SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

                                   (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 29, 1998

                                       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

As of June 5, 1998,  the  aggregate  market  value of the  voting  stock held by
non-affiliates of the Registrant was approximately $8,100,000.

As of June 5, 1998,  there were  10,838,260  shares of Class A Common  Stock and
76,135 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. (X)

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>

Item 1.  Business


General

Advanced Photonix, Inc.(R) (with its subsidiary, Silicon Detector Corporation, a
California   corporation   ("SDC"),   hereafter  referred  to  together  as  the
"Company"),  is engaged in the  development  and  manufacture of proprietary and
other  solid  state  light and  radiation  detection  devices.  The  Company was
incorporated  under  the laws of the State of  Delaware  on June 22,  1988.  The
Company believes that its proprietary  Avalanche  Photodiode  ("APD") technology
represents a leading-edge  advancement in photodetection  and imaging,  and 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 (the "LAAPD").  The Company believes that the LAAPD is an alternative
to photomultiplier  vacuum tubes ("PMT's"),  which have been used for many years
as the primary  technological  solution for highly  sensitive light detection in
certain  measurement,  control and monitoring  applications  used in industrial,
medical, military, scientific and commercial settings.

The LAAPD and PMT are at the highly  complex and  engineered end of the spectrum
of activities in the photonics  industry,  which encompasses all light detection
devices and  associated  electronic  components.  Fundamentally,  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 programmed  ways. The photonics  industry  includes  other  custom-engineered
devices   of  less   complexity   than  the  LAAPD  and  the  PMT  such  as  PIN
(Positive-Intrinsic-Negative)  photodiodes.  The bulk of the Company's  revenues
continue  to be  derived  from  the  sale of  products  based  on PIN and  other
non-proprietary technologies (the "core business").

Products

The  Company  designs  and  manufactures   optoelectronic   semiconductor  based
components and hybrid assemblies. The Company's product line includes:

o     Spectrally enhanced single and multi-element PIN photodetectors

o     Photodetector/preamplifier hybrids

o     Military/commercial aerospace products

o     Custom  optoelectronic   products,   including  visible  and  non  visible
        (infrared) light-emitting diodes ("LED's") and LED displays

o     FILTRODE(TM) - patented technology integrating spectrally enhanced filters
      directly onto  photodiode  wafers 

o     Small Area Avalanche  photodiodes  

o     Large Area Avalanche photodiodes (LAAPD's, LAAPD Modules and Cooled Heads)

The Company supplies detectors for military/commercial  aerospace and other High
Reliability  ("Hi-Rel")  applications.   Hi-Rel  devices  are  those  which  are
designed,  manufactured,  screened and qualified to function under exceptionally
severe levels of environmental  stress. The Company has many years of experience
in supplying Hi-Rel devices which require modern wafer  fabrication  techniques,
dedicated  assembly  area,  and  a  well  equipped  test  lab.  Hi-Rel  products
manufactured by the Company include:

o    Multi-Element Detector Pre-Amplifier assembly employed on the optical fuse
     used on the Rolling Airframe Missile (RAM)

                                       2
<PAGE>

o    Narrow and Wide Field of View detectors used in various TOW Missile 
     Trackers Common  Module LED  Arrays  qualified  with the  Center  for Night
     Vision Electro Optics for use in displaying thermal images in various night
     sights

o    Quadrant   Photodetectors   used  in  the   autocollimator   for  airborne
     navigation/FLIR  POD's  Multi-Element  Detector Arrays used in space-based
     optical encoders for Space Shuttle Arm Control

The Company's  patented  FILTRODE(TM)  technology  integrates  optical  coatings
directly on photodiode chips, replacing conventional  technology that requires a
separate  filter  glass  or  pigmented  epoxy  to be  assembled  to the top of a
detector.  While  the  technology  offers  a  simpler  design  and  lower  cost,
reliability  and  performance  are  improved  because the  integrated  design is
resistant to moisture, shock and vibration. Special packaging of this technology
allows for unique applications whereby both front and back detector surfaces can
be utilized for light detection.

The Company's Small Area Avalanche Photodiodes  ("SAAPD's" -- see description of
avalanche  photodiode  below) utilize a chip fabricated with a silicon epiplanar
structure.  SAAPD's  have been  designed for a variety of very  low-light  level
applications  and  cover  the  wavelength  from  400  nm  to  1000  nm.  Typical
applications  include optical  communication,  high-sensitivity bar code reading
and laser range finding.

Large Area Avalanche Photodiode Technology
------------------------------------------

An Avalanche  Photodiode is a specialized  silicon photodiode capable of sensing
very  low  levels  of  light  through  an  internal  gain  phenomenon  known  as
"avalanching". This fundamental performance characteristic is not present in the
more conventional PIN photodiode technology.

The first APD was developed in the late 1960's and gave promise as a solid state
replacement for the photomultiplier vacuum tube for sensing extremely low levels
of electromagnetic radiation. However, design and manufacturing limitations have
generally  restricted  APD's to small  diameters  (5mm or less) that can only be
practically  used with optical fiber,  thus sharply limiting the range of useful
applications.

The  Company  has  developed  and  patented  various  aspects  of an LAAPD  with
dimensions  of up to 25 mm.  The  LAAPD is a fast  pulse  detector  of low light
levels  spanning  the near UV  (ultraviolet),  visible,  and near IR  (infrared)
spectra,  and, when coupled to a scintillator,  of x-rays and gamma-rays.  It is
also  sensitive  to  electrons  accelerated  to  potentials  greater  than a few
thousand electron-volts.  The LAAPD offers capabilities well beyond those of the
existing primary photodetection devices - the PIN photodiode, the small area APD
and the PMT. Its advantages over PIN photodiodes  include higher  sensitivity at
higher  bandwidths.  Its advantages  over small area APD's include larger active
areas to collect more light when the source is diffused and greater  sensitivity
up to about an order of magnitude.  Its  advantages  over PMT's include  greater
counting  sensitivity  to pulses  above 500  photons in the  visible and near IR
spectra,  higher  dynamic  range by two orders of  magnitude,  and a more rugged
structure suitable for operation in harsh environments. LAAPD's feature superior
quantum  efficiency in both visible and UV regions that cannot be matched by any
PMT photocathode.  Other features which differentiate LAAPD's from PMT's include
greater dynamic range (by two orders of magnitude),  open face design for direct
low energy  x-ray  detection,  immunity  to higher  magnetic  fields and ease of
thermal stabilization  allowing much more stable operation.  In addition, a more
rugged and compact design, and operation  requiring far less power, make LAAPD's
more advantageous in many portable applications.

The LAAPD  sensitivity  in the UV region was  greatly  enhanced in 1995 when the
Company  developed new processing  techniques to improve UV quantum  efficiency.
This  capability  is crucial for many  applications  in high energy and particle
physics  (calorimetry).   The  improvement  in  the  UV  sensitivity  will  also
facilitate 

                                       3
<PAGE>

the design of more powerful  imaging and analytical  instruments  for
medical, chemical and biotechnology markets.

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 lines
of advanced silicon avalanche photonics products which will have a broader range
of  commercial  and  military  applications  than  the PMT and PIN  arrays.  For
example:

o     LAAPD Arrays - the Company's  patented  technology where 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.

o     Vacuum Avalanche  Photodiode  (VAPD) - another patented  technology which
      combines a photo  cathode and an LAAPD in a vacuum tube and functions 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 ("OEM's"),  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  original  equipment  manufacturers  who can take
advantage  of the  performance  capabilities  of  LAAPD's  will be the source of
repeat  business for  production  quantities.  Targeted  markets which have been
identified include:

o    Ranging, Tracking & Imaging - Smart image  surveillance/security  cameras,
     3D  collision   avoidance  cameras,   missile  guidance,   threat  warning,
     underwater mine detection, and mapping & salvaging.

o    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.

o    Industrial Scanning/Process Control - Industrial CT inspection,  aerospace
     ice inspection, drum/flat bed scanning, semiconductor wafer defect scanning
     and film to video conversion.

o    Analytical  Chemistry - Analyzing the chemical  "recipe" of samples,  from
     glucose levels in the blood to pesticides in ground water.

o    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  include  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.

o    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.

o    Scientific  Research - High energy physics fiber tracking,  space particle
     experiments and Neutrino experiments.



                                       4
<PAGE>

The  Company's  products are  primarily  sold as  components  or  assemblies  to
original  equipment  manufacturers  or  other  component  manufacturers  and the
Company does not manufacture any end-user products within the above or any other
markets.

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. The Company has obtained federal government research and development
funding  supporting  the  next  generation  LAAPD  products.  See  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  for
more detail on these  contracts.  Since its inception in June 1988,  the Company
has incurred material amounts of research and development  expenses.  During the
fiscal years ended in 1998,  1997 and 1996,  research and  development  expenses
amounted  to  $1.2  million,  $1.9  million  and  $2.1  million,   respectively.
Additional  research and  development  funding will be required for LAAPD arrays
and VAPD's if the Company decides to commercialize these products.

Manufacturing
-------------

Located  in  Camarillo,  CA, the  Company  has an  approximately  39,000 sq. ft.
manufacturing  facility which  includes  various fully equipped clean room areas
from  Class 100 to Class  100,000  for  fabrication,  processing,  handling  and
characterizing a number of semiconductor  compounds.  In-house processes include
photolithography,  diffusion, metalization, lapping, oxide growth and parametric
testing and analysis.  An extensive  library of different  photodiode shapes and
sizes is  maintained  to provide the  customer  with many  options when a custom
device is  required.  The Company  estimates  that these  facilities,  with some
modifications, will be sufficient to accommodate the expected growth in both the
core and LAAPD businesses for the foreseeable future.

The  Company  has  made a  significant  investment  in the  area  of  production
automation for its core business, which has enhanced manufacturing repeatability
and reliability, leading to higher quality and lower cost for finished products.
The automation techniques are employed on many different package configurations,
including PC boards, ceramic substrates, dual in-line and TO style packages.

For high  volume/low  cost  manufacturing,  the  Company  maintains  a strategic
alliance  with an  optoassembly  facility in the Pacific Rim. That facility uses
the  latest in  assembly  and test  equipment,  and  employs a Company  approved
quality  program  which  includes   Statistical  Process  Control  (SPC)  and  a
preventive  maintenance  program. The Facility is UL, FDA and ISO 9002 approved.
All Pacific Rim  manufactured  products are  assembled in a Class  100,000 clean
room.


                                       5
<PAGE>


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  $5.8 million of backlog at the end of fiscal 1998 compared with a
backlog of  approximately  $5.2 million at the end of fiscal  1997.  The Company
expects that  approximately $3.8 million of the backlog orders will be filled in
the current fiscal year.

The Company currently  supplies core business products in support of satellites,
aircraft and ground vehicle missile guidance and tracking systems. Product sales
to affiliates and divisions of Raytheon, in the aggregate over several programs,
represent  approximately 26% of the Company's  revenues for the year ended March
29, 1998.

Customers  normally  purchase the  Company's  products and  incorporate  them in
products that they in turn sell into 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 and  Canada,  are  conducted
through foreign distributors (see Note 2 to Consolidated Financial Statements).

In marketing  LAAPD  products,  the Company has recognized  that it must compete
with producers of PMT's,  which have dominated low light level detection markets
for many  years.  Even if the  Company  can  establish  that its  LAAPD's  are a
potential alternative to PMT's for certain commercial applications, and assuming
that  testing of the LAAPD  currently  being  conducted by OEM's 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 PMT's to incur the substantial expense and
expend the time and effort  necessary  for the  redesign  of their  products  to
accommodate the LAAPD devices.

The Company pursues marketing efforts related to securing  government  contracts
and subcontracts to fund continued research and product development based on its
APD technology.  Such efforts encompass subcontracts with industrial partners as
well as  contracts  directly  with  agencies of the federal  government.  During
fiscal 1998, revenues from these efforts  represented  approximately 5% of total
revenue. 


                                       6
<PAGE>

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 PMT's, 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
PMT's,  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
APD's,  the Company  believes that most of these  companies are limited by their
technology to small area APD devices which the Company believes 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.

PMT's 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.

Proprietary Technology
----------------------

The Company has been issued patents as follows:

US PATENT NO.    DESCRIPTION                                    DATE ISSUED
-------------    ---------------------------------        ----------------------
5,757,057        Large Area Avalanche Array               May 1998
5,477,075        Solid State Photodetector with 
                  Light-Responsive Rear Face              December 1995
5,311,044        Avalanche Photomultiplier Tube           May 1994
5,146,296        Devices for Detecting and/or 
                  Imaging Single Photoelectron            September 1992
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

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



                                       7
<PAGE>

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 5, 1998,  the  Company  employed 61  full-time  employees  (including  2
officers), 8 engineering and development  personnel,  41 operations personnel, 6
sales and marketing personnel, and 6 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 lease expires
in February 2004. The Company believes that its existing facility is adequate to
meet its needs for the foreseeable future. See "Business - Manufacturing."

Item 3.        Legal Proceedings    None
               -----------------

Item 4.        Submission of Matters to a Vote of Security Holders    None
               ---------------------------------------------------

                                  
                                     PART II

Item 5.   Market for the Registrant's Securities 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 stock is not publicly
traded.

At June 11,  1998,  the  Company had 90 holders of record for the Class A Common
Stock, representing  approximately 1,300 holders owning shares of Class A Common
Stock in street  name.  On the same  date,  there were 10 holders of the Class B
Common Stock.

                                       8
<PAGE>

The following table sets forth high and low closing prices by quarter for fiscal
years 1998 and 1997.

                   Quarterly Stock Market Data
                1st Quarter     2nd Quarter      3rd Quarter       4th Quarter
                1998   1997     1998    1997     1998    1997     1998     1997
                ----   ----     ----    ----     ----    ----     ----     ----
Common Stock (1)
      High    2 1/16   4 1/4   2 3/8   4 1/8     2      3 7/8    1 3/4   2 11/16
      Low     1 3/16   2 5/8   1 1/8   2 1/2     15/16   2      1 1/8   1 3/4

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 5, 1998,  690,000 shares of
Class A Redeemable  Convertible  Preferred Stock had been converted into 207,000
shares of Class B Common  Stock,  leaving  outstanding  90,000 shares of Class A
Redeemable  Convertible  Preferred  Stock. The aggregate  non-cumulative  annual
dividend  preference of such Class A Redeemable  Convertible  Preferred Stock is
$6,480.  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.
<TABLE>

Item 6.        Selected Financial Data
<CAPTION>

                                                1998             1997              1996             1995              1994
----------------------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
<S>                                       <C>               <C>              <C>               <C>              <C>    
Selected Statement of Operations Data:
Revenues                                  $ 7,008,000       $ 6,375,000      $ 7,863,000       $ 6,775,000      $ 6,267,000
Loss from operations                         (115,000)       (2,061,000)        (807,000)       (2,448,000)      (3,944,000)
Net Income (Loss)                              10,000        (1,886,000)        (654,000)       (2,368,000)      (3,897,000)
Basic income (loss) per share (1)            $0.00             $(0.17)           $(0.07)          $(0.28)          $(0.55)
                                                                      
Weighted average shares outstanding (2)    10,886,000        10,831,000         9,988,000         8,383,000        7,075,000

Selected Balance Sheet Data:
Working capital                           $ 3,737,000       $ 3,334,000      $ 4,931,000       $ 2,083,000      $ 4,182,000
Total assets                                6,366,000         6,165,000        7,706,000         5,580,000        7,835,000
Long term debt, net                              -                 -                -               26,000           42,000
Accumulated deficit                       (17,662,000)      (17,672,000)     (15,786,000)      (15,132,000)     (12,764,000)
Stockholders' equity                        5,045,000         4,948,000        6,806,000         4,438,000        6,785,000
<FN>

1  The impact of dilutive shares is immaterial.
2  See Note 2 to Financial Statements
</FN>
</TABLE>



                                       9
<PAGE>


Item 7.   Management's Discussion and Analysis of Financial Condition 
          and Results of Operations

RESULTS OF OPERATIONS

Fiscal year 1998 Compared to Fiscal Year 1997

REVENUES
The  Company's  revenues for the fiscal year ended March 29, 1998  ("1998") were
$7.0  million,  an increase of 10% from  revenues of $6.4 million for the fiscal
year ended March 30, 1997 ("1997").

Net product sales of $6.7 million increased  $870,000 (15%) in 1998. As detailed
below, this increase reflects higher shipments of military  aerospace  products,
partially offset by slightly lower shipments of commercial  products.  Volume in
military  aerospace  products increased by approximately 54% in 1998 compared to
1997.  The  increase in military  aerospace  products  was  partially  offset by
slightly lower shipments of commercial products which decreased by approximately
7% in 1998 compared to 1997. The Company believes that cutbacks in its sales and
marketing efforts during fiscal 1996 impacted its ability to book new orders and
resulted  in lower  sales  during the second  half of 1997 and the first half of
1998.  These cutbacks were a result of cash  conservation  measures put in place
prior to the  Company  completing  a private  placement  in August  1995.  After
receiving  the  additional  equity  financing,  the Company  hired and  replaced
employees in the sales  department  and otherwise  increased  marketing  efforts
including additional trade-show  attendance and advertising.  These efforts have
resulted in an increase in commercial backlog and helped to increase  commercial
sales  during the fourth  quarter of 1998 by  approximately  24% compared to the
same period in the prior year.  The Company  believes that these efforts  should
continue to result in higher commercial sales in future periods.

During the fourth  quarter of fiscal  1998,  shipments  of Large Area  Avalanche
Photodiode  (LAAPD) products (included in net product sales) were the highest in
Company  history.  While sales from these products  represented only 3% of total
net product sales, the Company anticipates increasing volume from sales of LAAPD
products as markets begin to implement  this  "enabling"  technology  and as the
Company continues its efforts to further refine and optimize LAAPD manufacturing
process  steps and ramp up its sales and  marketing  efforts to promote this new
technology.

Development  contract  revenues  during 1998  decreased  by $237,000  (41%) when
compared to 1997.  The Company was awarded a Phase II Department of Energy (DOE)
grant of approximately  $750,000 in June 1995, and in December 1995, was awarded
a $1.1  million  contract  from the  Advanced  Research  Projects  Agency of the
Pentagon and the Aircraft Division of the Naval Air Warfare Center  (ARPA/NAWC).
These types of government  development contracts are typically multi-year awards
and are subject to periodic  review and  cancellation by the government due to a
variety of reasons  including  a lack of  funding.  During the third  quarter of
1998,  revenues  from the DOE  contract  began to wind down and the contract was
completed. The ARPA/NAWC contract was completed during the fourth quarter. While
the  Company  has  proposals  outstanding,  it is  currently  not working on any
government funded development contracts

COSTS AND EXPENSES
Cost of product  sales  increased  by only  $20,000 (1%) in 1998 despite the 15%
increase in net product sales (see "Revenues" above). Cost of product sales as a
percent of net product  sales  decreased by 13% and gross  profit  margin on net
product  sales  increased  8  percentage  points to 41%  compared  to 1997.  The
improvement is  attributable  to a number of factors  including  improvements in
operating  efficiencies as well as improved margins on product mix. In line with
the reduction in product  shipments which spanned the second half of fiscal 1997
through the first half of fiscal 1998, the Company reduced its workforce from 86
to 69 during fiscal 1997 through  attrition and a reduction in force in February
1997. The Company's workforce is currently at 61 full-time employees.

                                       10
<PAGE>

Research and  development  ("R&D")  costs  decreased  by $670,000  (35%) to $1.2
million in 1998.  The decrease in R&D costs is primarily  due to the lower level
of R&D  effort  on  government  contracts  (see  "Revenues"  above) as well as a
general  reduction  in internal  R&D efforts as the Company  focuses more on the
commercialization/manufacture   of  the   LAAPD.   In   conjunction   with   its
commercialization  efforts,  the Company has  consolidated its core business and
LAAPD  manufacturing  operations  which  previously had been managed as separate
operational centers. In addition, the Company has better controlled internal R&D
activities. 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  expenses  decreased  by $19,000  (2%) to $978,000 in 1998.
Marketing and sales expenses should increase as the Company  continues to pursue
its plan for growth and commercialization of the LAAPD family of products.

General and  administrative  expenses decreased by $644,000 (40%) to $983,000 in
1998  primarily  due to lower labor  related  costs  partially  offset by higher
marketing  costs.  During 1997, the Company  recorded a one-time  reorganization
charge of approximately  $323,000  related to management  changes and during the
second quarter of 1998 reversed approximately  $100,000 of this accrual.  During
1998,  general  and  administrative   expenses,   before  the  impact  of  these
adjustments,  decreased by $221,000 (17%) to $1.1 million.  These decreases were
due to a number of factors including lower  compensation,  training,  management
systems, amortization and consulting costs.

Interest  income in 1998 of $123,000 was $44,000  lower than 1997 as a result of
lower average cash balances and lower available  interest rates. In August 1995,
the Company  completed a private  placement  which  increased  its average  cash
balances  during Q3 and Q4 of 1996 and all of 1997 (see  Liquidity  and  Capital
Resources).

Fiscal year 1997 Compared to Fiscal Year 1996

REVENUES
The  Company's  revenues for the fiscal year ended March 30, 1997  ("1997") were
$6.4  million,  a decrease of 19% from  revenues of $7.9  million for the fiscal
year ended March 31, 1996  ("1996").  The Company  believes that cutbacks in its
sales and marketing  efforts during fiscal 1996 impacted its ability to book new
orders and  resulted in lower sales during 1997 (see  "Revenues"  in Fiscal year
1998 Compared to Fiscal Year 1997 above).

Net product sales of $5.8 million decreased $1.3 million (18%) in 1997 primarily
due to a lower level of  shipments  of  military  aerospace  products.  Military
shipments were impacted by the winding down of a missile guidance system program
which was approaching the end of its life cycle.  During 1997, net product sales
of Large Area  Avalanche  Photodiode  (LAAPD)  products  increased by $53,000 to
$154,000.  During 1996, the Company  curtailed LAAPD  production  because of low
reliability  and yields it was  obtaining in the  manufacturing  process.  After
considerable research efforts, the Company developed a new manufacturing process
and, in July 1996, the Company filed for a patent seeking  protection of the new
manufacturing process.

Development  contract  revenues  decreased by $233,000  (29%).  During the third
quarter  of 1997,  revenues  from the DOE  contract  began to wind  down and the
contract  was  completed.  During the  second  half of 1997,  revenues  from the
ARPA/NAWC contract were impacted by a delay in funding from the customer.

COSTS AND EXPENSES
Cost of product  sales  decreased  by  $566,000  (13%) in 1997 and gross  profit
margin on net product  sales  decreased 4  percentage  points to 33% compared to
1996. The decreases are  attributable  to lower product  shipments and a related
decrease in  manufacturing  volume  efficiencies.  In line with the reduction in
product  shipments,  the Company reduced its workforce  (permanent and temporary
employees from 86 to 69 during 1997) through  attrition and a reduction in force
in February 1997.

                                       11
<PAGE>

Research and  development  costs  decreased by $187,000  (9%) to $1.9 million in
1997.  The  decrease  in R&D costs was  primarily  due to the lower level of R&D
effort  on  government  contracts  (see  "Revenues"  above) as well as a general
reduction in internal R&D efforts as the Company  focused more on the production
of  the  LAAPD.  In  addition,   the  Company  better  controlled  internal  R&D
activities.

Marketing and sales  expenses  increased by $296,000  (42%) to $997,000 in 1997.
The  increases  were  primarily due to increased  manpower and higher  marketing
costs.  This increase was expected,  as the Company pursued its plan for growth.
In addition,  sales and marketing  expenditures  had been  deferred  during 1996
awaiting  the  successful  completion  of  a  private  placement  offering  (See
Liquidity and Capital Resources).

General and administrative  expenses increased by $223,000 (16%) to $1.6 million
in 1997  primarily  due to a  one-time  reorganization  charge of  approximately
$323,000  related to management  changes which  occurred in October 1996.  Other
general and administrative  expenses decreased by $111,000 (8%) in 1997 compared
to 1996.  The decline was primarily due to lower  personnel and insurance  costs
(coverages remained constant or were improved).

Interest  income in 1997 of $167,000 was $24,000 higher than 1996 as a result of
higher  average cash balances.  In August 1995, the Company  completed a private
placement which increased its average cash balances during Q3 and Q4 of 1996 and
all of 1997 (see Liquidity and Capital Resources).

LIQUIDITY AND CAPITAL RESOURCES

At March 29,  1998,  the  Company  had cash,  cash  equivalents  and  short-term
investments of $2.4 million,  working capital of $3.7 million and an accumulated
deficit of $17.7 million.  The Company's cash,  cash  equivalents and short-term
investments  decreased  $313,000  during the twelve months ended March 29, 1998.
Cash expenditures were primarily  impacted by $499,000 used to finance inventory
growth  related to higher  levels of LAAPD  inventory  as the Company  begins to
commercialize the product line and higher material requirements  associated with
a change in the Company's product mix. Accounts receivable increased by $324,000
due to a 42%  increase  in  revenues  during the fourth  quarter of fiscal  1998
compared to the  comparable  period in 1997.  Capital  spending  during 1998 was
$163,000 compared to $331,000 during 1997.

To  enable  the  Company  to meet its  capital  commitment  needs,  the  Company
historically  has  supplemented  cash provided by operations  with proceeds from
private  placement  equity  financing,  bank  lines of  credit  and  loans  from
stockholders.  On August 15, 1995,  the Company  completed a $3,000,000  private
placement in which it issued 2,400,000 shares of Class A Common Stock.

The Company has used the proceeds of its 1995 private placement to implement its
strategic  business plan,  which focuses on growing the core business,  bringing
initial LAAPD products to market and developing  proof-of-concept  demonstration
LAAPD Arrays which are expected to prove  helpful in securing  future  financing
and strategic partners.  Development of LAAPD Arrays beyond the proof-of-concept
phase may require additional funds.

The Company has 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.  The agreement was renewed on July 15, 1997,  expires in one year
and provides for  interest to be paid  monthly at prime plus 1.25  percent.  The
Company must adhere to certain  requirements  and provisions to be in compliance
with the terms of the agreement. Borrowings under the line of credit are secured
by accounts receivable,  inventory,  equipment and general intangibles. At March
29, 1998,  no amounts were  outstanding  under any bank line of credit and there
were no stockholder loans to the Company.

                                       12
<PAGE>

The Company  believes  that its  current  cash and cash  equivalents,  cash from
operations and  availability  under its line of credit are sufficient to sustain
operations at least through March 1999.  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
----------------

The Company uses computer software programs  purchased from various  independent
vendors who may have written their  programs using a two digit date field rather
than a four digit field to define the applicable  year.  Such computer  programs
utilizing  a two digit  date field may  recognize  a date using "00" as the year
1900  rather  than the year 2000 (the  "Year 2000  Issue").  The Year 2000 Issue
could  potentially  result in a system  failure  or in  miscalculations  causing
disruptions of operations,  including among other things, a temporary  inability
to  process  transactions,  send  invoices  or  engage in other  similar  normal
business  activities.  The  Company has  identified  Year 2000 Issues in certain
software  applications  and is in the process of  upgrading  or  replacing  such
applications with software which recognizes dates beyond December 31, 1999, thus
addressing  a  substantial  portion  of the Year 2000  Issue that may impact the
Company.  The cost of this project, as it relates to the Year 2000 Issue, is not
expected to have a material  effect on the operations of the Company and will be
funded through operating cash flows.

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.

Item 8.    Financial Statements and Supplementary Data
           -------------------------------------------

The following consolidated financial statements of Advanced Photonix, Inc. 
are included in Item 8.
                                                                        Page
Report of Independent Public Accountants                                 14

Consolidated Statements of Operations
for each of the three years in the period ended March 29, 1998           15

Consolidated Balance Sheets at March 29, 1998 and March 30, 1997        16-17

Consolidated Statements of Stockholders' Equity
for each of the three years in the period ended March 29, 1998           18

Consolidated Statements of Cash Flows
for each of the three years in the period ended March 29, 1998           19

Notes to Consolidated Financial Statements                              20-26

All other 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 consolidated financial statements,
or are inapplicable and, therefore, have been omitted.


                                       13
<PAGE>




                               ARTHUR ANDERSEN LLP





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Advanced Photonix, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of  Advanced
Photonix,  Inc. (a Delaware Corporation) and Subsidiary as of March 29, 1998 and
March  30,  1997,  and  the  related  consolidated   statements  of  operations,
stockholders'  equity and cash  flows for each of the three  years in the period
ended March 29, 1998. 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 audits.

We  conducted  our  audits  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 financial statement presentation.
We believe that our audits provide 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. and
Subsidiary  as of March 29,  1998 and March 30,  1997,  and the results of their
operations  and their cash flows for each of the three years in the period ended
March 29, 1998 in conformity with generally accepted accounting principles.


                                                ARTHUR ANDERSEN LLP


Los Angeles, California
May 21, 1998




                                       14
<PAGE>

<TABLE>



                                              ADVANCED PHOTONIX, INC.

                                       CONSOLIDATED STATEMENTS OF OPERATIONS


<CAPTION>

For each of the three years                                             1998                1997                1996
in the period ended March 29, 1998
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>                 <C>    

REVENUES
   Net product sales                                               $  6,662,000        $  5,792,000        $  7,047,000
   Development contracts                                                346,000             583,000             816,000
                                                                   ----------------    ----------------    ----------------
                                                                   
                                                                      7,008,000           6,375,000           7,863,000
                                                                   ----------------    ----------------    ----------------
                                                                   

COST AND EXPENSES
   Cost of product sales                                              3,920,000           3,900,000           4,466,000
   Research and development                                           1,242,000           1,912,000           2,099,000
   Marketing and sales                                                  978,000             997,000             701,000
   General and administrative                                           983,000           1,627,000           1,404,000
                                                                   ----------------    ----------------    ----------------
                                                                   
                                                                      7,123,000           8,436,000           8,670,000
                                                                   ----------------    ----------------    ----------------
                                                                   

LOSS FROM OPERATIONS                                                   (115,000)         (2,061,000)           (807,000)
                                                                   ----------------    ----------------    ----------------
                                                                   


OTHER INCOME (EXPENSE)
   Interest expense                                                       -                   -                  (3,000)
   Interest income                                                      123,000             167,000             143,000
   Other, net                                                             2,000               8,000              13,000
                                                                          
                                                                   ----------------    ----------------    ----------------
                                                                   
                                                                        125,000             175,000             153,000
                                                                   ----------------    ----------------    ----------------
                                                                   
NET INCOME (LOSS) - $.00, $(.17), $(.07) per share                 $     10,000        $ (1,886,000)       $   (654,000)
                                                                   ================    ================    ================


<FN>

                                   See   notes   to    consolidated    financial statements.
</FN>
</TABLE>


                                                                     15
<PAGE>

<TABLE>

                                               ADVANCED PHOTONIX, INC.

                                            CONSOLIDATED BALANCE SHEETS

<CAPTION>

                                                                           March 29,               March 30,
                                                                              1998                   1997
--------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                    <C>    

ASSETS
CURRENT ASSETS

Cash and cash equivalents                                              $  1,386,000           $  1,217,000

Short-term investments                                                      977,000              1,459,000
                                                                         
Accounts receivable, less allowance of $83,000 in 1998 and 1997             966,000                642,000
                                                                         
Inventories                                                               1,573,000              1,074,000
                                                                         
Prepaid expenses and other current assets                                    84,000                 61,000
                                                                       ---------------        ---------------
                                                                         
         Total Current Assets                                             4,986,000              4,453,000
                                                                       ---------------        ---------------
                                                                         

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost                             3,387,000              3,331,000
                                                                         
Less accumulated depreciation and amortization                           (2,689,000)            (2,364,000)
                                                                       ---------------        ---------------
                                                                            698,000                967,000
                                                                         
OTHER ASSETS

Goodwill, net of accumulated amortization of $219,000 in 1998 and           
    $186,000 in 1997                                                        617,000                650,000 
                                                    
Patents, net of accumulated amortization of $25,000 in 1998 and
    $21,000 in 1997                                                          40,000                 40,000

Other                                                                        25,000                 55,000
                                                                         
                                                                       ---------------        ---------------
                                                                            682,000                745,000
                                                                       ---------------        ---------------
                                                                         
                                                                       $  6,366,000           $  6,165,000
                                                                       ===============        ===============
<FN>

                                  See    notes   to    consolidated    financial statements.

</FN>
</TABLE>

                                                                16
<PAGE>

<TABLE>

                                              ADVANCED PHOTONIX, INC.

                                            CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                                                        March 29,              March 30,
                                                                          1998                    1997
------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                   <C>    
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

Accounts payable                                                  $      518,000        $       295,000

Accrued expenses:
        
      Salaries and employee benefits                                     310,000                451,000
                                                                                             
      Warranty                                                            95,000                 95,000
                                                                                             
      Other                                                              326,000                278,000
                                                                  ----------------        ---------------
                                                                     
         Total Current Liabilities                                     1,249,000              1,119,000
                                                                  ----------------        ---------------                        
                                                                     

COMMITMENTS AND CONTINGENICES (Notes 7 and 8)
STOCKHOLDERS' EQUITY
Class A Common Stock, par value $.001 per share; authorized
 50,000,000 shares;
       1998 - 10,838,260 shares issued and outstanding
       1997 - 10,717,493 shares issued and outstanding                    11,000                 11,000
                                                                                             

Class B Common Stock, par value $.001 per share; authorized
 4,420,113 shares;
       1998 - 76,135 shares issued and outstanding
       1997 -159,225 shares issued and 137,002 outstanding                  -                      -

Convertible Preferred Stock at redemption  value; authorized
10,000,000 shares
       1998 - 90,000 shares issued and outstanding
       1997 - 123,000 shares issued and outstanding                       72,000                 98,000
                                                                                             
Additional paid-in capital                                            22,696,000             22,659,000

Less cost of 22,223 shares of Class B Common Stock 
 in Treasury in 1997                                                        -                   (50,000)
                                                                                     
Accumulated Deficit                                                  (17,662,000)           (17,672,000)
                                                                  ----------------        ---------------
                                                                       5,117,000              5,046,000
                                                                  ----------------        ---------------
                                                                     
                                                                  $    6,366,000          $   6,165,000
                                                                  ================        ===============
<FN>

                                  See    notes   to    consolidated    financial statements.

</FN>
</TABLE>

                                                                        17
<PAGE>


<TABLE>

                                                              ADVANCED PHOTONIX, INC.

                                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>

For each of the three                                                        Additional
years in the period         Class A           Class B         Convertible       Paid-in     Class B Common        
ended March 29, 1998      Common Stock     Common Stock     Preferred Stock   Ca[ital     Treasury Stock    Accumulated
                        Shares   Amount   Shares    Amount  Shares   Amount   Amount     Shares   Amount      Deficit      Total
                        ------   ------   ------    ------  ------   ------   ------     ------   ------      -------      -----

<S>                  <C>        <C>     <C>         <C>     <C>     <C>     <C>         <C>      <C>      <C>            <C>      
BALANCE AT APRIL 2,   7,056,638  $7,000  1,332,428  $1,000  123,000  98,000 $19,612,000  22,223  $(50,000) $(15,132,000) $4,536,000
  1995

Issuance of Class A 
  Common Stock        2,400,000   2,000      -         -       -       -      2,992,000    -         -            -       2,994,000

Conversion of Class  
 B Common Stock       1,161,648   1,000 (1,161,648) (1,000)    -       -          -        -         -            -           -

Exercise of Options      12,900     -        -         -       -       -         28,000    -         -            -          28,000

Net loss                    -       -        -         -       -       -          -        -         -         (654,000)   (654,000)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE AT MARCH     10,631,186  10,000    170,780     -    123,000  98,000  22,632,000  22,223   (50,000)  (15,786,000)  6,904,000
  31, 1996

Issuance Costs on 
 Sale of Class A 
 Common Stock               -       -        -         -       -       -        (18,000)   -         -            -         (18,000)

Conversion of Class 
  B Common Stock         33,778     -      (33,778)    -       -       -          -        -         -            -           -

Exercise of Options      52,529   1,000      -         -       -       -         45,000    -         -            -          46,000

Net Loss                    -       -        -         -       -       -          -        -         -       (1,886,000) (1,886,000)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE AT MARCH     10,717,493  11,000    137,002     -    123,000  98,000  22,659,000  22,223   (50,000)  (17,672,000)  5,046,000
  30, 1997 

Conversion of 
 Redeemable Preferred 
 Stock                      -       -        9,900     -    (33,000)(26,000)     26,000    -         -            -           -

Issuance Costs on 
 Sale of Class A 
 Common Stock               -       -        -         -       -       -        (17,000)   -         -            -         (17,000)

Conversion of Class 
 B Common Stock          70,767     -      (70,767)    -       -       -          -        -         -            -            -

Exercise of Options      50,000     -        -         -       -       -         78,000    -         -            -          78,000

Retirement of 
 Treasury Shares            -       -        -         -       -       -        (50,000)(22,223)   50,000         -            -

Net Income                  -       -        -         -       -       -          -        -         -          10,000       10,000
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 
  29, 1998           10,838,260 $11,000     76,135     -     90,000  72,000 $22,696,000    -         -    $(17,662,000)  $5,117,000
====================================================================================================================================
<FN>
  
 See notes to consolidated financial statements.
</FN>
</TABLE>

                                                          18
<PAGE>

<TABLE>


                                                                    ADVANCED PHOTONIX, INC.

                                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>


For each of the three years in the period ended March 29, 1998                    1998               1997              1996
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>                <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                               $     10,000      $  (1,886,000)     $   (654,000)

Adjustment to reconcile net income (loss) to net cash provided by (used in)
operating activities
     Depreciation                                                                    426,000            524,000           539,000
     Amortization                                                                     37,000             66,000            55,000
     (Gain) loss on disposal of fixed assets                                           6,000               -               (4,000)

Changes in assets and liabilities:
     Short-term investments                                                          482,000         (1,459,000)            -
     Accounts receivable                                                            (324,000)           150,000           328,000
     Inventories                                                                    (499,000)          (288,000)          219,000
     Prepaid expenses and other current assets                                       (23,000)            25,000           (40,000)
     Other assets                                                                     26,000              2,000            (2,000)
     Accounts payable and other accrued expenses                                     130,000            317,000          (116,000)
     Advances                                                                           -                27,000           (84,000)
                                                                                -------------     --------------     -------------
                                                                             
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                  271,000         (2,522,000)          241,000
                                                                                -------------     --------------     -------------
                                                                             
CASH FLOWS FROM INVESTING ACTIVITIES 
   Capital expenditures                                                             (163,000)          (331,000)          (82,000)
                                                                                -------------     --------------     -------------
NET CASH USED IN INVESTING ACTIVITIES                                               (163,000)          (331,000)          (82,000)
                                                                                -------------     --------------     -------------
                                                                             
CASH FLOWS FROM FINANCING ACTIVITIES
   Sales of common stock, net of issuance costs                                      (17,000)           (17,000)        2,994,000
   Proceeds from exercise of stock options                                            78,000             45,000            28,000
   Repayment of long-term debt                                                          -                  -              (42,000)
                                                                                -------------     --------------     -------------
                                                                             
NET CASH PROVIDED BY FINANCING ACTIVITIES                                             61,000             28,000         2,980,000
                                                                                -------------     --------------     -------------
                                                                             
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 169,000         (2,825,000)        3,139,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     1,217,000          4,042,000           903,000
                                                                                -------------     --------------     -------------
                                                                             
CASH AND CASH EQUIVALENTS AT END OF YEAR                                        $  1,386,000      $   1,217,000      $  4,042,000
                                                                                =============     ==============     =============
                                                                                
<FN>
                                                         See notes to consolidated financial statements.

</FN>
</TABLE>



                                                              19
<PAGE>




                             ADVANCED PHOTONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 29, 1998

NOTE 1 - LINE OF BUSINESS AND BUSINESS RISKS

Advanced   Photonix,   Inc.  (together  with  its  subsidiary  Silicon  Detector
Corporation,   the   "Company"),   designs   and   manufactures   optoelectronic
semiconductor  based components and hybrid  assemblies (the "core business") and
is engaged in the  development  and  manufacture of proprietary  and other solid
state light and radiation  detection  devices,  including  proprietary  advanced
solid state silicon  photodetection  devices which utilize Large Area  Avalanche
Photodetection ("LAAPD") technology.

The Company has an accumulated  deficit of $17,662,000 as of March 29, 1998, and
has incurred losses since inception until the current fiscal year. The Company's
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 29, 1998, no amounts were
outstanding under any bank line-of-credit and there were no stockholder loans to
the Company.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year: The Company's fiscal year ends on the last Sunday in March.  Fiscal
years in the  three-year  period  ended March 29, 1998,  each contain  fifty-two
weeks.

Principles of consolidation:  The consolidated  financial statements include the
accounts of the Company and its  wholly-owned  subsidiary,  SDC. All significant
intercompany accounts and transactions have been eliminated.

Cash, cash  equivalents and short-term  investments:  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 are comprised of
readily  marketable debt  securities  with remaining  maturities of more than 90
days at date of purchase.  The short-term investments are all considered trading
securities and are bought and held principally for the purpose of selling in the
near term. The fair value of such investments approximated the carrying value as
of March 29, 1998 and March 30,  1997.  Cash flows from  purchases  and sales of
trading securities are classified as cash flows from operating activities.

The Company maintains cash balances at a financial  institution that are insured
by the Federal Deposit Insurance Corporation up to $100,000.  The Company places
its cash equivalents and short-term investments in investment grade,  short-term
debt  instruments and limits the amount of credit exposure to any one commercial
issuer.  As of March 29,  1998,  the  Company had cash and cash  equivalents  at
various  financial  institutions and in various highly liquid  investments which
were in excess of federally insured amounts.

Credit risk: 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.  Receivables generally are due within 60 days. A significant portion
of  revenues  and  accounts  receivable  are with U.S.  Government  contractors,
including  approximately  26%, 19% and 16% of revenues from a major customer for
the fiscal years ending 1998, 1997 and 1996,  respectively.  In fiscal 1998, the
Company had export sales of approximately  $1,047,000 to customers in Australia,
France, Italy, Japan, Mexico, Spain, Switzerland, Canada, Germany, Great Britain


                                       20
<PAGE>

and Sweden (none of which was individually  greater than 10% of total revenues).
As of March 29, 1998, one customer comprised 14% of accounts receivable.

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:

                                        March 29, 1998          March 30, 1997
                                     --------------------    -------------------
                                                              
Raw materials                          $    481,000           $    336,000
Work in progress                            940,000                586,000
Finished products                           152,000                152,000
                                     --------------------    -------------------
                                                              
                                       $  1,573,000            $ 1,074,000
                                     ====================    ===================

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 years to eleven years.  The Company  capitalizes  expenditures
that  materially   increase  asset  lives  and  charges   ordinary  repairs  and
maintenance  to  operations  as  incurred.  When  assets  are sold or  otherwise
disposed of, the cost and related  depreciation or amortization are removed from
the  accounts  and  any  resulting  gain or loss is  included  in  other  income
(expense) in the accompanying statements of operations.  Equipment and leasehold
improvements consist of the following:

                                         March 29, 1998          March 30, 1997
                                     --------------------    -------------------
                                                             
Laboratory equipment                       $ 2,689,000            $ 2,570,000
Furniture, fixtures and office equipment       300,000                365,000
Leasehold improvements                         306,000                315,000
Construction in progress                        92,000                 81,000
                                     --------------------    -------------------
                                           $ 3,387,000            $ 3,331,000
                                     ====================    ===================

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 $4,000, $12,000 and $2,000
for the fiscal years 1998, 1997 and 1996, 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,  $34,000  and $33,000  for the fiscal  years 1998,  1997 and 1996,
respectively.  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:
Development   contracts  -  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.

Product  Sales - 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.

                                       21
<PAGE>

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 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 the year.  "Diluted" net income (loss) per share has
not been  presented as the impact is either not material or  anti-dilutive.  All
net income  (loss) per share  amounts  for 1997 and 1996 have been  restated  to
reflect  the  adoption  of SFAS No.  128.  Such  weighted  average  shares  were
approximately  10,886,000  in 1998,  10,831,000  in 1997 and  9,988,000 in 1996.
Options  totaling  2,052,000,  2,512,000 and  2,191,000 in 1998,  1997 and 1996,
respectively,  have been excluded  from the  determination  of weighted  average
shares outstanding as their affect would be anti-dilutive or not material.

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.

Use 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  6).  Adoption  of SFAS  123 has not  affected  the  Company's  results  of
operations or financial position.

New  Authoritative  Pronouncements:  In  June  1997,  the  Financial  Accounting
Standards Board ("FASB") issued SFAS No. 130, "Reporting  Comprehensive  Income"
("SFAS 130").  SFAS 130  establishes new standards for the reporting and display
of  comprehensive  income and its  components  in a full set of general  purpose
financial  statements.  These new standards require that all items recognized as
components of comprehensive  income be reported in a financial statement that is
displayed with the same  prominence as other financial  statements.  SFAS 130 is
effective for fiscal years  beginning  after  December 15, 1997. The adoption of
SFAS 130 will not impact the Company's financial statements.

In June 1997,  the FASB issued SFAS No. 11,  "Disclosures  About  Segments of an
Enterprise  and  Related  Information"  ("SFAS  131").  SFAS 131 changes the way
public companies report segment  information in annual financial  statements and
also requires those companies to report selected segment  information in interim
financial  reports.  SFAS 131 is effective for periods  beginning after December
15,  1997.  The  adoption  of SFAS 131 will not have a  material  impact  on the
Company's financial statements.

Reclassifications:  Certain  prior  years'  amounts  have been  reclassified  to
conform to the current year's presentation.

                                       22
<PAGE>

NOTE 3 - 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 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.

Pursuant  to a Private  Offering  Memorandum  dated June 15,  1995,  the Company
completed  a private  placement  of  2,400,000  shares,  from which the  Company
received gross  proceeds of $3,000,000.  The first closing was completed in July
and the final closing in August 1995.

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 $.001  per  share.  The  number of shares of Class A
Preferred  Stock issued and outstanding was 90,000 at March 29, 1998 and 123,000
at March 30, 1997,  respectively.  The Class A Preferred Stock has a liquidation
preference equal to its issue price ($.80 per share).The Class A Preferred Stock
is convertible at any time, at the option of the holder,  into .3 share of Class
B Common  Stock for each share of  Preferred  Stock  converted.  As of March 29,
1998,  there  were  27,000  shares  of Class B  Common  Stock  reserved  for the
potential conversion of the Class A Preferred Stock. 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  $72,000 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.

NOTE 4 - LINE OF CREDIT

The Company has 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.  The agreement  expires in July 1998 and provides for interest to
be paid monthly at prime plus 1.25 percent (9.75 percent at March 29, 1998). The
Company must adhere to certain  requirements  and provisions to be in compliance
with the terms of the  agreement.  The Company was in  compliance  with all such
covenants as of March 29, 1998.  Borrowings under the line of credit are secured
by accounts receivable,  inventory, equipment and general intangibles. There was
no outstanding balance under the line of credit agreement as of March 29, 1998.

NOTE 5 - INCOME TAXES

At March 29,  1998,  the  Company  had net  operating  loss  carry  forwards  of
approximately  $15.7  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 carry  forward
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 Company  also has  approximately  $509,000  in research  and
development credit carryovers  available for federal tax purposes that expire in
the fiscal years 2004 through 2013.

Under SFAS No. 109,  "Accounting  for Income Taxes",  deferred tax assets may be
recognized for temporary  differences that will result in deductible  amounts in
future periods and for loss  carryforwards.  A valuation allowance is recognized
if, based on the weight of available  evidence,  it is more likely than not that
some portion or all of the deferred tax asset will not be realized.  A detail of
the  Company's  net  deferred  tax asset as of March 29, 1998 and March 30, 1997
follows:

                                       23
<PAGE>

                                  March 29, 1998            March 30, 1997
                               ---------------------     ----------------------
NOL Carryforwards                  $ 6,074,000                $ 6,273,000
Inventory obsolescence                 549,000                    541,000
Warranty                                37,000                     37,000
Depreciation                           (54,000)                    (3,000)
Other                                  106,000                    105,000
                                ---------------------     ----------------------
                                     6,712,000                  6,953,000
Less valuation allowance            (6,712,000)                (6,953,000)
                                ---------------------     ----------------------
                                                                     
Net deferred tax asset             $     -0-                  $    -0-
                                =====================     ======================

Due to  the  uncertainty  surrounding  the  realization  of  the  favorable  tax
attributes of such net operating loss carry forwards in future tax returns,  the
Company has recorded a valuation  allowance  against its otherwise  recognizable
deferred tax assets. Accordingly, no deferred tax asset has been reported in the
accompanying balance sheet.

As the Company  utilized  tax loss  carryforwards  in fiscal  1998 and  incurred
losses in fiscal  years 1997 and 1996,  the Company has recorded  minimum  state
taxes of $1,600 in other  expense each year in the  accompanying  statements  of
operations.

NOTE 6 - 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 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:

                                                 1998                    1997
                                            -----------------    ---------------
                                                                        
Net Income (Loss) - as reported               $    10,000         $  (1,886,000)
Net Loss - pro forma                          $  (309,000)           (2,108,000)
Basic Income (Loss) per share - as reported           .00                 (0.17)
Basic Income (Loss) per share - pro forma            (.03)                (0.19)
                                            -----------------    ---------------

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 1998 and 1997, respectively:  risk free interest rates of 5.82 percent
and 6.53 percent,  expected  volatility of 48.57 percent and 63.33 percent,  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 29,  1998,  there
were  1,298,000  shares  available  for future  grant under such plans.  Options
typically  vest at the rate of 25 percent per year over four  years,  except for
options granted under The Directors'  Plan,  which typically vest at the rate of
50 percent per year over two years. Under these plans, the option exercise price
                                       
                                       24
<PAGE>

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.
<TABLE>

Stock option transactions for 1998, 1997 and 1996 are summarized as follows:
<CAPTION>

                                                  1998                     1997                    1996
                                        ---------------------------------------------------------------------------
                                           Shares      Wtd Avg      Shares     Wtd Avg      Shares      Wtd Avg
                                           (000)      Ex Price       (000)    Ex Price      (000)      Ex Price
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>            <C>       <C>          <C>        <C>           <C>  
Outstanding at beginning of year          2,512          $3.41     2,191        $3.52      2,247         $4.16
Granted                                      90           1.34       530         2.58        550          2.18
Exercised                                   (50)          1.56      (101)        2.13        (13)         2.16
Cancelled                                  (500)          2.18      (108)        2.74       (593)         4.74
Outstanding at end of year                2,052          $3.67     2,512        $3.41      2,191         $3.52
-------------------------------------------------------------------------------------------------------------------
Exercisable at end of year                1,659          $4.02     1,905        $3.76      1,825         $3.83
-------------------------------------------------------------------------------------------------------------------
Weighted average fair value of options    $0.90                    $2.01                   $1.76
granted
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>

The following  table  summarizes  information  about  fixed-price  stock options
outstanding at March 29, 1998:
<CAPTION>

                                          Options Outstanding                             Options Exercisable
-------------------------------------------------------------------------------------------------------------------
 Option Price Range        Shares          Wtd Avg Remaining         Wtd Avg          Shares       Wtd Avg Exercise
                                           Contractual Life       Exercise Price                        Price
---------------------- ---------------- ------------------------ ----------------- -------------- -------------------
<S>  <C>                   <C>                <C>                     <C>              <C>              <C>  
     $ 6.00                750,000            2.88 years              $6.00            750,000          $6.00
     $ 4.00-5.75            67,000            4.00 years              $4.84             67,000          $4.84
     $ 2.25-2.44           979,000            5.85 years              $2.37            678,000          $2.32
     $ 1.25-1.75           256,000            7.88 years              $1.50            163,000          $1.59
</TABLE>


NOTE 7 - COMMITMENTS

The Company leases its  manufacturing and office facility under a noncancellable
operating   lease.   Approximate   minimum   future  lease  payments  under  all
noncancellable  operating  leases expiring at various dates through fiscal 2004,
are as follows:

               Fiscal year ending:
               1999                              $    350,000
               2000                                   370,000
               2001                                   372,000
               2002                                   368,000
               2003                                   375,000
               Thereafter                             342,000
                                                 ------------
                                                 $  2,177,000
                                                 ============

Rent expense for the fiscal years ending 1998,  1997 and 1996 was  approximately
$353,000, $346,000 and $323,000, respectively.

                                       25
<PAGE>

The Company has employment and  termination  agreements  with certain  employees
under which the employees  may receive  severance pay through the greater of 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  $275,000  for each of the  fiscal  years  ending  1999 and  2000,
respectively.

NOTE 8 - 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.

NOTE 9 - 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  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  $60,000,  $69,000,  and $68,000 for the fiscal years ending 1998,
1997 and 1996, respectively.

NOTE 10 - SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION
<TABLE>
<CAPTION>

                                                         March 29, 1998       March 30, 1997       March 31, 1996
                                                      ----------------------------------------------------------------
<S>                                                        <C>                  <C>                   <C>    
Cash paid during the year for:
   Interest (net of amount capitalized)                    $   -                $   -                 $ 2,600
   Income taxes                                              1,600                1,600                 5,407

Noncash Transaction:
   Issuance of common stock upon the conversion of          26,000                  -                     -
    Redeemable Convertible Preferred Stock
</TABLE>

NOTE 11 - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>

(000)                                               Balance at    Charged to Cost     Deductions     Balance at End
                                                   Beginning of     and Expenses                       of Period
                                                      Period
                                                  --------------- ----------------- --------------- -----------------
<S>                                                  <C>                <C>              <C>            <C>     
Year end March 29, 1998                              $     83           $ -              $ -            $     83
-----------------------
Allowance for bad debt
Warranty                                                   95             25              25                  95
Year end March 30, 1997                                   105              -              22                  83
-----------------------
Allowance for bad debt
Warranty                                                   95            39               39                  95
Year end March 31, 1996                                   105              -                -                105
-----------------------
Allowance for bad debt
Warranty                                                   95              -                -                 95


</TABLE>


                                       26
<PAGE>

Item 9.    Changes in and Disagreements with Accountants on Accounting 
           and Financial Disclosure

           None

                                    PART III

Item 10.          Directors and Executive Officers

Set forth below is certain information relating to the directors and officers of
the Company.

      Name                              Age              Position


Harry Melkonian                48       Chairman of the Board, President and 
                                        Chief Executive Officer

Robert G. Allison              41       Director

James A. Gordon                48       Director

Hayden Leason                  67       Director

Jon B. Victor                  45       Director

Patrick J. Holmes              52       Executive Vice President, Chief 
                                        Financial Officer, Secretary & Treasurer


Harry Melkonian, Chairman of the Board, President & Chief Executive Officer
Mr.  Melkonian  joined the  Company in June 1992.  He has been  President  since
November 1996, was elected Chief Executive  Officer in October 1997 and Chairman
of the Board in April 1998.  He served as General  Manager of the  Company's PIN
photodiode  business from 1993 until November 1996.  From 1989 until joining the
Company,  Mr. Melkonian  operated Melkonian  Associates,  a consulting firm that
assisted the Company in the  acquisition  of its  subsidiary,  Silicon  Detector
Corporation.  From 1987 until 1989,  he was Director of  Operations at Simulaser
Corporation;  and for six years  previously,  he held various  operations  level
positions at Sensor  Technology,  Inc. Mr. Melkonian holds a Bachelor of Science
degree in Business Administration from Northeastern University.

Robert G. Allison, Director
Mr.  Allison  became a  director  in January  1998.  He  previously  served as a
director from October 1996 to June 1997. Mr. Allison is the Managing  Partner of
Allison  Venture  Partners,  Inc., a private capital and consulting firm serving
the  technology  market.  Mr.  Allison is a partner of Edgewater  Private Equity
Fund, LP and Edgewater Private Equity Fund II, LP, limited  partnerships  formed
for investment purposes.  Prior to forming Allison Venture Partners, Mr. Allison
served as the Executive Vice President,  Chief Operating Officer and Director of
Aurora Electronics Group, Inc. (AUR-AMEX). Mr. Allison served as Vice President,
Semiconductor  Marketing and Assets at Arrow Electronics,  Inc.  (NASDQ-ARW) and
was the founder,  President and CEO of Insight Electronics,  Inc., a specialized
semiconductor distributor which was acquired by MEMEC Group, PLC.

James A. Gordon, Director
Mr. Gordon became a director of the Company in August 1992.  Since January 1992,
Mr. Gordon has been President of Gordon  Management,  Inc., which is the general
partner of Edgewater  Private Equity Fund, LP

                                       27
<PAGE>

and  Edgewater  Private  Equity  Fund II, LP,  limited  partnerships  formed for
investment  purposes.  In addition,  Mr. Gordon has managed Focused Value Equity
portfolios  since 1985. Mr. Gordon presently serves as a member of the Boards of
Directors of the  following  organizations:  Grinnell  College  (also serving as
Chairman of the Investment Committee), IMNET Systems, Inc.; HealthDesk, Inc. and
Microware  Systems  Corporation.  He is currently a Board member of the National
Committee for the Performing Arts of the Kennedy Center.  Mr. Gordon served as a
member of the Board of Directors for Des Moines Art Center;  Des Moines  Ballet;
Des Moines Metro Opera; Governor's United Nations Board; Iowa Society to Prevent
Blindness;   Des  Moines   Parent   Teacher   Association;   Young   President's
Organization; and Northwestern University Alumni Board.

Hayden Leason, Director
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 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.

Jon B. Victor, Director
Mr.  Victor became a director of the Company in June 1995. He served as Chairman
of the Board from  October 1997 until April 1998.  Mr.  Victor is the Manager of
Greenwich Ventures,  LLC, which is the general partner of Greenwich Ventures, LP
and Vantage Ventures, CV, Investment  Partnerships,  which he organized in 1996.
He began his career in the equity research and trust  departments of the Bank of
New York.  From 1978 through 1982 he worked for J. & W. Seligman & Co., where he
was responsible for offshore  advisory  relationships,  and was President of the
firm's broker/dealer subsidiary. Mr. Victor founded Security Capital Management,
Inc.,  an  investment  advisory  firm,  in 1983,  and served as its President or
Co-President until 1996. In 1992, Mr. Victor co-founded Gordon Management, Inc.,
the general partner of Edgewater  Private Equity Fund, LP, and Edgewater Private
Equity Fund II, LP. Mr. Victor is a 1973 magna cum laude  graduate of Washington
University and a 1977 graduate of the George Washington University School of Law
where he earned his J.D. cum laude and  completed  his M.B.A.  course work.  Mr.
Victor serves on the Board of Directors of several private  investment firms and
acts as an independent arbitrator for the National Futures Association.

Patrick J. Holmes, Executive Vice President,  Chief Financial Officer, Corporate
Secretary  and  Treasurer  Mr.  Holmes joined the Company in August 1993 and was
named  Executive Vice  President in November  1996.  From 1989 until joining the
Company, Mr. Holmes was a Division Controller for Textron,  Inc. From 1985 until
1989, he was Chief Accountant and Financial  Operations Manager for two start-up
companies of Lockheed Corporation in Sunnyvale, CA. Previously,  Mr. Holmes held
senior  financial  posts with General  Dynamics and Datapoint  Corporation.  Mr.
Holmes, who is a Certified Public Accountant, received his degree in accounting,
magna cum laude,  from the  University  of Missouri  in St.  Louis and is a past
recipient of the Missouri  Society of CPAs Silver Medal.  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.

Item 11.        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 three fiscal years.

                                       28
<PAGE>
<TABLE>

                                              SUMMARY COMPENSATION TABLE

<CAPTION>
                                                                           Long Term Compensation
                                                                   --------------------------------------
                                         Annual Compensation                  Awards            Payouts
                                     ----------------------------  --------------------------   -------
                                                                    Restricted     Securities
Name and                                             Other Annual     Stock        Underlying    LTIP      All Other
Principal                    Fiscal  Salary   Bonus  Compensation     Awards        Options     Payouts  Compensation
Position                      Year    ($)      ($)        ($)           ($)           (#)        ($)         ($)(1)
--------------------------------------------------------------------------------------------------------------------
<S>                           <C>   <C>       <C>          <C>           <C>       <C>            <C>      <C>                      
Harry Melkonian,              1998  150,000   40,000       -             -            -           -        4,700
Chairman of the Board,        1997  135,000     -          -             -         140,000        -        3,900
President and Chief           1996  110,000   15,000       -             -            -           -        3,300
Executive Officer (2)
--------------------------------------------------------------------------------------------------------------------
Hayden Leason                 1998      -        -         -             -            -           -           -
Chairman of the Board and     1997      -        -         -             -            -           -           -
Chief Executive Officer (3)   1996      -        -         -             -            -           -           -
--------------------------------------------------------------------------------------------------------------------
Patrick J. Holmes             1998  125,000   15,000       -             -            -           -        3,900
Executive Vice President,     1997  125,000      -         -             -          70,000        -        3,300
CFO, Secretary and            1996  125,000   15,000       -             -            -           -        3,800
Treasurer
--------------------------------------------------------------------------------------------------------------------
<FN>

1 Represents amounts paid by the Company on behalf of the named person in connection with the Company's 401(k) Retirement Plan.
2 Mr. Melkonian was elected Chief Executive Office in October, 1997, and Chairman of the Board in April 1998..
3 Mr. Leason resigned as Chairman of the Board and Chief Executive Officer in October 1997.  Options granted as part of plans 
  provided to outside directors of the Company have been excluded from the table (10,000 in 1998 and 25,000 in 1996).
</FN>
</TABLE>

Employment Agreements

The Company has employment and termination  agreements  with certain  employees,
including  Messrs.  Melkonian  and Holmes under which the  employees may receive
severance  pay  through  the end of the  term of the  contract  or up to  twelve
months. See Notes to Consolidated Financial Statements - Note 7.

Stock Options

Except as described in the Summary  Compensation  Table, no options were granted
to executive officers of the Company during fiscal 1998.

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. No options were exercised during the last fiscal
year.
<TABLE>

    Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values

<CAPTION>
                                                                                                       Value of Unexercised
                                                                Number of Securities Underlying      In-the-Money Options at
                        Shares Acquired                     Unexercised Options at Fiscal Year End   (#)Fiscal Year End ($)
Name (1)                on Exercise (#)  Value Realized          Exercisable/Unexercisable          Exercisable/Unexercisable
-----------------------------------------------------------------------------------------------------------------------------
<S>                             <C>               <C>                   <C>                               <C>    
Harry Melkonian                 -                 -                     88,000/112,000                    -/-
Hayden Leason                   -                 -                     25,000/10,000                     -/-
Patrick J. Holmes               -                 -                     74,000/76,000                     -/-
-----------------------------------------------------------------------------------------------------------------------------
<FN>
1    See "Summary Compensation Table" and Item 10 "Directors and Executive Officers" for principal position.
</FN>
</TABLE>

On January  18,  1995 the Board of  Directors  canceled  outstanding  options to
purchase an aggregate of 365,000  shares of the  Company's  Class A Common Stock
and granted to the holders of such options new options to purchase an equivalent
number of shares.  These options were the only options of the Company which have
been issued coincident with the cancellation of outstanding options or otherwise
repriced  since the Company's  inception  through  March 29, 1998.  The Board of
Directors  concluded  that the  subsequent  decrease in the market price for the
Company's Class A Common Stock below the exercise price for the 

                                       29
<PAGE>

canceled  options was due to factors which were  principally  not all within the
realm of  responsibility  of the option  holders  and that the options no longer
provided  the  incentive  to such  option  holders  to  perform on behalf of the
Company in the manner  contemplated by the Board when the canceled  options were
initially  granted.  On the  date of the  issuance  of the new  options  and the
cancellation  of the  outstanding  options,  the  closing  sale  price  for  the
Company's  Class A Common Stock as reported on the American  Stock  Exchange was
$1.56.  The  following  table  sets  forth  certain  information  regarding  the
aforementioned canceled and new options:
<TABLE>

                                               Ten-Year Option Repricings
<CAPTION>

                                 Number of Securities   Market Price of   Exercise Price at               Length of Original
                                  Underlying Options   Stock at Time of       Time of       New        Option Term Remaining at
                                     Repriced or         Repricing or       Repricing or    Exercise            Date of
Name1                Date            Amended (#)         Amendment ($)     Amendment ($)    Price ($)   Repricing or Amendment
----                 ----            -----------         -------------     -------------    ---------   ----------------------
<S>                  <C>               <C>                   <C>                <C>            <C>              <C>    
Harry Melkonian      1/18/95           60,000                1.56               3.62           1.56             7 years

Patrick J. Holmes    1/18/95           30,000                1.56               4.87           1.56             9 years
                                       30,000                1.56               4.50           1.56             9 years
------------------------------------------------------------------------------------------------------------------------------
<FN>
1    See "Summary Compensation Table" and Item 10 "Directors and Executive Officers" for principal position.
</FN>
</TABLE>

Compensation of Directors

Prior to October 1995, each director who is not an employee of the Company or an
affiliate  received an annual fee of $10,000,  payable in quarterly  increments,
and a fee of $1,000 for each meeting attended.  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.
Directors who are also officers of the Company or its  affiliates do not receive
cash  compensation  in  consideration  for  their  services  as  directors.  All
directors,  however, including employee directors, are reimbursed for reasonable
travel  expenses  incurred in connection  with their  attending  meetings of the
Board of  Directors  and  committees.  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 addition,
participation  in the 1991  Special  Directors  Stock  Option  Plan,  other than
initial  grants for new  directors,  was  suspended.  In January 1998, the Board
reinstated  participation  in the 1991 Special  Directors  Stock Option Plan and
approved an annual stock option grant in lieu of an annual cash fee.  This grant
would  be  the   approximate   equivalent  of  $10,000   calculated   using  the
Black-Scholes option pricing model.

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 ownership and changes in ownership  with the  Securities  and
Exchange Commission and to furnish the Company with copies of these reports. New
rules governing these reports were adopted in February 1991 and generally became
effective  in May  1991.  Based  upon the  Company's  review  of copies of these
reports  received by it, the Company  believes  that all filings  required to be
made by the Reporting  Persons  during the fiscal year ended March 29, 1998 were
made on a timely basis.

                                       30
<PAGE>


Item 12.     Security Ownership of Certain Beneficial Owners and Management

The  following  table  sets  forth,  as of June  5,  1998,  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  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.
<TABLE>
<CAPTION>

                                           Class A Common Stock                         Class B Common Stock
                               --------------------------------------------  ------------------------------------------------------
                                               Shares Under                               Shares Under
                                  Shares        Exercisable      Percent of   Shares      Exercisable     Percent of    Percent
                                  Owned      Options/Warrants(1)   Class      Owned     Options/Warrants    Class      Voting(2)

<S>                               <C>             <C>              <C>        <C>            <C>             <C>          <C> 
The Dreyfus Corporation(3)        1,497,700            -           13.8       -              -               -            13.7

Hayden Leason(4)                  1,304,100        27,500          12.3       -              -               -            12.2
 
The Townsend Group                  874,100            -            8.1       -              -               -             8.0
                                    
Advanced Detectors,Inc.(5)             -          750,000           6.5       -              -               -             6.4

J. Morton Davis(6)                  656,045            -            6.1       -              -               -             6.0
                                                                                                       
James A. Gordon(7)                  593,640        33,000           5.5       -              -               -             5.4
                            
Edgewater Private Equity Fund(8)    593,640        33,000           5.5       -              -               -             5.4

Robert G. Allison(9)                593,640        33,000           5.5       -              -               -             5.4
                            
Jon Victor(10)                      237,400        27,500           2.4       -              -               -             2.4
                            
Patrick J. Holmes                    52,600       108,000           1.5       -              -               -             1.5
                            
Harry Melkonian                      10,000       116,000           1.2       -              -               -             1.2
                            
Directors & Officers as           2,197,740       312,000          22.5       -              -               -            22.5
a Group
-----------------------------------------------------------------------------------------------------------------------------------
<FN>

1 Includes shares under options/warrants exercisable on June 5, 1998 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.

3 Shareholder is a subsidiary of Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, PA 15258-0001.

4 The address of this shareholder is Palmas Del Mar, 10 Monte Sol, Humacao, Puerto Rico 00791.

5 Formerly Xsirius, Inc., the last known address of this beneficial owner was 1220 Avenida Acaso, Camarillo, CA 93012.

6 The address of this  shareholder is D.H. Blair, 44 Wall Street,  New York, NY 10005.  Includes  617,760 shares owned by 
   D.H. Blair Investment Banking Corporation and 38,285 shares owned by Parliament Hill Corporation.

7 The address of this shareholder is c/o Edgewater  Private Equity Fund, 666 Grand Avenue,  Suite 200, Des Moines,  IA 50309.  
   Includes 593,640 shares owned by Edgewater Private Equity Fund, L.P.  ("Edgewater").  Mr. Gordon is the President of Gordon  
   Management,  Inc. which is the general partner of Edgewater. Also includes 2,500 options granted to Mr. Allison. Mr. Allison is
   a partner of Edgewater.

8 The address of this  shareholder  is c/o Edgewater  Private  Equity Fund,  666 Grand Avenue,  Suite 200, Des Moines, IA 50309.  
   Includes 30,500 options granted to Mr.  Gordon (see footnote 7) and 2,500  options  granted to Mr.  Allison (see footnote 10).

9 The address of this shareholder is c/o Allison Venture Partners,  Inc., 103 N. Point Drive,  Lake Forest,  CA 92630.  
   Includes 593,640 shares owned by Edgewater Private Equity Fund, L.P.  ("Edgewater").  Mr. Allison is the President of Allison 
   Venture Partners,  Inc. which is the general partner of Edgewater.

10 The address of this shareholder is c/o Greenwich Ventures, LLC, 3463 State Street, Santa Barbara, CA 93105.
</FN>
</TABLE>


Item 13.       Certain Relationships and Related Transactions

See Item 11.  Executive Compensation.


                                       31
<PAGE>


                                     PART IV

Item 14.       Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following is a list of the financial  statement schedules and exhibits filed
herewith.

(a) (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.

(a) (3)  Exhibits:

Exhibit
  No.                   Description

 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.

10.6      Employment  Agreement dated June 1, 1998,  between Advanced  Photonix,
          Inc. and Harry Melkonian.

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.


                                       32
<PAGE>

10.8      Loan and Security Agreement dated July 15, 1997 between Silicon Valley
          Bank and  Registrant -  incorporated  by reference to Exhibit 10.14 to
          the Registrant's June 29, 1997 Quarterly Report on Form 10-Q.

10.9      Lease  Agreement  dated February 23, 1998 between  Advanced  Photonix,
          Inc. and High Tech No. 1, Ltd.

10.10     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

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.

*Constitutes a compensation plan or arrangement  required to be filed as part of
this report.

                                   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/ Harry Melkonian
                                             --------------------
                                             Harry Melkonian, 
                                             President & Chief Executive Officer
Date:  June 26, 1998                                 
      ---------------                                         
                                                              

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.

Signature                          Title                                 Date

/s/ Harry Melkonian       Chairman of the Board, President &       June 26, 1998
-------------------       Chief Executive Officer                  -------------
Harry Melkonian           (Principal Executive Officer)          
                                            

/s/ Robert G. Allison     Director                                 June 26, 1998
-------------------                                                -------------
Robert G. Allison

/s/ Hayden Leason         Director                                 June 26, 1998
-------------------                                                -------------
Hayden Leason

/s/ James A. Gordon       Director                                 June 26, 1998
-------------------                                                -------------
James A. Gordon

/s/ Jon B. Victor         Director                                 June 26, 1998
-------------------                                                -------------
Jon B. Victor

/s/ Patrick J. Holmes     Executive Vice President, Chief          June 26, 1998
-------------------       Financial Officer, Corporate             -------------
Patrick J. Holmes         Secretary/Treasurer,          
                          (Principal Financial and Accounting Officer)


                                       33
<PAGE>