x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Minnesota
|
41-1347235
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
Yes
|
x
|
No
|
o
|
Large
accelerated filer
|
o
|
Accelerated
filer
|
o
|
Non-accelerated
filer
|
x
|
Yes
|
o
|
No
|
x
|
Class:
|
Outstanding
at February 2, 2007
|
Common
stock, par value $.01
|
11,872,331
|
3
|
|
3
|
|
3
|
|
4
|
|
5
|
|
11
|
|
19
|
|
19
|
|
20
|
|
20
|
|
20
|
|
21
|
|
21
|
|
21
|
|
21
|
|
22
|
December
31,
2006
|
March
31,
2006
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
7,014,017
|
$
|
8,947,777
|
|||
Accounts
receivable, net of allowance for uncollectible accounts of $75,560
at
December 31, 2006 and $77,831 at March 31, 2006
|
1,716,333
|
1,892,483
|
|||||
Inventories
|
1,743,723
|
1,836,843
|
|||||
Bond
reserve fund
|
-
|
126,385
|
|||||
Prepaid
expenses and other
|
140,900
|
173,040
|
|||||
Total
current assets
|
10,614,973
|
12,976,528
|
|||||
Property,
plant and equipment, net
|
2,421,545
|
2,623,412
|
|||||
Other
assets:
|
|||||||
Bond
reserve funds
|
-
|
343,241
|
|||||
Goodwill
|
3,422,511
|
3,422,511
|
|||||
Other
|
401,877
|
227,879
|
|||||
3,824,388
|
3,993,631
|
||||||
Total
assets
|
$
|
16,860,906
|
$
|
19,593,571
|
|||
Liabilities
and shareholders’ equity
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of long-term debt
|
$
|
14,750
|
$
|
1,342,481
|
|||
Accounts
payable
|
860,649
|
1,353,828
|
|||||
Accrued
compensation
|
745,729
|
815,046
|
|||||
Accrued
expenses
|
140,183
|
211,840
|
|||||
Total
current liabilities
|
1,761,311
|
3,723,195
|
|||||
Long-term
debt, net of current maturities
|
7,410
|
18,480
|
|||||
Deferred
rent
|
74,646
|
-
|
|||||
Deferred
income taxes
|
337,174
|
272,454
|
|||||
Total
liabilities
|
2,180,541
|
4,014,129
|
|||||
Shareholders’
equity:
|
|||||||
Undesignated
shares, 4,999,500 authorized shares; no shares issued and
outstanding
|
-
|
-
|
|||||
Preferred
stock, $.01 par value; 500 authorized shares; no shares issued and
outstanding
|
-
|
-
|
|||||
Common
stock, $.01 par value; 50,000,000 authorized shares; 11,872,331 shares
issued and outstanding at December 31, 2006 and March 31,
2006
|
118,723
|
118,723
|
|||||
Additional
paid-in capital
|
52,009,185
|
51,968,366
|
|||||
Accumulated
foreign currency translation
|
(230
|
)
|
(2,153
|
)
|
|||
Accumulated
deficit
|
(37,447,313
|
)
|
(36,505,494
|
)
|
|||
Total
shareholders’ equity
|
14,680,365
|
15,579,442
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
16,860,906
|
$
|
19,593,571
|
Three
Months Ended
December
31,
|
Nine
Months Ended
December
31,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Revenues
|
$
|
4,429,117
|
$
|
4,379,192
|
$
|
14,272,847
|
$
|
11,961,122
|
|||||
Cost
of revenues
|
3,204,504
|
3,354,859
|
10,358,670
|
9,307,609
|
|||||||||
Gross
profit
|
1,224,613
|
1,024,333
|
3,914,177
|
2,653,513
|
|||||||||
Operating
expenses
|
|||||||||||||
Research
and development
|
105,624
|
313,127
|
394,616
|
980,097
|
|||||||||
Selling,
general and administrative
|
1,624,576
|
2,035,215
|
5,030,770
|
5,185,989
|
|||||||||
Loss
(gain) on disposal of assets
|
(4,059
|
)
|
-
|
(352,266
|
)
|
(93,126
|
)
|
||||||
1,726,141
|
2,348,342
|
5,073,120
|
6,072,960
|
||||||||||
Loss
from operations
|
(501,528
|
)
|
(1,324,009
|
)
|
(1,158,943
|
)
|
(3,419,447
|
)
|
|||||
Interest
income
|
117,558
|
91,063
|
325,832
|
245,219
|
|||||||||
Interest
expense
|
(19,067
|
)
|
(22,329
|
)
|
(60,414
|
)
|
(67,857
|
)
|
|||||
Other
income (expense), net
|
189
|
(19,761
|
)
|
21,476
|
14,115
|
||||||||
98,680
|
48,973
|
286,894
|
191,477
|
||||||||||
Loss
before income taxes
|
(402,848
|
)
|
(1,275,036
|
)
|
(872,049
|
)
|
(3,227,970
|
)
|
|||||
Income
taxes
|
26,520
|
750
|
69,770
|
2,450
|
|||||||||
Net
loss
|
$
|
(429,368
|
)
|
$
|
(1,275,786
|
)
|
$
|
(941,819
|
)
|
$
|
(3,230,420
|
)
|
|
Net
loss per share:
|
|||||||||||||
Basic
and diluted
|
($0.04
|
)
|
($0.11
|
)
|
($0.08
|
)
|
(0.27
|
)
|
|||||
Weighted
average shares outstanding:
|
|||||||||||||
Basic
and diluted
|
11,872,331
|
11,872,331
|
11,872,331
|
11,872,331
|
Nine
Months Ended
December
31,
|
|||||||
2006
|
2005
|
||||||
Cash
Flow from operating activities
|
|||||||
Net
loss
|
$
|
(941,819
|
)
|
$
|
(3,230,420
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
434,448
|
806,266
|
|||||
Deferred
taxes
|
64,720
|
-
|
|||||
Gain
on sale of assets
|
(352,266
|
)
|
(93,126
|
)
|
|||
Stock
based compensation
|
40,819
|
7,167
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable, net
|
176,150
|
(240,697
|
)
|
||||
Inventories
|
93,120
|
(391,865
|
)
|
||||
Prepaid
expenses and other
|
(141,858
|
)
|
35,444
|
||||
Accounts
payable and accrued expenses
|
(559,507
|
)
|
451,992
|
||||
Net
cash used in operating activities
|
(1,186,193
|
)
|
(2,655,239
|
)
|
|||
Cash
flow from investing activities
|
|||||||
Purchases
of property and equipment
|
(324,672
|
)
|
(307,009
|
)
|
|||
Proceeds
from sale of assets
|
444,357
|
111,680
|
|||||
Net
cash provided by (used in) investing activities
|
119,685
|
(195,329
|
)
|
||||
Cash
flow from financing activities
|
|||||||
Repayment
of long-term debt
|
(1,338,801
|
)
|
(83,972
|
)
|
|||
Withdrawal
of bond reserve funds, net
|
469,626
|
43,389
|
|||||
Net
cash used in financing activities
|
(869,175
|
)
|
(40,583
|
)
|
|||
Foreign
currency translation
|
1,923
|
6,418
|
|||||
Decrease
in cash and cash equivalents
|
(1,933,760
|
)
|
(2,884,733
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
8,947,777
|
10,813,492
|
|||||
Cash
and cash equivalents at end of period
|
$
|
7,014,017
|
$
|
7,928,759
|
Three
Months Ended
December
31,
|
Nine
Months Ended
December
31,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Numerator
for basic and diluted net loss per share
|
$
|
(429,368
|
)
|
$
|
(1,275,786
|
)
|
$
|
(941,819
|
)
|
$
|
(3,230,420
|
)
|
|
Denominator
for basic and diluted net loss per share - weighted average shares
outstanding
|
11,872,331
|
11,872,331
|
11,872,331
|
11,872,331
|
|||||||||
Basic
and diluted net loss per share
|
($0.04
|
)
|
($0.11
|
)
|
($0.08
|
)
|
($0.27
|
)
|
Optronics
|
APACN
|
Eliminations
|
Consolidated
|
||||||||||
Three
months ended December 31, 2006
|
|||||||||||||
Revenues
|
$
|
16
|
$
|
4,415
|
$
|
(2
|
)
|
$
|
4,429
|
||||
Gross
profit (loss)
|
(128
|
)
|
1,353
|
-
|
1,225
|
||||||||
Income
(loss) from operations
|
(612
|
)
|
110
|
-
|
(502
|
)
|
|||||||
Depreciation
and amortization
|
84
|
54
|
-
|
138
|
|||||||||
Capital
expenditures
|
12
|
21
|
-
|
33
|
|||||||||
Assets
|
16,712
|
7,829
|
(7,680
|
)
|
16,861
|
||||||||
Three
months ended December 31, 2005
|
|||||||||||||
Revenues
|
$
|
124
|
$
|
4,342
|
$
|
(87
|
)
|
$
|
4,379
|
||||
Gross
profit (loss)
|
(152
|
)
|
1,178
|
(2
|
)
|
1,024
|
|||||||
Income
(loss) from operations
|
(1,346
|
)
|
22
|
-
|
(1,324
|
)
|
|||||||
Depreciation
and amortization
|
195
|
68
|
-
|
263
|
|||||||||
Capital
expenditures
|
62
|
11
|
-
|
73
|
|||||||||
Assets
|
19,270
|
7,470
|
(7,635
|
)
|
19,105
|
||||||||
Nine
months ended December 31, 2006
|
|||||||||||||
Revenues
|
$
|
101
|
$
|
14,175
|
$
|
(3
|
)
|
$
|
14,273
|
||||
Gross
profit (loss)
|
(347
|
)
|
4,261
|
-
|
3,914
|
||||||||
Income
(loss) from operations
|
(1,629
|
)
|
470
|
-
|
(1,159
|
)
|
|||||||
Depreciation
and amortization
|
256
|
179
|
-
|
435
|
|||||||||
Capital
expenditures
|
282
|
43
|
-
|
325
|
|||||||||
Assets
|
16,712
|
7,829
|
(7,680
|
)
|
16,861
|
||||||||
Nine
months ended December 31, 2005
|
|||||||||||||
Revenues
|
$
|
336
|
$
|
11,908
|
$
|
(283
|
)
|
$
|
11,961
|
||||
Gross
profit (loss)
|
(529
|
)
|
3,188
|
(5
|
)
|
2,654
|
|||||||
Loss
from operations
|
(3,380
|
)
|
(39
|
)
|
-
|
(3,419
|
)
|
||||||
Depreciation
and amortization
|
612
|
194
|
-
|
806
|
|||||||||
Capital
expenditures
|
191
|
116
|
-
|
307
|
|||||||||
Assets
|
19,270
|
7,470
|
(7,635
|
)
|
19,105
|
Three
Months Ended
December
31, 2005
|
Nine
Months Ended
December
31, 2005
|
||||||
Net
loss to common shareholders - as reported
|
$
|
(1,275,786
|
)
|
$
|
(3,230,420
|
)
|
|
Less:
Total stock-based employee compensation expense determined under
fair
value based method for all awards, net of related tax
effects
|
(27,861
|
)
|
(89,387
|
)
|
|||
Net
loss - pro forma
|
$
|
(1,303,647
|
)
|
$
|
(3,319,807
|
)
|
|
Basic
and diluted net loss per common share - as reported
|
($0.11
|
)
|
($0.27
|
)
|
|||
Basic
and diluted net loss per common share - pro forma
|
($0.11
|
)
|
($0.28
|
)
|
Nine
Months
Ended
December,
2006
|
||
Expected
volatility
|
64%
|
|
Expected
life (in years)
|
5
years
|
|
Expected
dividends
|
0%
|
|
Risk-free
interest rate
|
4.78%
|
Number of
shares
|
Weighted
average exercise price
|
||||||
Outstanding
at March 31, 2006
|
276,470
|
$
|
2.80
|
||||
Granted
|
25,000
|
1.33
|
|||||
Canceled
|
(37,490
|
)
|
2.87
|
||||
Outstanding
at June 30, 2006
|
263,980
|
2.65
|
|||||
Granted
|
15,000
|
1.28
|
|||||
Canceled
|
(10,415
|
)
|
5.39
|
||||
Outstanding
at September 30, 2006
|
268,565
|
2.46
|
|||||
Granted
|
-
|
1.28
|
|||||
Canceled
|
(30,000
|
)
|
5.39
|
||||
Outstanding
at December 31, 2006
|
238,565
|
2.46
|
Options
outstanding
|
||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted
average remaining contractual
life
|
Weighted
average
exercise
price
|
Aggregate
intrinsic
value
|
||||||||||
$
|
0.00-$1.29
|
15,000
|
5.67
years
|
$
|
1.28
|
$
|
19,200
|
|||||||
1.30-2.91
|
213,565
|
3.84
years
|
1.81
|
387,834
|
||||||||||
5.53-8.90
|
10,000
|
0.08
years
|
8.06
|
80,600
|
||||||||||
238,565
|
3.79
years
|
$
|
2.04
|
$
|
487,634
|
Options
exercisable
|
||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted
average remaining contractual
life
|
Weighted
average
exercise
price
|
Aggregate
intrinsic value
|
||||||||||
$
|
0.00-$1.29
|
-
|
-
|
$
|
-
|
$
|
-
|
|||||||
1.30-2.91
|
85,365
|
3.06
years
|
2.06
|
176,398
|
||||||||||
5.53-8.90
|
10,000
|
0.08
years
|
8.06
|
80,600
|
||||||||||
95,365
|
2.75
years
|
$
|
3.57
|
$
|
256,998
|
December
31, 2006
|
March
31, 2006
|
||||||
Raw
Materials
|
$
|
1,447,312
|
$
|
1,588,816
|
|||
Work-in-progress
|
47,034
|
48,474
|
|||||
Finished
Goods
|
249,377
|
199,553
|
|||||
$
|
1,743,723
|
$
|
1,836,843
|
Total
|
Less
than
1
Year
|
1-3
years
|
4-5
years
|
After
5
years
|
||||||||||||
Long-term
debt (1)
|
$
|
26
|
$
|
15
|
$
|
11
|
$
|
-
|
$
|
-
|
||||||
Leases
|
1,944
|
346
|
689
|
474
|
435
|
|||||||||||
Total
Contractual Cash
|
||||||||||||||||
Obligations
|
$
|
1,970
|
$
|
361
|
$
|
700
|
$
|
474
|
$
|
435
|
·
|
Stock
Option Accounting;
|
·
|
Accounting
for income taxes
|
·
|
Valuation
and evaluating impairment of long-lived assets and goodwill;
and
|
·
|
Accounting
for uncertainty in income taxes
|
(a)
|
Evaluation
of disclosure controls and procedures.
The Company’s chief executive officer and chief financial officer have
concluded that as of the end of the fiscal period covered by this
report
the Company’s disclosure controls and procedures (as defined in Exchange
Act Rule 13a-14(c)) were effective.
|
(b)
|
Changes
in internal controls.
There were no changes in the Company’s internal controls over financial
reporting during the fiscal period covered by this report that materially
affected, or are likely to materially affect, the Company’s control over
financial reporting.
|
|
APA
ENTERPRISES, INC.
|
||
February
13, 2007
|
|
/s/
Anil K. Jain
|
|
Date
|
Anil
K. Jain
|
||
President,
|
|||
Chief
Executive Officer and Chief Financial Officer (Principal Executive
and
Principal Financial and Accounting
Officer)
|