investments -- 1,082,000
Accounts receivable (109,000) 39,000
Inventories 278,000 (583,000)
Prepaid expenses and other current assets (114,000) --
Other assets (233,000) --
Accounts payable and accrued expenses 39,000 (83,000)
------------------------ -----------------------
Net cash provided by (used by) operating activities (29,000) 1,006,000
------------------------ -----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (41,000) (407,000)
Purchase of selected net assets of Silicon Sensors, LLC (1,799,000) --
------------------------ -----------------------
Net cash used by investing activities (1,840,000) (407,000)
------------------------ -----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock options 5,000 --
Proceeds from exercise of stock options 5,000 3,000
------------------------ -----------------------
Net cash provided by financing activities 10,000 3,000
------------------------ -----------------------
NET INCREASE IN CASH & CASH EQUIVALENTS (1,859,000) 602,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,083,000 3,907,000
------------------------ -----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,224,000 $ 4,509,000
======================== =======================
See notes to consolidated financial statements.
-6-
ADVANCED PHOTONIX, INC.
NOTES TO FINANCIAL STATEMENTS
December 29, 2002
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Advanced Photonix, Inc. ("the Company") and the Company's wholly
owned subsidiary, Silicon Sensors Inc. ("SSI") (See Note 2). These consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial information and
with the instructions to Form 10-QSB and Article 10 of Regulation S-X and
Regulation S-B. All significant intercompany accounts and transactions have been
eliminated in consolidation. 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 three and nine month periods ended
December 29, 2002 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 30, 2003. 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 31,
2002.
NOTE 2 - ACQUISITION
On August 21, 2002, SSI, a newly formed wholly owned subsidiary of API purchased
substantially all of the assets and selected liabilities of Silicon Sensors LLC,
a closely held manufacturer of opto-electronic semiconductor based components
located in Dodgeville, Wisconsin. The final purchase price was $1,718,675 in
cash plus the assumption of the Seller's trade accounts payable and accrued
liabilities, amounting to approx. $282,000. The Company incurred $79,000 of
expenses in connection with this acquisition. In addition, the Company entered
into a 3 year $225,000 non-compete agreement with the majority member of Silicon
Sensors, LLC and is recording monthly amortization expense of $6,250.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Income (Loss) Per Share: Net income (loss) per share is based on the
weighted average number of common shares outstanding. Such weighted average
shares were approximately 12,250,000 at December 29, 2002 and 12,241,000 at
December 23, 2001. Net income (loss) per share calculations are in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" (SFAS 128). Accordingly, "basic" net income (loss) per share is computed
by dividing net income (loss) by the weighted average number of shares
outstanding for the year. The impact of Statement 128 on the calculation of
earnings per share is as follows:
-7-
NOTE 3 - Continued
Nine Months Ended Nine Months Ended
BASIC December 29, 2002 December 23, 2001
----- ----------------- -----------------
Average Shares Outstanding 12,250,000 12,241,000
Net Loss (194,000) (55,000)
Basic Loss Per Share ($ 0.02) ($ 0.00)
DILUTED
Average Shares Outstanding 12,250,000 12,241,000
Net Effect of Dilutive Stock Options
based on the treasury stock method
using average market price 240,000 55,000
Total Shares 12,490,000 12,296,000
Net Income (Loss) (194,000) (55,000)
Diluted Earnings Per Share anti-dilutive anti-dilutive
Average Market Price of Common Stock $ 0.92 $ 0.84
Ending Market Price of Common Stock $ 0.83 $ 0.65
Stock options granted to Company employees, directors, and former owners were
excluded from the calculation of earnings per share in the financial statements
because they were either anti-dilutive or immaterial for the periods reported:
Nine Months Ended December 29, 2002 Nine Months Ended December 23, 2001
------------------------------------------ ------------------------------------------
No. of Shares Exercise Price No. of Shares Exercise Price
Underlying Options Per Share Underlying Options Per Share
------------------------------------------ ------------------------------------------
16,000 0.5000 12,000 0.5000
126,000 0.5630 88,000 0.5630
25,000 0.6100 - 0.6100
500 0.6250 500 0.6250
416,668 0.6700 - 0.6700
5,000 0.6875 4,000 0.6875
126,000 0.7500 88,000 0.7500
266,006 0.8000 238,673 0.8000
76,250 0.8600 - 0.8600
75,000 1.0000 50,000 1.0000
14,500 1.1875 13,900 1.1875
74,800 1.2500 59,200 1.2500
- 1.5000 4,000 1.5000
4,000 1.6250 4,000 1.6250
66,000 1.8750 44,000 1.8750
35,500 2.5000 35,600 2.5000
8,000 3.0000 8,000 3.0000
1,000 3.0940 500 3.0940
400,000 3.1875 400,000 3.1875
50,000 5.3440 25,000 5.3440
-----------------------------------------------------------------------------------------------
1,786,224 1,075,373
-8-
NOTE 3 - Continued
Inventories: Inventories consist of the following:
December 29, 2002
-----------------
Raw materials $ 2,174,000
Work in progress 756,000
Finished products 314,000
-----------------
Total inventories $ 3,244,000
=================
Less reserve (465,000)
=================
Inventories, net $ 2,779,000
=================
NOTE 4 - NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 141 "Business Combinations"
("SFAS No. 141") and No.142 , "Goodwill and Other Intangible Assets" ("SFAS No.
142") were issued by the Financial Accounting Standards Board in July 2001.
These pronouncements require the use of the purchase method of accounting for
acquisitions and they require that goodwill no longer be amortized, but tested
for impairment on an annual basis. These pronouncements were effective for
financial statements for fiscal years beginning after December 31, 2001.
Accordingly, the Company adopted the provisions of these pronouncements in the
current fiscal year and has ceased monthly amortization of intangible assets
with an indefinite life.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS 143 establishes accounting standards for recognition and
measurement of a liability for the costs of asset retirement obligations. Under
SFAS 143, the costs of retiring an asset will be recorded as a liability when
the retirement obligation arises, and will be amortized to expense over the life
of the asset. We do not expect any effect on our financial position or results
of operations from the adoption of this statement.
SFAS 144 establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS 144 superseded SFAS
121 and APB Opinion No. 30, "Reporting the Results of Operations--Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." The provisions of SFAS 144 are
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted, and in general are to be applied prospectively. The Company adopted
SFAS 144 effective April 1, 2002, which did not have a material impact on its
consolidated results of operations or financial position.
In June of 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities," which nullifies EITF Issue 94-3. SFAS 146 is
effective for exit and disposal activities that are initiated after December 31,
2002 and requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred, in contrast to
the date of an entity's commitment to an exit plan, as required by EITF Issue
94-3. The Company will adopt the provisions of SFAS 146 effective January 1,
2003.
-9-
NOTE 5 - SUBSEQUENT EVENT
In January 2003, the Company purchased all of the issued and outstanding shares
of common stock of Texas Optoelectronics, Inc. ("TOI"), a privately owned custom
manufacturer of optoelectric components and assemblies. The purchase price was
1,000,000 shares of API Class A Common Stock, subject to an adjustment based on
TOI's financial statements as of January 17, 2003. At closing of the purchase
API paid off a debt of TOI in the total amount of $1,200,000 representing
principal and interest.
-10-
Item 2. Management's Discussion and Analysis
Application of Critical Accounting Policies
-------------------------------------------
Application of our accounting policies requires management to make judgments and
estimates about the amounts reflected in the financial statements. Management
uses historical experience and all available information to make these estimates
and judgments, although differing amounts could be reported if there are changes
in the assumptions and estimates. Estimates are used for, but not limited to,
the accounting for the allowance for doubtful accounts, inventory allowances,
restructuring costs, impairment costs, depreciation and amortization, sales
discounts and returns, warranty costs, taxes and contingencies. Management has
identified the following accounting policies as critical to an understanding of
our financial statements and/or as areas most dependent on management's judgment
and estimates.
Revenue Recognition
-------------------
We generally recognize revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the price is fixed or readily determinable, and
collectibility is probable. Sales are recorded net of sales returns and
discounts. We recognize revenue in accordance with Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements."
Impairment of Long-Lived Assets
-------------------------------
We continually review the recoverability of the carrying value of long-lived
assets using the methodology prescribed in Statement of Financial Accounting
Standards (SFAS) 144, "Accounting for the Impairment and Disposal of Long-Lived
Assets." We also review long-lived assets and the related intangible assets for
impairment whenever events or changes in circumstances indicate that the
carrying value of such assets may not be recoverable. Upon such an occurrence,
recoverability of these assets is determined by comparing the forecasted
undiscounted net cash flows to which the assets relate, to the carrying amount.
If the asset is determined to be unable to recover its carrying value, then
intangible assets, if any, are written down first, followed by the other
long-lived assets to fair value. Fair value is determined based on discounted
cash flows, appraised values or management's estimates, depending on the nature
of the assets.
Deferred Tax Asset Valuation Allowance
--------------------------------------
We record a deferred tax asset in jurisdictions where we generate a loss for
income tax purposes. Due to our history of operating losses, we have recorded a
full valuation allowance against these deferred tax assets in accordance with
SFAS 109, "Accounting for Income Taxes," because, in management's judgment, the
deferred tax assets may not be realized in the foreseeable future.
Inventories
-----------
Our inventories are stated at the lower of cost (first-in, first-out method) or
market. Slow moving and obsolete inventories are written off quarterly. To
calculate the write-off amount, we compare the current on-hand quantities with
both the projected usages for a two-year period and the actual usage over the
past 12 months. On-hand quantities greater than projected usage are calculated
at the standard unit cost. The engineering and purchasing departments review the
initial list of slow-moving and obsolete items to identify items that have
alternative uses in new or existing products. These items are then excluded from
the analysis. The remaining amount of slow-moving and obsolete inventory is then
written off. Additionally, non-cancelable open purchase orders for parts we are
obligated to purchase where demand has been reduced may be reserved. Reserves
for open purchase orders where the market price is lower than the purchase order
price are also established.
-11-
Accounts Receivable and Allowance for Doubtful Accounts
-------------------------------------------------------
The Allowance for Doubtful Accounts is established by analyzing each account
that has a balance over 90 days past due. Each account is individually assigned
a probability of collection. The total amount determined to be uncollectible in
the 90-days-past-due category is then reserved fully. The percentage of this
reserve to the 90-days-past-due total is then established as a guideline and
applied to the rest of the non-current accounts receivable balance. When other
circumstances suggest that a receivable may not be collectible, it is
immediately reserved for, even if the receivable is not yet in the
90-days-past-due category.
RESULTS OF OPERATIONS
---------------------
The Company's net sales for the third quarter ("Q3 03") and nine month period
("YTD 03") ended December 29, 2002, were $2.6 million and $6.0 million,
respectively. As compared to the third quarter of the prior year ("Q3 02"), net
sales increased by 60%, while year to date net sales increased by 14% over the
same nine month period of the prior year ("YTD 02").
The increase in net sales for the for both the quarter and year to date periods
was primarily due to higher volume in military aerospace, industrial sensing,
and medical equipment and imaging revenues, as compared to the same periods in
the prior year. As compared to fiscal year 2002, sales to the medical markets
increased by 105% for the quarter and by 14% for the year to date period,
industrial sensing revenues increased by 51% for the quarter and by 23% year to
date and sales to the military aerospace markets increased by 53% for the
quarter and by 1% year to date. Revenues from these three markets represent 98%
of total revenues year to date, with revenues from the industrial sensing
markets accounting for 46% of total revenues, military aerospace accounting for
34% of total revenues and medical accounting for 18% of total revenues.
Increased revenues resulting from the Company's recent acquisition of Silicon
Sensors, Inc. ("SSI") accounted for approximately 66% of the quarterly increase.
COSTS AND EXPENSES
------------------
Cost of goods sold increased by $762,000 (78%) during the third quarter of 2003
and by $968,000 (32%) during year to date period as compared to the same periods
of the prior year. As a percentage of net sales, cost of goods sold increased 7
percentage points to 67% for Q3 03 and increased 9 percentage points to 66% for
YTD 03, as compared to the same periods of the prior year. Thus, gross margin as
a percentage of net sales was 33% for QTD 03 and 34% for YTD 03. Throughout the
year, the Company has continued to realize reduced gross margins as a result of
current product mix and increases in fixed overhead and indirect costs
associated with the manufacturing process. In particular, increased
manufacturing costs associated with SSI accounted for approximately 36% of the
year to date variance. The remainder is due primarily to higher material costs,
as a percentage of net sales, associated with the current sales mix. Increased
competitiveness in the marketplace over the past year has caused the Company to
absorb increases in certain material costs while maintaining existing pricing in
an effort to generate new business as well as retain existing business. The
Company expects that current gross margin percentage is indicative of what can
be expected for the remainder of the year.
-12-
Research and development costs increased by $5,000, or 5%, in the third quarter
of 2003 as compared to third quarter of 2002. Year to date, research and
development costs have increased by $36,000, or 10%, as compared to the prior
year. The slight increase in research and development costs continues to be
attributable to variable expenditures associated with current development
projects, including those related to the continual improvement of the Company's
current lines of avalanche photodiode and core business products. The Company
expects research and development costs to remain relatively flat for the
remainder of the year and does not anticipate any notable increases or decreases
from the current level. However, should the level of activity associated with
customer-requested development contracts increase significantly, research and
development costs may increase as well.
Marketing and sales expenses increased by $51,000 (23%) to $271,000 in the third
quarter of 2003 compared to Q3 02 and by $38,000 (6%) to $728,000 year to date,
as compared to YTD 02. The increase in both quarterly and year to date expense
is primarily attributable to increased absorption of expenses resulting from the
Company's recently acquired subsidiary, SSI (see Note 2). Excluding the impact
of the SSI expenses, year to date marketing and sales expenses were $25,000 less
than the prior year, as a result of both decreased recruitment expenses and a
reduction in commissions paid to outside sales representatives. Due to continued
corporate expansion, the Company expects to see continued increases in marketing
and sales expenses throughout the remainder of the year.
General and administrative expenses increased by $172,000 (61%) to $454,000 in
Q3 03 as compared to $282,000 in Q3 02. Year to date, general and administrative
expenses increased by $338,000 (40%) to $1,175,000 as compared to $837,000 for
YTD 02. The increase in quarterly expenses is directly attributable to increased
general and administrative expenses incurred as a result of the acquired SSI
subsidiary. Excluding the impact of the acquisition, general and administrative
expenses remained flat in Q3 03 and increased by $105,000 for YTD 03, as
compared to the same periods of the prior year. The increase in general and
administrative expenses for the year to date period continues to be due to
increased insurance, depreciation, consultant and legal expenses over the same
period in the prior year. As indicated in previous reports, the Company has
experienced significant increases in both liability and benefits-type insurances
over the past two years and expects that such increases will continue. The
increase in depreciation expense is the result of the purchase of a new
Enterprise Resource Planning (ERP) software system which was installed during
the third quarter of last year. In addition, the Company reported increased
expenses of approximately $61,000 associated with consultant and legal fees, due
to the development and implementation of a shareholder rights agreement, which
was implemented in the second quarter of fiscal year 2003.
Interest income for the quarter was $20,000, or $14,000 less than Q3 02.
Interest income for the year to date period was $68,000, or $103,000 less than
the same period in the prior year. The decrease in interest income is primarily
due to consistently lower interest rates in addition to lower cash reserves
available for investment.
Net income for the third quarter of 2002 was $61,000, or $37,000 lower than net
income of $98,000 reported in Q3 02. Year to date, the Company's net loss of
($194,000) is $139,000 greater than the net loss of ($55,000) reported for the
same period in the prior year.
-13-
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
At December 29, 2002 , the Company had cash, cash equivalents and short term
investments of $2.2 million and working capital of $6.1 million, and an
accumulated deficit of $18.2 million. The Company's cash, cash equivalents and
short-term investments decreased by $1.9 million during the nine months ended
December 29, 2002. $10,000 was obtained through the exercise and issuance of
stock options and $29,000 was used by operating activities. $41,000 was used for
capital expenditures and $1.8 million was used for the acquisition of Silicon
Sensors, LLC.
All capital expenditures during the current year have been due to necessary
equipment upgrades and/or replacements. The Company has one capital project
scheduled at this time and expects capital outlays of approximately $70,000 for
costs associated with the installation of a wide-area-network communication
system throughout the remainder of the year. However, the Company does not
anticipate any other significant expenditures for capital items, as there are no
additional capital equipment purchases scheduled at this time.
The Company is exposed to interest rate risk for marketable securities. Due to
declining interest rates available to the Company pursuant to its investment
policy, the Company was able to achieve higher yields on more liquid money
market accounts and thus transferred the majority of its available cash reserves
from short term investment instruments to such accounts during the prior fiscal
year. At December 29, 2002, the Company continued to hold one investment in a
U.S. Government security with a value of $1,000,000 which carries an interest
rate of 5.0%. The Company will continue to monitor available interest rates
throughout the remainder of the year and will attempt to utilize the best
possible avenues of investment for its excess liquid assets.
Item 3. Controls and Procedures
Our Chief Executive Officer, President, and Chief Financial Officer (the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for the Company. The Certifying Officers have
designed such disclosure controls and procedures to ensure that material
information is made known to them, particularly during the period in which this
report was prepared. The Certifying Officers have evaluated the effectiveness of
the Company's disclosure controls and procedures within 90 days of the date of
this report and believe that the Company's disclosure controls and procedures
are effective based on the required evaluation. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
FORWARD LOOKING STATEMENTS
The information contained herein includes forward looking statements that are
based on assumptions that management believes to be reasonable but are subject
to inherent uncertainties and risks including, but not limited to, risks
associated with the integration of newly acquired businesses, technological
obstacles which may prevent or slow the development and/or manufacture of new
products, limited (or slower than anticipated) customer acceptance of new
products which have been and are being developed by the Company, the
availability of other competing technologies and a decline in the general demand
for optoelectronic products.
-14-
PART II OTHER INFORMATION
Items 1-5
None.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(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: February 11, 2003 /s/ Richard Kurtz
----------------- -----------------------
Richard Kurtz
Chief Executive Officer
/s/ Paul D. Ludwig
-----------------------
Paul D. Ludwig
President
/s/ Susan A. Schmidt
-----------------------
Susan A. Schmidt
Chief Financial Officer
and Secretary
-15-