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 30, 1997

                                       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.
             (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 2, 1997,  the  aggregate  market  value of the  voting  stock held by
non-affiliates of the Registrant was approximately $8,900,000.

As of June 2, 1997,  there were  10,717,493  shares of Class A Common  Stock and
137,002 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

           Part I, Item 9 - The Current Report on Form 8-K, amended by
                        8-K/A, Dated January 26, 1995, is
                        incorporated herein by reference.


<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 believes
that its  proprietary  Avalanche  Photodiode  ("APD")  technology  represents  a
leading-edge advancement in photodetection and imaging.

The Company was incorporated under the laws of the State of Delaware on June 22,
1988 as a wholly- owned subsidiary of Xsirius,  Inc.  ("Xsirius") under the name
Xsirius Photonics,  Inc. The Company changed its name to Advanced Photonix, Inc.
on November  13,  1990.  Xsirius  changed its name to Advanced  Detectors,  Inc.
("ADI") on December 27, 1995.

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 ("PMTs"), 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 Company early-on saw advantages of being able to offer both the existing PIN
photodiode  technology and the LAAPD,  thereby having a full line of solid state
photodetectors.  In addition,  the Company needed a manufacturing  facility with
semiconductor  production  capability  for  its  LAAPD  device  similar  to that
required for PIN photodiodes. After an Initial Public Offering in February 1991,
the  Company  acquired  SDC in  September  1991  to  provide  a  sales  base  of
photodetector  products and a manufacturing  facility and capability which could
be used for its LAAPD devices.  SDC manufactured and marketed  custom-engineered
and other  photodetection  devices and had sales of  approximately $4 million in
the twelve months ended July 31, 1991. In March 1992, the Company  acquired from
Applied Solar Energy Corporation ("ASEC") the inventory, equipment, intellectual
property  rights and customer  order board of ASEC relating  exclusively  to the
production,   development,   sales  and   maintenance   of  ASEC's  solid  state
photodetector  products. By June 1992, these assets had been integrated with the
existing SDC business in the Company's facility in Camarillo, CA. In addition to
using the SDC facility as a development  and  manufacturing  site for the LAAPD,
the Company has continued the photodetector  business of both SDC and ASEC under
the Company name.  This  complementary,  non-LAAPD "core business" is profitable
and,  together  with  equity  financing,  has  provided  the funds to enable the
Company to continue development of the LAAPD technology.

Products
--------

The  Company  designs  and  manufactures   optoelectronic   semiconductor  based
components  and hybrid  assemblies.  While the Company was founded in 1988,  the
acquired  business  base of SDC can be traced  to 1977 and for the photo  sensor
business of ASEC (a business formerly known as Advanced

                                        2

<PAGE>

Optoelectronics)  to the early  1960's.  Therefore,  even though the Company was
formed  in  1988,  it  draws  upon  over 30  years  of  optoelectronic,  product
manufacturing experience. 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 ("LEDs"), LED displays and indium gallium
     arsenide ("InGaAs") photodetectors

o    Patented  technology  integrating  spectrally enhanced filters with silicon
     photodiode applications (Spectrode(TM))

o    Small Area Avalanche photodiodes

o    Large Area Avalanche photodiodes

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)

o    Narrow and Wide Field of View  detectors  used in  various  TOW  Missile
     Trackers

o    Common Module LED Array  qualified with the Center for Night Vision Electro
     Optics for use in displaying thermal images in various night sights

o    Quadrant   Photodetector   used   in  the   autocollimator   for   airborne
     navigation/FLIR PODs

o    Multi-Element  Detector  Arrays used in  space-based  optical  encoders for
     Space Shuttle Arm Control

The Company's  patented  Spectrode(TM)  technology  integrates  optical coatings
directly on photodiode chips,  replacing previous  conventional  technology that
requires a separate filter glass or pigmented epoxy 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  ("SAAPDs" -- see description of
avalanche  photodiode  below) utilize a chip fabricated with a silicon epiplanar
reach-through  structure.  SAAPDs  have  been  designed  for a  variety  of very
low-light  level  applications  and cover the wavelength from 500 nm to 1000 nm.
Applications  include optical  communication,  high-sensitivity bar code reading
and laser range finding including applications used in golf.

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  APDs to small  diameters  (5mm or less)  that can only be
practically  used with optical fiber,  thus sharply limiting the range of useful
applications.

                                        3

<PAGE>

The  Company  has  developed  and  patented  various  aspects  of an LAAPD  with
dimensions  of up to 25 mm and active  surfaces  comparable to those of the PMT.
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 APDs  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 PMTs include greater counting  sensitivity to
pulses  above 500 photons in the visible  and near IR  spectra,  higher  dynamic
range by two orders of magnitude, a more rugged structure suitable for operation
in  harsh  environments,  and  immunity  in  high  level  magnetic  fields.  Its
advantages  over PMTs were  greatly  extended  during  fiscal year 1995 when the
Company demonstrated that LAAPDs could be made to be 4 to 7 times more sensitive
than PMTs to ultra-violet  light.  Ultra-violet  sensitivity is crucial for some
experiments  in high energy and  particle  physics  known as  calorimeters.  The
improvement in ultra-violet  sensitivity will also facilitate the design of more
powerful  imaging and  analytical  instruments  for the medical,  chemical,  and
biological markets.

The Company  suspended most  shipments of LAAPD products  during the fiscal year
ended  April  2,  1995  when  it  realized  that  its  devices  had  significant
performance and reliability  problems.  Since that time, the Company has focused
its research and  development  resources  on improving  upon its baseline  LAAPD
manufacturing process to produce devices with both good performance and improved
reliability  as  well  as  with  reasonable  process  yields.  As  a  result  of
improvements in its baseline manufacturing process, the Company resumed shipping
LAAPD based  products  during  fiscal 1996.  The Company  continues to focus its
efforts on optimizing  the  manufacturing  process,  reducing  costs and further
enhancing reliability with respect to these products.

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 over the past four years,  and has sold
over 500  prototypes  of  LAAPD  products  to  third  parties  for  testing  and
evaluation  of possible  integration  into  applications.  Evaluation  detectors
continue to be sold to original equipment manufacturers ("OEMs"),  engineers and
scientists  who  report   information  to  the  Company   concerning   potential
applications  and  markets,  as  well as  suggesting  improvements  and  pricing
objectives.  It is expected, but there is no assurance,  that original equipment
manufacturers  who can take advantage of the performance  capabilities of LAAPDs
will be the  source of  repeat  business  for  production  quantities.  Targeted
markets which have been identified include:

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

                                        4

<PAGE>

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 and  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.

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  -- The CERN Large  Hadron  Calorimeter,  high  energy
     physics  fiber   tracking,   space   particle   experiments   and  Neutrino
     experiments.

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. Although the
Company believes,  but cannot assure,  that its research and development efforts
will yield commercial results,  significant  additional research and development
funding will still be required.  During the fiscal year ended in 1997,  1996 and
1995,  such expenses  amounted to $1.9  million,  $2.1 million and $1.9 million,
respectively.

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,

                                        5

<PAGE>

processing,  handling and  characterizing a number of  semiconductor  compounds.
In-house processes include photolithography,  diffusion, metallization, lapping,
oxide  growth and  parametric  testing and  analysis.  An  extensive  library of
different  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.

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  $5.2 million of backlog at the end of fiscal 1997 compared with a
backlog of  approximately  $4.7 million at the end of fiscal  1996.  The Company
expects that  approximately $3.9 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 Hughes  Aircraft  Company,  in the aggregate over
several programs,  represent approximately 19% of the Company's revenues for the
year ended March 30, 1997.

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.



                                        6

<PAGE>

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 Japan, are conducted through
foreign distributors.

In marketing  LAAPD  products,  the Company has recognized  that it must compete
with producers of PMTs,  which have dominated low light level detection  markets
for  many  years.  Even if the  Company  can  establish  that its  LAAPDs  are a
potential alternative to PMTs for certain commercial applications,  and assuming
that  testing of the LAAPD  currently  being  conducted  by OEMs and other third
parties proves successful,  the ability to successfully market its LAAPD devices
on a volume  basis  will be  substantially  dependent  upon the  willingness  of
potential  customers who currently use PMTs to incur the substantial expense and
expend the time and effort  necessary  for the  redesign  of their  products  to
accommodate the LAAPD devices.

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 1997, revenues from these efforts  represented  approximately 9% of total
revenue.

Competition
-----------

The Company competes with a range of companies for the custom optoelectronic and
silicon photodetector  requirements of vendors of medical instruments,  computer
peripherals,  a variety of  industrial  products  and  specialized  military and
commercial   aerospace   applications.   The  Company   believes  its  principal
competitors  for sales of custom  devices  are small to medium  size  companies.
Because the Company  specializes  in custom  devices  requiring a high degree of
engineering  expertise to meet the  requirements  of specific  applications,  it
generally  does not compete to any  significant  degree with other large  United
States,  European  or Far  Eastern  manufacturers  of  standard  "off-the-shelf"
optoelectronic components or silicon photodetectors.

The Company  believes  that the  principal  competition  for its  silicon  LAAPD
photodetection  devices lies with producers of PMTs, the only product  currently
available for many of the  applications  for which the Company's  LAAPD products
are designed.  The Company  believes that there are a number of manufacturers of
PMTs,  most  of  which  have  significantly  greater  financial,  technological,
marketing  and  personnel  resources  than the  Company.  In  addition,  several
companies  produce  solid state  detectors  based on small area APD  technology.
Although a few  additional  photodetector  companies  are engaged in  developing
APDs,  the Company  believes  that most of these  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 an electronic signal gain approaching 1,000, while
typical small area APD devices have a gain of about 100 and, therefore,  are not
competitive with the Company's LAAPD devices in certain applications.

PMTs were first  invented  in the  1940's.  It is  possible  that  existing  PMT
manufacturers or other  photodetector  manufacturers  will begin APD development
and  eventually   manufacture   competitive  APD  devices.   Additionally,   RMD
Corporation ("RMD"), a research and development company, has produced Large Area
APD devices similar to devices under development by the Company, and the Company
believes RMD has delivered several devices to customers for testing and possible
application.

                                        7

<PAGE>
Proprietary Technology
----------------------

The Company has been issued patents as follows:

US PATENT NO.          DESCRIPTION                    DATE ISSUED
--------------------------------------------------------------------------------
5,021,854    Silicon Avalanche Photodiode Array     June 1991
5,057,892    Light Responsive Avalanche Diode       October 1991
5,146,296    Devices for Detecting and/or           September 1992
             Imaging Single Photoelectron
5,477,075    Solid State Photodetector With         December 1995
             Light-Responsive Rear Face
5,311,044    Avalanche Photomultiplier Tube         May 1994
4,717,946    Thin Line Junction Photodiode          Acquired in ASEC Acquisition
4,782,382    High Quantum Efficiency                Acquired in ASEC Acquisition
             Photodiode Devices



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  would  be
substantial.  If the  Company  is  unable  to obtain  patents  for its  proposed
applications,  other  entities  may exploit the  Company's  developments  in APD
technology.  Furthermore, there can be no assurance the Company's APD technology
will not infringe patents or other rights owned by others, licenses to which may
not be available to the Company. Based on limited patent searches, contacts with
others  knowledgeable  in the field of APD  technology and a review of pertinent
published  materials,  to the  Company's  knowledge,  its  competitors  hold  no
patents, licenses or other rights to the APD technology which would preclude the
Company  from  pursuing  its  intended   operations  or  from  obtaining  patent
protection for its proposed applications.

In some cases, the Company may rely on trade secrets to protect its innovations.
There can be no assurance that trade secrets will be  established,  that secrecy
obligations  will be  honored  or that  others  will not  independently  develop
similar or superior technology. To the extent that consultants, key employees or
other third parties apply technological  information  independently developed by
them or by others to Company projects,  disputes may arise as to the proprietary
rights to such information which may not be resolved in favor of the Company.

Employees
---------

At June 2,  1997 the  Company  employed  66  full-time  employees,  including  3
officers,  5  LAAPD  engineering  and  development   personnel,   48  operations
personnel,  7 sales and marketing personnel (including 1 officer), 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 September 1998. 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

                                        8

<PAGE>

Item 4.        Submission of Matters to a Vote of Security Holders:

The Company's  Annual  Stockholders'  Meeting was held on October 16, 1996.  The
following  persons  were  elected to the  Company's  Board of Directors to serve
until the next Annual  Meeting of the  Stockholders  and until their  respective
successors have been duly elected and qualified:

                      FOR         WITHHELD            TOTAL
                      ---         --------            -----
James W. Ward      8,436,246       11,000           8,447,246
James A. Gordon    8,248,846      198,400           8,447,246
Hayden Leason      8,436,246       11,000           8,447,246
Jon B. Victor      8,436,246       11,000           8,447,246

                                    
                                     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 2,  1997,  the  Company  had 95 holders of record for the Class A Common
Stock, representing  approximately 1,000 holders owning shares of Class A Common
Stock in street  name.  On the same  date,  there were 21 holders of the Class B
Common Stock.

The following table sets forth high and low closing prices by quarter for fiscal
years 1997 and 1996.

                           Quarterly Stock Market Data

                1st Quarter     2nd Quarter        3rd Quarter     4th Quarter
               1997   1996     1997    1996       1997   1996     1997    1996
------------  -------------  ----------------  ---------------  ----------------
Common Stock(1)
      High    4 1/4  1 7/8    4 1/8   2 15/16    3 7/8    3     2 11/16   3 1/8
      Low     2 5/8    7/8    2 1/2   1 1/2      2        2     1 3/4     2 3/8
------------  -------------  ----------------  ---------------  ----------------
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 2, 1997,  657,000 shares of
Class A Redeemable  Convertible  Preferred Stock had been converted into 197,000
shares of Class B Common Stock,  leaving  outstanding  123,000 shares of Class A
Redeemable  Convertible  Preferred  Stock. The aggregate  non-cumulative  annual
dividend  preference of such Class A Redeemable  Convertible  Preferred Stock is
$8,856.  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.


                                        9

<PAGE>

<TABLE>

Item 6.           Selected Financial Data
<CAPTION>

                                                   1997              1996             1995              1994              1993
-------------------------------------------  ----------------  ---------------- ----------------- ----------------- ----------------
<S>                                             <C>               <C>               <C>               <C>              <C>    
Selected Statement of Operations Data:
--------------------------------------
Revenues                                        $  6,375,000      $  7,863,000      $  6,775,000      $  6,267,000     $  7,160,000
Loss from operations                              (2,061,000)         (807,000)       (2,448,000)       (3,944,000)      (2,253,000)
Net Loss                                          (1,886,000)         (654,000)       (2,368,000)       (3,897,000)      (2,302,000)
Net Loss per share (1)                                $(0.17)           $(0.07)           $(0.28)           $(0.55)          $(0.42)
Weighted average shares outstanding (1)           10,831,000         9,988,000         8,383,000         7,075,000        5,483,000

Selected Balance Sheet Data:
----------------------------
Working capital                                 $  3,334,000      $  4,931,000      $  2,083,000      $  4,182,000     $  3,473,000
Total assets                                       6,165,000         7,706,000         5,580,000         7,835,000        7,834,000
Long-term debt, net                                  -                 -                  26,000            42,000           58,000
Redeemable convertible preferred stock                98,000            98,000            98,000           120,000          148,000
Accumulated deficit                              (17,672,000)      (15,786,000)      (15,132,000)      (12,764,000)      (8,867,000)
Stockholders' equity                               4,948,000         6,806,000         4,438,000         6,785,000        6,104,000

<FN>

1  See Note 2 to Financial Statements.
</FN>
</TABLE>

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

RESULTS OF OPERATIONS

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.  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. As a result of this refocus, bookings for the fourth quarter of
1997 were the highest in Company history ($3.5 million).

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 is  approaching  the end of its life cycle.  Volume in military  aerospace
products should increase in fiscal 1998 as the Company begins deliveries under a
new, longer term military  program.  The Company was awarded a contract for $1.3
million under this program which, along with follow-on orders, should

                                       10

<PAGE>

provide a solid base to grow revenues over the next few years.  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 which it anticipates  will  significantly  improve both  reliability and
process yields. In July 1996, the Company filed for a patent seeking  protection
of the new  manufacturing  process,  and has begun to aggressively  market LAAPD
products  to original  equipment  manufacturers.  While the Company  anticipates
increasing  volume from sales of LAAPD  products  made with its newly  developed
manufacturing process,  further refinements in the manufacturing process will be
required  before full  production can be achieved.  While current demand exceeds
the Company's ability to deliver, the Company expects but cannot insure that the
remaining  manufacturing  issues can be corrected in the near-term.  The Company
has a  number  of  customers  who  are  early  adopters  and  evaluators  of the
technology and believes that demonstration of these applications and evaluations
will help to develop the marketplace.

Development  contract  revenues  decreased  by $233,000  (29%).  The Company was
awarded a Phase II Department of Energy (DOE) grant of approximately $750,000 in
June 1995 based upon the success of a Phase I effort,  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 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.
Funding was awarded in January  1997 to complete  option one of the contract and
work should resume in Q1 1998.

COSTS AND EXPENSES
Cost of product  sales  decreased  by  $566,000  (13%) in 1997 and gross  profit
margin on net product sales decreased by 4 percentage points compared to 1996 to
33%. 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  has  reduced  its  workforce  (permanent  and
temporary employees from 86 to 69 during 1997) through attrition and a reduction
in force in February 1997.

Research and  development  costs  decreased by $187,000  (9%) to $1.9 million in
1997.  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 production
of the LAAPD.  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.  The Company is  currently  developing  LAAPD
imaging arrays which the Company  believes will have the greatest  future market
potential  within the line of LAAPD  products.  An  acceleration  in development
and/or efforts to bring this  technology  into  production  could  substantially
impact R&D costs.

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 pursues 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).  Marketing and sales expenses should continue
to  increase  as the  Company  continues  to  pursue  its  plan for  growth  and
commercialization of the LAAPD family of products.

                                       11

<PAGE>

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).

Fiscal year 1996 Compared to Fiscal Year 1995

REVENUES
The  Company's  revenues  for 1996 were $7.9  million,  an  increase of 16% from
revenues of $6.8 million for the fiscal year ended April 2, 1995  ("1995").  Net
product  sales of $7.0  million  increased  $540,000  (8%) in 1996.  Development
contract revenues  increased by $548,000 (204%) primarily due to two development
contracts which were awarded during 1996 (see Revenue discussion in "Fiscal Year
1997 Compared to Fiscal Year 1996" above).

1996 net product sales  increased by 8%  principally  from  increased  volume in
military  and  commercial  aerospace  products.  Included in these  products are
shipments to the Company's  largest  customer where the Company has been able to
expand it's product offering and provide  additional value added to it's product
line. Higher volume in military and commercial  aerospace products was partially
offset by lower volume in industrial  and medical  products.  1996  shipments of
LAAPD products were nominal and slightly  lower than for 1995.  During 1995, the
Company suspended most shipments of its proprietary LAAPD products and curtailed
LAAPD production  because of a high rate of field failures and low manufacturing
yields.   During  1996,  the  Company  focused   essentially  all  research  and
development  resources on the baseline  LAAPD  manufacturing  process to produce
devices  with both good  performance  and improved  reliability  as well as with
improved process yields.  The Company believed these efforts were successful and
resumed shipment of evaluation  products during the third quarter of fiscal year
1996.

COSTS AND EXPENSES
Cost of product sales decreased by $304,000 (6%) in 1996 despite the increase in
net product sales. The gross profit margin on net product sales  strengthened to
37%, an increase of 10  percentage  points  compared to 1995.  This  increase in
gross  margin on net  product  sales  was  attributable  to a number of  factors
including improved pricing, cost containment programs, productivity improvements
and product mix improvements.

A 12%  reduction  in  personnel at the end of fiscal year 1994 (12 people out of
103)  improved  results of operations in each of the quarters of fiscal 1995 and
1996 by approximately  $100,000, or $400,000 on a fiscal year basis. The Company
again took action to reduce  costs in March 1995  through  another  reduction in
personnel   and  other   adjustments,   including   consolidation   of   certain
administrative functions.

Research and  development  costs  increased by $247,000 (13%) to $2.1 million in
1996.  The  increase in R&D costs is  primarily  due to the higher  level of R&D
effort  on  government  contracts.  The  portion  of R&D costs  not  related  to
government  contracts  decreased  in 1996 as compared  to 1995.  The Company has
better  controlled  its  internal  R&D  activities  and has been  able to obtain
government  funded  development  contracts  to support its internal R&D efforts.
These costs might  otherwise be incurred as internal R&D without any  additional
funding.

Marketing and sales  expenses  decreased by $206,000  (23%) to $701,000 in 1996.
Expenses in the core product lines decreased by $113,000 (17%) due to reductions
in salary expense, advertising and commissions to outside sales representatives.
The  Company  made a  decision  in  fiscal  year 1995 to  reduce  the  number of
independent

                                       12

<PAGE>

representatives  who are paid on a commission  basis and increase the focus on a
direct sales  force.  In addition,  replacement  of a senior level  employee who
resigned in March 1995 was deferred  until  December  1995.  Marketing and sales
expenses in the LAAPD product lines decreased by $93,000 (41%) due to reductions
in headcount,  advertising and other marketing expenses.  Marketing efforts have
been curtailed as the Company  focused on improving the reliability of its LAAPD
products.  The  Company has  combined  its sales and  marketing  efforts for all
product lines during 1997.

General and administrative  expenses decreased by $290,000 (17%) to $1.4 million
in 1996.  These  decreases are primarily due to reductions in salaries and wages
and to a reduction  in fees paid to outside  members of the  Company's  Board of
Directors.  The Company appointed a new President and Chief Executive Officer in
May 1994 while continuing to pay the salary of the prior executive through March
1995, resulting in higher salaries and wages during 1995. Changes in the make-up
of the Board of Directors  during 1996 have  resulted in a reduction in fees. In
October 1995, the Company's Board of Directors  unanimously  agreed to eliminate
all fees for its outside  directors  except for  reasonable  travel  expenses in
conjunction with regular or committee meetings. The decrease in 1996 versus 1995
expenses  was  somewhat  offset by higher  legal  fees due to a higher  level of
patent reviews and general corporate matters.

Interest  income in 1996 of $143,000 was $41,000 higher than 1995 as a result of
higher  average cash balances.  In August 1995, the Company  completed a private
placement  which increased its average cash balances for 1996 (see Liquidity and
Capital Resources).

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At March 30,  1997,  the  Company  had cash,  cash  equivalents  and  short-term
investments of $2.7 million,  working capital of $3.3 million and an accumulated
deficit of $17.7 million.  The Company's cash,  cash  equivalents and short-term
investments  decreased  $1.4  million  during the twelve  months ended March 30,
1997.  Cash of $1.1  million was used for  operating  activities,  including  an
increase  in net  inventories  of  $288,000.  Capital  spending  during 1997 was
$331,000 compared to $82,000 during 1996. Capital spending was lower during 1996
as the Company  conserved its  resources  pending  receipt of additional  equity
financing.

The  Company's  LAAPD  technology is still  considered to be in the  development
stage and 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.  To enable the  Company  to meet its  capital
commitment needs, the Company historically has supplemented cash operating needs
with proceeds from private placement equity financing,  bank lines of credit and
loans from  stockholders.  At March 30, 1997, no amounts were outstanding  under
any bank  line-of-credit and there were no stockholder loans to the Company.  On
August 15, 1995, the Company completed a $3,000,000  private placement  offering
in which it issued 2,400,000 shares of Class A Common Stock.

The Company has used the proceeds of its private placement offering 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.  The continued  development  of LAAPD
Arrays beyond the proof-of-concept phase may require additional funds.

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.


                                       13

<PAGE>


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,  unforseen
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 Accountant                                15

Consolidated Statements of Operations
for each of the three years in the period ended March 30, 1997         16

Consolidated Balance Sheets at March 30, 1997 and March 31, 1996      17-18

Consolidated Statements of Stockholders' Equity
for each of the three years in the period ended March 30, 1997         19

Consolidated Statements of Cash Flows
for each of the three years in the period ended March 30, 1997         20

Notes to Consolidated Financial Statements                            21-28


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.




                                       14

<PAGE>

                    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 30, 1997 and
March  31,  1996,  and  the  related  consolidated   statements  of  operations,
stockholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our 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 30,  1997 and March 31,  1996,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
generally accepted accounting principles.

                                                 ARTHUR ANDERSEN LLP

Los Angeles, California
May 23, 1997


                                       15

<PAGE>
<TABLE>

                                                  ADVANCED PHOTONIX, INC.

                                           CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>

For each of the three years
in the period ended March 30, 1997                                1997                  1996                  1995
----------------------------------------------------  --- ------------------ -- ------------------ -- ------------------
  <S>                                                           <C>                  <C>                   <C>    
  REVENUES
   Net product sales                                            $ 5,792,000          $  7,047,000          $  6,507,000
   Development contracts                                            583,000               816,000               268,000
                                                          ------------------    ------------------    ------------------
                                                                  6,375,000             7,863,000             6,775,000
                                                          ------------------    ------------------    ------------------

  COSTS AND EXPENSES
   Cost of product sales                                          3,900,000             4,466,000             4,770,000
   Research and development                                       1,912,000             2,099,000             1,852,000
   Marketing and sales                                              997,000               701,000               907,000
   General and administrative                                     1,627,000             1,404,000             1,694,000
                                                          ------------------    ------------------    ------------------
                                                                  8,436,000             8,670,000             9,223,000
                                                          ------------------    ------------------    ------------------

  LOSS FROM OPERATIONS                                           (2,061,000)             (807,000)           (2,448,000)
                                                          ------------------    ------------------    ------------------

  OTHER INCOME (EXPENSE)
   Interest expense                                                     -                  (3,000)               (4,000)
   Interest income                                                  167,000               143,000               102,000
   Other, net                                                         8,000                13,000               (18,000)
                                                          ------------------    ------------------    ------------------
                                                                    175,000               153,000                80,000
                                                          ------------------    ------------------    ------------------
  NET LOSS - $(.17), $(.07), $(.28) per share                  $ (1,886,000)         $   (654,000)         $ (2,368,000)
                                                          ==================    ==================    ==================

<FN>

                                       See  notes  to   consolidated   financial statements.

</FN>
</TABLE>
                                                            16

<PAGE>
<TABLE>
                                                  ADVANCED PHOTONIX, INC.

                                                CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                             March 30,                March 31,
                                                                               1997                     1996
--------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                     <C>    
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                                   $  1,217,000             $  4,042,000
   Short-term investments                                                         1,459,000                     -
   Accounts receivable, less allowance of $83,000 in 1997 and
     $105,000 in 1996                                                               642,000                  792,000
   Inventories                                                                    1,074,000                  813,000
   Prepaid expenses and other current assets                                         61,000                   86,000
                                                                               ------------             ------------
        Total Current Assets                                                      4,453,000                5,733,000
                                                                               ------------             ------------

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost                                     3,331,000                3,198,000
   Less accumulated depreciation and amortization                                (2,364,000)              (2,038,000)
                                                                               ------------             ------------
                                                                                    967,000                1,160,000
                                                                               ------------             ------------
OTHER ASSETS
   Goodwill, net of accumulated amortization of
     $186,000 in 1997 and $152,000 in 1996                                          650,000                  684,000
   Patents, net of accumulated amortization of
     $21,000 in 1997 and $9,000 in 1996                                              40,000                   53,000
   Other                                                                             55,000                   76,000
                                                                               ------------             ------------
                                                                                    745,000                  813,000
                                                                               ------------             ------------
                                                                               $  6,165,000             $  7,706,000
                                                                               ============             ============
<FN>

                                      See   notes  to   consolidated   financial statements.

</FN>
</TABLE>
                                                            17

<PAGE>
<TABLE>
                                                  ADVANCED PHOTONIX, INC.

                                                CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                               March 30,                  March 31,
                                                                                  1997                       1996
------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                       <C>    
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                            $    295,000              $    167,000
   Accrued expenses:
        Salaries and employee benefits                                              451,000                   293,000
        Warranty                                                                     95,000                    95,000
        Other                                                                       278,000                   247,000
                                                                               ------------              ------------
        Total Current Liabilities                                                 1,119,000                   802,000
                                                                               ------------              ------------

REDEEMABLE CONVERTIBLE PREFERRED STOCK AT REDEMPTION VALUE                           98,000                    98,000
                                                                               ------------              ------------

COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY
   Class A Common Stock, par value $.001 per share; authorized
   50,000,000 shares;
         1997--10,717,493 shares issued and outstanding
         1996--10,631,186 shares issued and outstanding                              11,000                    10,000
   Class B Common Stock, par value $.001 per share; authorized
   4,420,113 shares;
         1997--159,225 shares issued and 137,002 outstanding
         1996--193,003 shares issued and 170,780 outstanding                           -                         -
   Additional paid-in capital                                                    22,659,000                22,632,000
   Less cost of 22,223 shares of Class B Common Stock in
   Treasury in 1997 and 1996                                                        (50,000)                  (50,000)
   Accumulated deficit                                                          (17,672,000)              (15,786,000)
                                                                               ------------              ------------
                                                                                  4,948,000                 6,806,000
                                                                               ------------              ------------
                                                                               $  6,165,000              $  7,706,000
                                                                               ============              ============ 
<FN>

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

                                                            18

<PAGE>
<TABLE>
                                                      ADVANCED PHOTONIX, INC.

                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<CAPTION>
                                  
                                       Class A            Class B                    Class B Common     
For each of the three years         Common Stock       Common Stock      Additional  Treasury Stock
in the period ended                 ------------       ------------       Paid-in    ---------------     Accumulated
March 30, 1997                   Shares     Amount   Shares     Amount    Capital    Shares   Amount       Deficit         Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>     <C>         <C>      <C>          <C>     <C>        <C>             <C>

BALANCE AT APRIL 3, 1994        6,775,225  $ 7,000  1,605,741  $ 2,000  $19,590,000  22,223  $(50,000)  $(12,764,000)   $ 6,785,000
Conversion of Redeemable 
 Convertible Preferred Stock         -        -         8,100     -          22,000    -         -              -            22,000
Conversion of Class B Common 
 Stock                            281,413     -      (281,413)  (1,000)        -       -         -              -            (1,000)
Net loss for the year                -        -          -        -            -       -         -        (2,368,000)    (2,368,000)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT APRIL 2,1995         7,056,638    7,000  1,332,428    1,000    9,612,000  22,223   (50,000)    (15,132,000)    4,438,000
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 Warrants 
 and Options                       12,900     -          -        -          28,000    -         -               -           28,000
Net loss for the year                -        -          -        -            -       -         -           (654,000)     (654,000)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1996      10,631,186   10,000    170,780     -      22,632,000  22,223   (50,000)    (15,786,000)    6,806,000
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 Warrants 
 and Options                       52,529    1,000       -        -          45,000    -         -               -           46,000
Net loss for the year                -        -          -        -            -       -         -         (1,886,000)   (1,886,000)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 30, 1997      10,717,493  $11,000    137,002   $ -     $22,659,000  22,223  $(50,000)   $(17,672,000)  $ 4,948,000
====================================================================================================================================

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

                                                                    19

<PAGE>
<TABLE>
                                                        ADVANCED PHOTONIX, INC.

                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

For each of the three years in the period ended March 30, 1997                     1997               1996           1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>              <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                                    $(1,886,000)     $  (654,000)     $(2,368,000)
   Adjustments to reconcile net loss to net cash provided by (used in)
   operating activities:
        Depreciation                                                               524,000          539,000          539,000
        Amortization                                                                66,000           55,000           56,000
        Decrease in market value of investments                                       -                -              26,000
        (Gain) loss on disposal of fixed assets                                       -              (4,000)           2,000
   Changes in assets and liabilities:
        Short-term investments                                                  (1,459,000)            -                -
        Accounts receivable                                                        150,000          328,000         (177,000)
        Inventories                                                               (288,000)         219,000           66,000
        Prepaid expenses and other current assets                                   25,000          (40,000)          69,000
        Other assets                                                                 2,000           (2,000)           7,000
        Accounts payable and other accrued expenses                                317,000         (116,000)          86,000
        Advances                                                                    27,000          (84,000)          76,000
                                                                               -----------      -----------      -----------
  NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                           (2,522,000)         241,000       (1,618,000)
                                                                               -----------      -----------      -----------
  CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                                           (331,000)         (82,000)        (319,000)
   Purchase and maturity of  investments, net                                         -                  -         2,140,000
                                                                               -----------      -----------      -----------
  NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                             (331,000)         (82,000)       1,821,000
                                                                               -----------      -----------      -----------
  CASH FLOWS FROM FINANCING ACTIVITIES
   Sales of common and/or preferred stock, net of issuance costs                   (17,000)       2,994,000             -
   Proceeds from exercise of stock options and warrants                             45,000           28,000             -
   Repayment of long-term debt                                                        -             (42,000)         (48,000)
                                                                               -----------      -----------      -----------
  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               28,000        2,980,000          (48,000)
                                                                               -----------      -----------      -----------
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (2,825,000)       3,139,000          155,000
  CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                 4,042,000          903,000          748,000
                                                                               -----------      -----------      -----------
  CASH AND CASH EQUIVALENTS AT END OF YEAR                                     $ 1,217,000      $ 4,042,000      $   903,000
                                                                               ===========      ===========      ===========
<FN>
                                             See notes to consolidated financial statements.
</FN>
</TABLE>

                                                                   20

<PAGE>

                             ADVANCED PHOTONIX, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 March 30, 1997

NOTE 1 - LINE OF BUSINESS AND BUSINESS RISKS

Advanced   Photonix,   Inc.  (together  with  its  subsidiary  Silicon  Detector
Corporation  ("SDC"),  the  "Company"),  founded  in  1988  as  a  research  and
development 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 $17,672,000 as of March 30, 1997, and
has incurred losses since  inception.  The Company's  LAAPD  technology is still
considered to be in the  development  stage and 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 30,  1997,  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 30, 1997,  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.  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 is 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 30,  1997,  the  Company  had cash,  cash  equivalents  and
short-term  investment balances of $2,576,000 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

                                       21

<PAGE>

significant portion of revenues and accounts receivable are with U.S. Government
contractors,  including  approximately 19%, 16% and 17% of revenues from a major
customer  for the fiscal  years ending  1997,  1996 and 1995,  respectively.  In
fiscal 1997, the Company had export sales of approximately $800,000 to customers
in Canada,  Germany,  Great  Britain and Sweden (none of which was  individually
greater than 10% of total revenues).

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 30, 1997           March 31, 1996
                                --------------           --------------
  Raw materials                  $    336,000             $   245,000
  Work in progress                    586,000                 448,000
  Finished products                   152,000                 120,000
                               ---------------           --------------
                                  $ 1,074,000             $   813,000
                               ===============           ==============

Equipment and leasehold  improvements:  Equipment and leasehold improvements are
stated on the basis of cost or estimated fair market value on the date acquired.
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 30, 1997          March 31, 1996
                                          --------------          --------------
Laboratory equipment                        $2,570,000              $2,411,000
Furniture, fixtures and office equipment       365,000                 448,000
Leasehold improvements                         315,000                 309,000
Construction in progress                        81,000                  30,000
                                         ---------------          --------------
                                            $3,331,000              $3,198,000
                                         ===============          ==============

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 $12,000; $2,000 and $2,000
for the fiscal years 1997, 1996 and 1995, 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  $34,000;  $33,000  and $34,000  for the fiscal  years 1997,  1996 and 1995,
respectively.

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.


                                       22

<PAGE>

Production  contracts  - 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.

Net Loss Per Share:  Net loss per share is based on the weighted  average number
of common and common  equivalent  shares  outstanding.  Common stock equivalents
were not considered in the  calculation  as their effect would be  antidilutive.
Such weighted average shares were approximately 10,831,000 in 1997; 9,988,000 in
1996; and 8,383,000 in 1995.

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.

New Authoritative Pronouncements:  In October 1995, the FASB issued FAS No. 123,
"Accounting for Stock-Based  Compensation" ("FAS 123"). FAS 123 encourages,  but
does not require,  a fair value based method of  accounting  for employee  stock
options  or similar  equity  instruments.  It also  allows an entity to elect to
continue to measure compensation cost under Accounting  Principles Board Opinion
No. 25,  "Accounting for Stock Issued to Employees" ("APB 25"), but requires pro
forma disclosure of net income and earnings per share as if the fair value based
method had been  applied.  The  Company  has chosen to  continue  to account for
stock-based  compensation  using the intrinsic value method prescribed in APB 25
and comply with the pro forma disclosure requirements (see Note 7).

In March 1997, the FASB issued FAS No. 128, "Earnings per Share" ("FAS 128") and
FAS No. 129,  "Disclosure of Information  about Capital  Structure" ("FAS 129").
FAS 128  revises and  simplifies  the  computation  for  earnings  per share and
requires certain additional disclosures. FAS 129 requires additional disclosures
regarding the Company's  capital  structure.  Both  standards will be adopted in
fiscal 1998.  Management does not expect the adoption of these standards to have
a  material  effect  on the  Company's  financial  position  or the  results  of
operations.

NOTE 3 - CAPITALIZATION AND STOCK PURCHASE WARRANTS

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.


                                       23

<PAGE>

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.

In June 1992, the Company granted a warrant to purchase  500,000 shares of Class
A Common Stock at $3.00 per share which expire in December  1997 to a consultant
in conjunction with the Company's 1992 private placement. None of these warrants
have been exercised.

In August  1992,  the Company  granted a five year unit  purchase  option to the
placement  agent and certain of its officers in  connection  with the  Company's
1992  private  placement.  The unit  purchase  option  consisted  of  options to
purchase  375,008  shares of Class A Common Stock at $3.00 per share and 375,008
Class A Warrants to purchase  the  Company's  Class A Common  Stock at $3.00 per
share.  Options to purchase 25,000 shares have been exercised at March 30, 1997.
None of the warrants have been exercised.

NOTE 4 - REDEEMABLE CONVERTIBLE PREFERRED STOCK

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 $.001  per  share.  The  number of shares of Class A
Preferred  Stock issued and  outstanding was 123,000 at March 30, 1997 and March
31, 1996, respectively. The Class A Preferred Stock has a liquidation preference
equal to its  issue  price  ($.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 30, 1997,
there were 37,000  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  $98,000 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 5 - 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 September 1997 and provides for interest
to be paid monthly at prime plus 1.25 percent  (9.75 percent at March 30, 1997).
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. There was no outstanding balance under the line of credit agreement
as of March 30, 1997.

NOTE 6 - INCOME TAXES

At March 30,  1997,  the  Company  had net  operating  loss  carry  forwards  of
approximately  $16.2  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  $462,000  in research  and
development credit carryovers  available for federal tax purposes that expire in
the fiscal years 2004 through 2012.


                                       24

<PAGE>

Under FAS 109,  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 30, 1997 and March 31, 1996 follows:

                                         March 30, 1997           March 31, 1996
                                         --------------           --------------
NOL Carryforwards                         $ 6,273,000              $ 5,596,000
Inventory obsolescence                        541,000                  511,000
Warranty                                       37,000                   37,000
Depreciation                                   (3,000)                 (75,000)
Other                                         105,000                   97,000
                                         -------------            --------------
                                            6,953,000                6,166,000
Less valuation allowance                   (6,953,000)              (6,166,000)
                                        --------------            --------------
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  incurred losses in fiscal years 1997, 1996 and 1995, the Company
has  recorded  minimum  state taxes of $1,600 in other  expense each year in the
accompanying statements of operations.

NOTE 7 - STOCK OPTIONS

The Company has three stock option plans,  the 1990  Incentive  Stock Option and
Non-Qualified  Stock Option Plan ("The 1990 Plan"),  the 1991  Directors'  Stock
Option Plan ("The  Directors'  Plan") and the 1997  Employee  Stock  Option Plan
("The 1997  Plan").  The Company  accounts 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 FAS 123, the Company's
net loss and net loss per share would have  increased to the following pro forma
amounts:


                                            1997                         1996
                                        -------------              -------------
Net Loss - as reported                  $ (1,886,000)              $   (654,000)
Net Loss - pro forma                      (2,108,000)                (1,410,000)
Net Loss per share - as reported               (0.17)                     (0.07)
Net Loss per share - pro forma                 (0.19)                     (0.14)
                                        -------------              -------------


                                       25

<PAGE>

Because the FAS 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
1997 and 1996,  respectively:  risk free interest rates of 6.53 percent and 6.56
percent,  expected  volatility of 63.33 percent and 66.84 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,  30, 1997,  there
were  1,077,500  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
equals the stock's market price on the date of grant.  Options may be granted to
employees,  officers,  directors and  consultants.  The Company has also granted
options,  under similar terms as above, under no specific  shareholder  approved
plan.

Stock option transactions for 1997, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>

                                               1997                       1996                      1995
                                     ------------------------- -------------------------- -------------------------
                                        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         2,191      $ 3.52        2,247        $ 4.16        2,131       $ 4.78
-------------------------------------------------------------------------------------------------------------------
Granted                                   530         2.58          550          2.18          744         2.20
Exercised                                (101)        2.13          (13)         2.16           -           -
Canceled                                 (108)        2.74         (593)         4.74         (628)        3.94
-------------------------------------------------------------------------------------------------------------------
Outstanding at end of year               2,512      $ 3.41        2,191        $ 3.52        2,247       $ 4.16
-------------------------------------------------------------------------------------------------------------------
Exercisable at end of year               1,905      $ 3.76        1,825        $ 3.83        1,838       $ 4.66
-------------------------------------------------------------------------------------------------------------------
Weighted average fair value
of options granted                       $2.010                    $1.755                       -
-------------------------------------------------------------------------------------------------------------------
</TABLE>

The following  table  summarizes  information  about  fixed-price  stock options
outstanding at March 30, 1997:
<TABLE>
<CAPTION>

                                        Options Outstanding                              Options Exercisable
----------------------------------------------------------------------------------------------------------------------
                                         Wtd Avg Remaining    Wtd Avg Exercise                      Wtd Avg Exercise
 Option Price Range     Shares (000)      Contractual Life         Price           Shares (000)           Price
----------------------------------------------------------------------------------------------------------------------
<S>  <C>                  <C>               <C>                   <C>               <C>                 <C>   
     $ 6.00                 750,000         3.87 years            $ 6.00            750,000             $ 6.00
     $ 4.00-5.75             87,000         4.41 years            $ 4.86             85,000             $ 4.86
     $ 2.25-3.31          1,074,500         7.00 years            $ 2.42            595,400             $ 2.35
     $ 2.13                 199,800          .17 years            $ 2.13            199,800             $ 2.13
     $ 1.5-1.75             401,000         7.66 years            $ 1.57            274,500             $ 1.57
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                                          26

<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENCIES

The Company leases its  manufacturing and office facility under a noncancellable
operating lease.  Future minimum lease payments are subject to annual adjustment
upward for increases in the Consumer  Price Index.  Approximate  minimum  future
lease payments under all  noncancellable  operating  leases  expiring at various
dates through fiscal 2001, are as follows:


Fiscal year ending:
1998                                                     $364,000
1999                                                      165,000
2000                                                       24,000
2001                                                       12,000
                                                         --------
                                                         $565,000
                                                         ========              
  
Rent expense for the fiscal years ending 1997,  1996 and 1995 was  approximately
$346,000; $323,000 and $310,000, respectively.

The Company has employment and  termination  agreements  with certain  employees
under which the employees may receive  severance pay through the end of the term
of the contract or up to six 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 1998, 1999 and 2000, respectively.

NOTE 9 - 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 10 - 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  $69,000,  $68,000,  and $84,000 for the fiscal years ending 1997,
1996 and 1995, respectively.

NOTE 11 - SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION

                                           March 3,    March 31,     April 2,
                                             1997        1996          1995
                                             ----        ----          ----
Cash paid during the year for:
 Interest (net of amount capitalized)       $ -        $ 2,600       $ 4,000
 Income taxes                                1,600       5,407          -
Noncash Transactions:
 Issuance of common stock upon the 
  conversion of Redeemable Convertible 
  Preferred Stock                             -           -           22,000

                                   27

<PAGE>

NOTE 12 - VALUATION AND QUALIFYING ACCOUNTS


                               Balance at    Charged to              Balance at
                              Beginning of    Cost and                 End of
(Dollars in thousands)           Period       Expenses   Deductions    Period
                              ------------   ----------  ----------  ----------
Year end March 30, 1997
 Reserve for obsolescence       $1,323         $ 77        $ -         $1,400
 Allowance for bad debt            105            -          22            83
 Warranty                           95           39          39            95
Year end March 31, 1996 
  Reserve for obsolescence         956          367          -          1,323
  Allowance for bad debt           105            -          -            105
  Warranty                          95            -          -             95
Year end April 2, 1995  
Reserve for obsolescence           894          215         153           956
  Allowance for bad debt            87           50          32           105
  Warranty                          95           10          10            95
   
                                       28
<PAGE>

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

The  information  contained  in the  Current  Report on Form 8-K amended by Form
8-K/A, dated January 26, 1995, is incorporated herein by reference.

                                    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

Hayden Leason           66    Chairman of the Board and Chief Executive Officer

James A. Gordon         47    Director

Jon B. Victor           44    Director

James W. Ward           58    Director

Harry Melkonian         47    President

Patrick J. Holmes       51    Executive Vice President, Chief Financial Officer,
                              Secretary & Treasurer

Robert C. King          53    Vice President of Sales & Marketing

Hayden Leason, Chairman of the Board and Chief Executive Officer
----------------------------------------------------------------
Mr.  Leason  became a  director  of the  Company  in July  1995 and was  elected
Chairman of the Board in October  1996 and elected  Chief  Executive  Officer in
November  1996.  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.

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 L.P., a limited  partnership formed for
investment  purposes.  In addition,  Mr. Gordon has managed Focused Value Equity
portfolios  since 1985. Since 1986, Mr. Gordon has been a member of the Board of
Directors of Bankers  Trust  Company  (Iowa),  and has served as Chairman of its
Trust and Investment  Committee,  as well as a member of both its Audit and Loan
Committees.  He  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, Inc.; SoftNet Systems,  Inc.;  HealthDesk,  Inc.;
Cellular World Corp.; DAC Vision,  Inc.;  Microware Systems  Corporation;  Pride
Industries,  Inc.;  and  Pangea,  Inc.  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.

                                       29

<PAGE>

Jon B. Victor, Director
-----------------------
Mr.  Victor  became a director  of the Company in June 1995.  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.

James W. Ward, Director
-----------------------
Mr.  Ward has been a  director  of the  Company  since  May  1994.  He served as
President  and Chief  Executive  Officer from May 1994 until October 1996 and as
Chairman of the Board from February  1995 until  October 1996.  Prior to joining
the Company, he was President and CEO of Boss Golf Company, Inc., a company that
he co-founded in September  1992.  From 1990 to 1992,  Mr. Ward was President of
Ling Electronics,  Inc. a manufacturer of electrodynamic  vibration test systems
worldwide.  From 1980 through 1989,  he was President of two Gulton  Industries,
Inc.  companies,  Engineered  Magnetics  and  Transrex.  Mr. Ward  experienced a
distinguished  career with General  Electric  Company over a period of 18 years,
holding  various   management   responsibilities   in  marketing,   engineering,
manufacturing and quality assurance,  primarily for the commercial nuclear power
generating plant business.  He also served on the IEEE Standards  Committee that
generated  the  IEEE  Standard  on  Nuclear  Quality  Assurance.  Mr.  Ward is a
Registered  Professional  Engineer  in  California  and  past-recipient  of  The
Missouri  Honor  Award  for  Distinguished   Service  in  Engineering  from  the
University of Missouri,  Columbia.  He holds a Bachelor of Science  Degree and a
Master of  Science  Degree in  electrical  engineering  from the  University  of
Missouri.

Harry Melkonian, President
--------------------------
Mr.  Melkonian  joined the  Company in June 1992 and was  elected  President  in
November  1996. 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.

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.

Robert C. King, Vice President of Sales & Marketing
---------------------------------------------------
Mr.  King  joined the  Company in  December  1995.  From 1992 until  joining the
Company,  Mr. King was Vice President,  Sales and Marketing of Medical Materials
Corporation.  From 1989 until 1992, he was Vice  President,  Market and Business
Development of PCO, a subsidiary of Corning Incorporated and an affiliate

                                       30

<PAGE>

of IBM.  From 1986  until  1989,  he was  Executive  Vice  President,  Sales and
Marketing of Wangtek.  Prior to 1986,  Mr. King held sales and  executive  level
positions for Granger Associates,  Q.T. Wiles and Associates,  TRW Semiconductor
and North  American  Aviation.  Mr. King holds a Bachelor  of Science  degree in
Mechanical Engineering, cum laude, from Ohio University in Athens, Ohio.

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. Pursuant to an agreement between the Company and D.H.
Blair,  entered  into in  connection  with a private  placement  offering of the
Company's  capital  in 1992,  D.H.  Blair has the right,  at its option  through
August 10,  1997,  to  designate  one  director to the Board of Directors of the
Company. To date, it has not exercised its option.

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.
<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>                       
Hayden Leason               1997     -        -          -             -             -          -           -
Chairman of the Board and   1996     -        -          -             -          25,000        -           -
Chief Executive Officer(2)  1995     -        -          -             -             -          -           -
---------------------------------------------------------------------------------------------------------------------
James W. Ward               1997  109,000     -          -             -             -          -        55,700(3)
Chairman of the Board,      1996  173,000   25,000       -             -             -          -         4,700
President and Chief         1995  142,000     -          -             -         150,000(4)     -         3,600
Executiv Officer(3)
---------------------------------------------------------------------------------------------------------------------
Harry Melkonian,            1997  135,000     -          -             -          140,000       -         3,900
President(5)                1996  110,000   15,000       -             -             -          -         3,300
                            1995  110,000   15,000       -             -          60,000        -         3,300
---------------------------------------------------------------------------------------------------------------------
Patrick J. Holmes           1997  125,000     -          -             -          70,000        -         3,300
Executive Vice President,   1996  125,000   15,000       -             -             -          -         3,800
CFO, Secretary & Treasurer  1995  125,000     -          -             -          80,000        -         3,800
---------------------------------------------------------------------------------------------------------------------
Robert King                 1997  125,000   18,000       -             -          20,000        -         4,500
Vice President of Sales     1996   42,000    8,000       -             -          60,000        -           900
                            1995     -        -          -             -             -          -           -
---------------------------------------------------------------------------------------------------------------------
<FN>
1   Represents amounts paid by the Company on behalf of the named person in connection with the Company's 401(k) Retirement Plan 
    accept for $51,000 paid to Mr. Ward (see note 3 below).
2   Mr. Leason became Chairman of the Board in October 1996 and Chief Executive Officer in November 1996.
3   Mr. Ward terminated his employment in October 1996. Pursuant to an arrangement with the Company, amounts paid to him subsequent
    to the termination of his employment are included in All Other Compensation.
4   Does not include 150,000 option shares granted in May 1994 which were canceled in January 1995.See "Ten-Year Option Repricings."
5   Mr. Melkonian became President in November 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 8.


                                       31

<PAGE>

James W. Ward  terminated  his  employment on October 16, 1996 and remained as a
Director.  Pursuant to an agreement with the Company,  Mr. Ward will continue to
be paid his salary through September 16, 1996, subject to certain reductions for
his other earnings.

Stock Options

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.

                          Option Grants in Fiscal 1997
                                Individual Grants
                          ----------------------------
                Number of Securities  %of Total Options
                    Underlying          Granted to       Exercise or
                     Options           Employees in      Base Price   Expiration
Name(1)             Granted (#)        Fiscal Year         ($/Sh)      Date
--------------------------------------------------------------------------------
Hayden Leason          -                    -               -             -
Harry Melkonian     140,000                28%            $2.50         1/14/07
Patrick J. Holmes    70,000                14%            $2.50         1/14/07
Robert C. King       20,000                 4%            $2.50         1/14/07
1    See "Summary Compensation Table" and Item 10 "Directors and Executive 
     Officers" for principal position.

<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 ($)
Name1                   on Exercise (#)  Value Realized          Exercisable/Unexercisable          Exercisable/Unexercisable
----                     ----------------- --------------          -------------------------        -------------------------
<S>                             <C>               <C>                   <C>                               <C>    
Hayden Leason                   -                 -                        25,000/0                             -
James W. Ward                   -                 -                      90,000/60,000                    33,750/22,500
Harry Melkonian                 -                 -                     88,000/112,000                       22,500/0
Patrick J. Holmes               -                 -                      74,000/76,000                     18,000/4,500
Robert C. King                  -                 -                      28,000/52,000                          -
------------------------ ----------------  ----------------  -------------------------------------  --------------------------
<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  April 2, 1995.  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 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:

                                                           32

<PAGE>
<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>    
James W. Ward        1/18/95           150,000               1.56               3.25           1.56             9 years
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.

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 30, 1997 were
made on a timely basis.



                                       33

<PAGE>

Item 12.        Security Ownership of Certain Beneficial Owners and Management

The  following  table  sets  forth,  as of June  2,  1997,  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)        1,521,000                  -         14.2      -               -               -            14.0
Hayden Leason(4)                  1,304,100             25,500         12.4      -               -               -            12.2
J. Morton Davis(5)                  656,045            333,340          9.0      -               -               -             8.9
The Townsend Group                  758,900               -             7.1      -               -               -             7.0
Advanced Detectors, Inc.(6)            -               750,000          6.5      -               -               -             6.5
John Pappajohn(7)                   186,668            500,000          6.1      -               -               -             6.0
James A. Gordon(8)                  593,640             28,000          5.8      -               -               -             5.7
Edgewater Private Equity Fund(9)    593,640             28,000          5.8      -               -               -             5.7
Jon Victor(10)                      237,400             25,000          2.4      -               -               -             2.4
James W. Ward                        13,850            120,000          1.2      -               -               -             1.2
Patrick J. Holmes                    50,000             64,000          1.1      -               -               -             1.0
Harry Melkonian                      10,000             60,000          0.6      -               -               -             0.6
Robert C. King                       30,000             24,000          0.5      -               -               -             0.5
Directors & Officers as a Group   2,238,990            346,000         23.4      -               -               -            23.1

------------------------------------------------------------------------------------------------------------------------------------
<FN>
1   Includes shares under options/warrants exercisable on March 30, 1997 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   The address of this shareholder is D.H. Blair, 44 Wall Street, New York, NY 10005.  Includes 617,760 shares and 333,340 shares
    underlying a unit purchase option owned by D. H. Blair Investment Banking Corp. and 38,285 shares owned by Parliament 
    Hill Corporation.
6   Formerly Xsirius, Inc., the last address known for this beneficial owner was 1220 Avenida Acaso, Camarillo, CA 93012.
7   The address of this shareholder is c/o Equity Dynamics, 2116 Financial Center, Des Moines, IA 50309.
8   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.
9   The address of this shareholder is c/o Edgewater Private Equity Fund, 666 Grand Avenue, Suite 200, Des Moines, IA 50309.  
    Includes 28,000 options granted to Mr. Gordon ( see footnote 8).
10  The address of this shareholder is c/o Greenwich Ventures, LLC, 2 Soundview Drive, Greenwich, CT 06830.
</FN>
</TABLE>

                                                            34

<PAGE>



Item 13.          Certain Relationships and Related Transactions

On May 16,  1995,  the Company  issued  Bernhardt  Denmark an option to purchase
400,000  shares of Class A Common  Stock at an exercise  price of $2.25 a share.
The  option,  which has a  five-year  term,  was issued in  connection  with Mr.
Denmark's  resignation  from the Board of  Directors,  and in  exchange  for the
cancellation  of options to purchase  400,000  shares of the  Company's  Class A
Common Stock at exercise  prices ranging from $4.625 to $5.00 a share which were
originally  granted to Mr. Denmark in 1992 and 1993 and which would have expired
by their terms three months after his resignation as a director.

See Item 11.  Executive Compensation for employment agreements.

                                     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.

3.2     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    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.

                                       35

<PAGE>




10.4    Lease  Agreement  dated  October  26,  1987  between  Silicon   Detector
        Corporation  and High Tech No. 1, Ltd. -  incorporated  by  reference to
        Exhibit 10.17 to the  Registrant's  March 31, 1992 Annual Report on Form
        10-K.

10.5    Second  Amendment  to Lease  dated  September  9, 1991  between  Silicon
        Detector  Corporation  and High  Tech No.  1,  Ltd.  -  incorporated  by
        reference  to Exhibit  10.18 to the  Registrant's  March 31, 1992 Annual
        Report on Form 10-K.

10.6    Form of  Non-Qualified  Stock  Option  granted  to  Bernhardt  Denmark -
        incorporated  by  reference  to the  Registrant's  March 31, 1996 Annual
        Report on Form 10-K.

10.7    Form  of  Non-Qualified   Stock  Option  granted  to  James  W.  Ward  -
        incorporated  by  reference  to the  Registrant's  March 31, 1996 Annual
        Report on Form 10-K.

10.8    Employment Agreement between Advanced Photonix, Inc. and James W. Ward -
        incorporated  by  reference  to the  Registrant's  March 31, 1996 Annual
        Report on Form 10-K.

10.9    Employment  Agreement  between  Advanced  Photonix,  Inc. and Patrick J.
        Holmes.

10.10   Employment   Agreement  between  Advanced   Photonix,   Inc.  and  Harry
        Melkonian.

10.11   Loan and Security  Agreement  dated  September  6, 1995 between  Silicon
        Valley  Bank  and  Registrant  -   incorporated   by  reference  to  the
        Registrant's March 31, 1996 Annual Report on Form 10-K.

10.12   Termination agreement between Advanced Photonix, Inc. and James W. Ward.

10.13   Advanced Photonix, Inc. 1997 Employee Stock Option Plan.

16      Letter from Certifying Accountant, dated January 30, 1993 - incorporated
        by reference to Current Report on Form 8-K, dated January 30, 1993

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 auditors.

(b)     Reports on Form 8-K: On January 26,  1995,  the Company  filed a Current
        Report on Form 8-K,  amended  by a Current  Report on Form  8-K/A  dated
        January  26,  1995,  relating  to a change in the  Company's  certifying
        accountant.

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

                                       36

<PAGE>

                                   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.


Date:  June 23, 1997                         By:      /s/ Harry Melkonian
      ---------------                                 -------------------------
                                                      Harry Melkonian, President


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/ Hayden Leason        Director, Chairman of the Board           June 23, 1997
---------------------    and Chief Executive Officer
                         (Principal Executive Officer)                     
Hayden Leason                               

/s/ James A. Gordon      Director                                  June 23, 1997
---------------------                                                         
James A. Gordon

/s/ Jon B. Victor        Director                                  June 23, 1997
---------------------                                                 
Jon B. Victor

/s/ James W. Ward        Director                                  June 23, 1997
---------------------                                                         
James W. Ward

/s/ Patrick J. Holmes    Vice President, Chief Financial Officer,  June 23, 1997
---------------------    Corporate Secretary/Treasurer,                         
Patrick J. Holmes        (Principal Financial and Accounting Officer)         
                                            

                                       37

<PAGE>