U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

                                   (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 28, 2004
                                              --------------

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from _____ to _____

                         Commission file number 1-11056

                           ADVANCED PHOTONIX, INC.(R)
             (Exact name of registrant as specified in its charter)

         Delaware                                        33-0325826
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

                     1240 Avenida Acaso, Camarillo, CA 93012
               (Address of principal executive offices) (Zip Code)

                                 (805) 987-0146
              (Registrant's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          Common Stock, $.001 Par Value
                              Class A Common Stock


     Check whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the Exchange  Act of 1934 during the  preceding 12 months
(or for such shorter  period that the issuer was required to file such  reports)
and (2) has been subject to such filing  requirements  for the past 90 days.
Yes [X] No [ ]

     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K contained in this form,  and no disclosure  will 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-KSB or any
amendment to this Form 10-KSB. [ ]

     Total  revenues  for  registrant's  fiscal  year ended March  28,2004  were
$12,400,543.

     As of June 15, 2004, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $30,500,000.

     As of June 15, 2004 there were  13,399,059  shares of Class A Common  Stock
and 31,691 shares of Class B Common Stock outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>


                                     PART I
Item 1.     Business

General
-------
Advanced  Photonix,  Inc. (R) (the Company),  was incorporated under the laws of
the State of  Delaware in June 1988.  The Company is engaged in the  development
and manufacture of custom optoelectronic solutions,  serving a variety of global
Original Equipment  Manufacturer (OEM) markets. While the Company specializes in
silicon-based  custom  photodiode  assemblies,  its product  families range from
custom light detection  assemblies,  including its patented Avalanche Photodiode
technology,  to light emitting diode (LED) assemblies.  The Company supports the
customer  from the initial  concept and design phase of the product,  through to
full-scale  production  and test.  The Company has two  manufacturing  and wafer
fabricating facilities; one in Camarillo, CA and one in Dodgeville, WI.

Products & Technologies
-----------------------
The Company designs and manufactures silicon-based optoelectronic components and
assemblies  for a global OEM  customer  base.  The core  technology  used in the
majority of the Company's  products is  silicon-based  photodiodes.  Photodiodes
sense light of varying  wavelengths  and  intensity  and convert that light into
electrical signals. The Company manufactures  photodiodes of varying complexity,
from   basic   PIN   (positive-intrinsic-negative)   photodiodes   to  the  more
sophisticated  avalanche  photodiode  (APD).  The APD is a  specialized  silicon
photodiode  capable of detecting  very low light levels due to an internal  gain
phenomenon  known as  avalanching.  All  devices are  designed by the  Company's
experienced  engineering  staff,  and fabricated in two  state-of-the-art  clean
rooms. The Company's basic products and technologies include the following:

o PIN photodetectors - spectrally enhanced, both single and multi-element
o Silicon High Resistivity p-type Detectors
o Photodetector hybrids, which include signal amplification circuitry within the
  detector package
o Custom LED assemblies and LED displays
o FILTRODE(R) - patented technology integrating optical filters directly on
  photodiode chips
o APDs - discrete, with and without thermoelectric coolers, and with integrated
  modules

Markets
-------
These products serve customers in a variety of global  markets,  typically North
America, Asia, Europe and Australia.  The target markets and applications served
by the Company are as follows:

Military & Aerospace:
  o   Missile guidance
  o   Laser range finders
  o   Laser training systems
  o   Heads-up displays
  o   Satellite positioning




                                       2
<PAGE>




Industrial & Commercial:
  o   Optical encoders
  o   Laboratory Instrumentation
  o   Baggage/Cargo scanners
  o   Bar code scanners
  o   Laser positioning systems

Medical:
  o   Blood analysis, including pulse oximetry and glucometry
  o   Bacteriology
  o   Medical imaging

Automotive:
  o   Laser detection
  o   Adaptive cruise control
  o   Automatic power windows
  o   Drive-by-wire

Communications:
  o   VCSEL monitor
  o   Pump laser monitor
  o   Wireless communication

One of the key  competitive  advantages  held by the  Company is its  ability to
supply detector assemblies for high reliability (Hi-Rel) applications, including
military and commercial aerospace. Hi-Rel devices are designed, manufactured and
tested to  function  in severe  environmental  conditions.  The Company has many
years of  experience  in  supplying  Hi-Rel  devices  that demand  modern  wafer
fabrication techniques, a dedicated assembly area, and a sophisticated test lab.
These assembly and test capabilities meet several military approvals,  including
MIL-PRF-19500,  MIL-STD-883 and MIL-STD-750. Hi-Rel products manufactured by the
Company include:

o Multi-element hybrid assemblies used on the U.S. Navy's Rolling Airframe
  Missile (RAM) developed by Raytheon
o Narrow and wide field-of-view detectors used in Tube-launched Optically-
  tracked Wire-guided (TOW) missile tracking systems
o LED arrays for use in thermal image displays in military night sight
  applications
o Quadrant  photodetectors used in the autocollimator for airborne  navigation/
  FLIR  (Forward Looking Infrared) pods and "smart bombs"
o Opto assemblies for biological and blood analysis
o Assemblies used in automotive distance control systems

Raw Materials
-------------
The  principal  raw  materials  used by the  Company in the  manufacture  of its
semiconductor components and sensor assemblies are silicon wafers, chemicals and
gases used in  processing  wafers,  gold  wire,  lead  frames,  and a variety of
packages and substrates,  including metal, printed circuit board, flex circuits,
ceramic and plastic  packages.  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 (2
months or greater) between order and delivery of raw materials.

                                       3
<PAGE>

Research and Development
------------------------
Since its inception in June 1988, the Company has incurred material research and
development expenses,  with the intent of commercializing these investments into
profitable  new standard and custom product  offerings.  During the fiscal years
ended in 2004 and 2003,  research and development  expenses amounted to $280,000
and  $511,000  respectively.  The Company  expects that  continued  research and
development  funding will be required for new projects as well as the continuing
development of new  derivatives of the Company's  current  product line, and for
the  commercialization of these products.  The Company has in the past, and will
continue to pursue customer funded, as well as internally  funded,  research and
development  projects  when they are in  support  of the  Company's  development
objectives.

During the last fiscal  year,  the Company  shifted  its  primary  research  and
development  focus from overall APD  development  to those  projects  which have
strong existing markets and can be transitioned to full  commercialization  in a
relatively  short period of time. As we begin the new fiscal year, the following
research and development projects are currently underway:

o APD performance enhancements - designed specifically for certain military and
  medical imaging applications

o Silicon PIN diodes, which are being developed to meet unique customer
  requirements, such as higher speeds, lower electrical noise, and unique
  multi-element geometries.

o Additional applications leveraging the Company's patented Filtrode(TM)
  family, integrating a variety of filters onto a detector chip

o Position Sensitive Devices - the Company is broadening its offering of
  these devices with improved performance for industrial sensing markets

Environmental Regulations
-------------------------
The photonics  industry,  as well as the semiconductor  industry in general,  is
subject to  governmental  regulations  for the  protection  of the  environment,
including  those  relating 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  that  the  Company   maintain   certain
environmental  permits.  The Company believes that it has obtained all necessary
environmental permits required to conduct its manufacturing  processes.  Changes
in the  aforementioned  laws  and  regulations  or the  enactment  of new  laws,
regulations  or  policies  could  require   increases  in  operating  costs  and
additional   capital   expenditures   and  could   possibly   entail  delays  or
interruptions of operations.




                                       4
<PAGE>



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. When a customer cancels an order, they are responsible for
all finished goods, all costs, direct and indirect,  incurred by the Company, as
well as a reasonable  allowance  for  anticipated  profits.  No assurance can be
given that the Company  will  receive  these  amounts  after  cancellation.  The
current backlog  contains only those orders for which the Company has received a
confirmed  purchase  order and also  includes  contracts  which  have  scheduled
shipping  dates beyond the upcoming  fiscal year. As such,  the current  backlog
represents  only a portion of expected  annual revenues for fiscal year 2004. At
the end of fiscal 2004, the Company had approximately $8.2 million in backlog as
compared to backlog of approximately $7.8 million at the end of fiscal 2003.

Customers  normally  purchase the Company's  products and incorporate  them into
products that they in turn sell in their own markets on an ongoing  basis.  As a
result,  the Company's  sales are dependent  upon the success of its  customers'
products and its future performance is dependent upon its success in finding new
customers and receiving new orders from existing customers.

Marketing
---------
The Company markets its products in the United States and Canada through its own
technical  sales  engineers  and  through  independent  sales   representatives.
International  sales,  including  Europe,  the Middle East and Pacific  Rim, are
conducted through foreign distributors (see Note 1 to the Financial Statements).
The  Company's  products are  primarily  sold as  components  or  assemblies  to
original equipment  manufacturers  (OEM's). The Company markets its products and
capabilities  through industry  specific  channels,  both on the internet and in
print through trade journals.

Competition
-----------
The Company competes with a range of companies for the custom optoelectronic and
silicon  photodetector  requirements  of  customers in its target  markets.  The
Company believes that 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 Pacific Rim
manufacturers of standard "off the shelf"  optoelectronic  components or silicon
photodetectors.

Proprietary Technology
----------------------
The  Company  utilizes  proprietary  design  rules and  processing  steps in the
development and fabrication of its PIN photodiodes and avalanche photodiodes. In
addition, the Company owns the following patents:
<TABLE>
<CAPTION>

US PATENT NO.               DESCRIPTION                                         DATE ISSUED
-------------               -----------                                         -----------

<S>                <C>                                                          <C>
6,111,299          Active Large Area Avalanche Photodiode Array                 August 2000

6,005,276          Solid State Photodetector with Light Responsive Rear Face    December 1999

5,801,430          Solid State Photodetector with Light Responsive Rear Face    September 1998

5,757,057          Large Area Avalanche Array                                   May 1998

5,477,075          Solid State Photodetector with Light Responsive Rear Face    December 1995
</TABLE>

                                       5
<PAGE>

<TABLE>
<S>                <C>                                                          <C>
5,311,044          Avalanche Photomultiplier Tube                               May 1994

5,146,296          Devices for Detecting and/or Imaging Single Photoelectron    September 1992

5.057,892          Light Responsive Avalanche Diode                             October 1991

5,021,854          Silicon Avalanche Photodiode Array                           June 1991

4,782,382          High Quantum Efficiency Photodiode Devices                   November 1988 (by predecessor co.)

4,717,946          Thin Line Junction Photodiode                                January  1988 (by predecessor co.)
</TABLE>

There can be no assurance  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 to prevent the  infringement  of a patent
could be substantial.  Furthermore, there can be no assurance that the Company's
APD technology will not infringe on patents or rights owned by others,  licenses
to  which  might  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 the published  materials,  the Company believes that its competitors
hold no patents,  licenses  or other  rights to the APD  technology  which would
preclude the Company from pursuing its intended operations.

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  might  arise  as  to  the
proprietary rights to such information which may not be resolved in favor of the
Company.

Employees
---------
At June  15,  2004 the  Company  had 96  employees,  comprised  of 88 full  time
employees  (including  3 officers)  and 8 part time  employees.  Included  are 7
engineering  and  development  personnel,  8 sales and marketing  personnel,  70
operations personnel,  and 11 general and administrative  personnel (including 3
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 in payroll expense.


Item 2.     Properties

The Company leases its executive offices, research,  marketing and manufacturing
facilities that consist of  approximately  45,000 square feet in two facilities.
The facility  located at 1240 Avenida Acaso in  Camarillo,  California is leased
through February 2009. A second manufacturing  facility is located at 305 County
YZ, Dodgeville, Wisconsin, and is leased through November 2007. For a portion of
the year,  the  Company  also held a lease on the  prior  Texas  Optoelectronics
facility in Garland,  Texas, which was terminated  effective September 2003. The
Company believes that its existing facilities are adequate to meet its needs for
the foreseeable future.




                                       6
<PAGE>



Item 3.     Legal Proceedings

None.

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

None.


                                     PART II

Item 5.     Market for Common Equity and Related Stockholder Matters

The  Company's  Class A Common  Stock is traded on the American  Stock  Exchange
(AMEX) under the symbol "API".

At June 15,  2004,  the Company had 108 holders of record for the Class A Common
Stock (including shares held in street name),  representing  approximately 6,500
beneficial  owners of the Class A Common Stock.  On the same date,  there were 6
holders of record of the Class B Common Stock (none of which were held in street
name).

The following table sets forth high and low closing prices by quarter for fiscal
years 2004 and 2003.
<TABLE>
<CAPTION>

                           Quarterly Stock Market Data
---------------------------- -------------------- -------------------- -------------------- --------------------
                                 1st Quarter          2nd Quarter          3rd Quarter          4th Quarter
                              2004       2003       2004       2003     2004       2003      2004       2003
---------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Common Stock (1)
<S>                            <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
      High                     1.05       1.66      1.89       1.00      2.51       .94       2.45       1.50
      Low                       .87        .95       .88        .60      1.37       .66       1.66        .82
---------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
(1) Price ranges on the American Stock Exchange
</TABLE>

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.  To date, a total of 740,000  shares of
Class A Redeemable  Convertible Preferred Stock have been converted into 222,000
shares of Class A Common  Stock,  leaving  outstanding  40,000 shares of Class A
Redeemable  Convertible  Preferred  Stock. The aggregate  non-cumulative  annual
dividend  preference of such Class A Redeemable  Convertible  Preferred Stock is
$2,880.  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.




                                       7
<PAGE>



Item 6.     Management's Discussion and Analysis

Application of Critical Accounting Policies
-------------------------------------------
Application of our accounting policies requires management to make judgments and
estimates about the amounts  reflected in the financial  statements.  Management
uses historical experience and all available information to make these estimates
and judgments, although differing amounts could be reported if there are changes
in the  assumptions  and estimates.  Estimates are used for, but not limited to,
the accounting for the allowance for doubtful  accounts,  inventory  allowances,
restructuring  costs,  impairment costs,  depreciation and  amortization,  sales
discounts and returns,  warranty costs, taxes and contingencies.  Management has
identified the following  accounting policies as critical to an understanding of
our financial statements and/or as areas most dependent on management's judgment
and estimates.

Revenue Recognition
-------------------
We  generally  recognize  revenue  when  persuasive  evidence of an  arrangement
exists,  delivery has occurred, the price is fixed or readily determinable,  and
collectibility  is  probable.  Sales  are  recorded  net of  sales  returns  and
discounts. We recognize revenue in accordance with Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements."

Impairment of Long-Lived Assets
-------------------------------
We  continually  review the  recoverability  of the carrying value of long-lived
assets using the  methodology  prescribed  in Statement of Financial  Accounting
Standards (SFAS) 144,  "Accounting for the Impairment and Disposal of Long-Lived
Assets." We also review long-lived assets and the related  intangible assets for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying value of such assets may not be  recoverable.  Upon such an occurrence,
recoverability  of these  assets  is  determined  by  comparing  the  forecasted
undiscounted net cash flows to which the assets relate,  to the carrying amount.
If the asset is  determined  to be unable to recover its  carrying  value,  then
intangible  assets,  if any,  are  written  down  first,  followed  by the other
long-lived  assets to fair value.  Fair value is determined  based on discounted
cash flows, appraised values or management's estimates,  depending on the nature
of the assets.

Deferred Tax Asset Valuation Allowance
--------------------------------------
We record a deferred  tax asset in  jurisdictions  where we  generate a loss for
income tax purposes.  Due to our history of operating losses, we have recorded a
full valuation  allowance  against these deferred tax assets in accordance  with
SFAS 109, "Accounting for Income Taxes," because, in management's  judgment, the
deferred tax assets may not be realized in the foreseeable future.

Inventories
-----------
Our  inventories are stated at standard cost (which  approximates  the first-in,
first-out method) or market.  Slow moving and obsolete  inventories are analyzed
quarterly.  To  calculate  a reserve  for  obsolescence,  we compare the current
on-hand  quantities with both the projected usages for a two-year period and the
actual usage over the past 12 months.  On-hand quantities greater than projected
usage are calculated at the standard unit cost. The production,  engineering and
purchasing departments review the initial list of slow-moving and obsolete items
to identify items that have alternative uses in new or existing products.  These
items are then excluded from the analysis.  The remaining  amount of slow-moving
and obsolete inventory is then reserved for.  Additionally,  non-cancelable open
purchase  orders for parts we are  obligated  to purchase  where demand has been
reduced may be  reserved.  Reserves  for open  purchase  orders where the market
price is lower than the purchase order price are also established.




                                       8
<PAGE>



Accounts Receivable and Allowance for Doubtful Accounts
-------------------------------------------------------
The Allowance for Doubtful  Accounts is  established  by analyzing  each account
that has a balance over 90 days past due. Each account is individually  assigned
a probability of collection.  The total amount determined to be uncollectible in
the  90-days-past-due  category is then reserved  fully.  The percentage of this
reserve to the  90-days-past-due  total is then  established  as a guideline and
applied  to the  rest  of the  non-current  accounts  receivable  balance  where
appropriate.  When other  circumstances  suggest  that a  receivable  may not be
collectible,  it is immediately  reserved for, even if the receivable is not yet
in the 90-days-past-due category.


TABLE OF CONTRACTUAL OBLIGATIONS
--------------------------------
The following table sets forth the contractual obligations of the Company at
March 28, 2004.
<TABLE>
<CAPTION>

------------------------------------------- --------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                                              PAYMENTS DUE BY PERIOD
------------------------------------------- --------------------------------------------------------------------------
                                Total        Less than 1 year      1 - 3 years     3 - 5 years     More than 5 years
                                -----        ----------------      -----------     -----------     -----------------
<S>                          <C>               <C>                 <C>              <C>                   <C>
Long-term debt                    -                  -                  -               -                  -

Capital lease obligations       27,000             16,000             11,000            -                  -

Operating lease              1,866,000            414,000          1,147,000         305,000               -
obligations

Purchase Obligations         1,881,000          1,881,000               -               -                  -

Other long-term
liabilities reflected on
the registrant's balance
sheet under GAAP                  -                  -                  -               -                  -

--------------------------- --------------- -------------------- ---------------- --------------- --------------------
          Total              3,774,000          2,311,000          1,158,000         305,000               -
--------------------------- --------------- -------------------- ---------------- --------------- --------------------
</TABLE>


RESULTS OF OPERATIONS

Fiscal year 2004 Compared to Fiscal Year 2003

REVENUES
--------
The  Company's  revenues  for the fiscal  year ended  March 28, 2004 (2004) were
$12.401 million,  an increase of $3.254 million, or 36%, from revenues of $9.147
million for the fiscal year ended March 30, 2003 (2003).

The increase was primarily attributable to the Company's acquisitions of Silicon
Sensors,  Inc. and Texas  Optoelectronics,  Inc.,  both of which occurred during
fiscal 2003. The increase in net product sales reflects significant increases in
shipments to customers in each of the Company's major market segments,  the most
notable coming from the  military/aerospace  segments,  which increased 41% over
the prior year and represent 37% of total revenues, or $4.64 million. Similarly,
sales to the industrial  sensing segments  increased 28% over the prior year and
represent 41% of total revenues, or $5.13 million. Sales to the medical markets,
representing 15% of total revenues, increased 22% to $1.86 million, and sales to
the  automotive   segment,   which  are  directly   attributable  to  the  Texas
Optoelectronics,  Inc.  acquisition,  increased to $717,000 and  represent 6% of
total  revenues,  as compared to $203,000  representing  2% of total revenues in
fiscal  year 2003.

                                       9
<PAGE>

Revenues  fell  somewhat  short of  expectations  because of changes in customer
delivery schedules and other manufacturing issues.  Nonetheless,  we are pleased
with the market stability and increased  diversification  that has been achieved
as a result of our acquisitions and consolidation of the three companies. In the
absence  of any  further  acquisitions,  we  expect  to see  revenue  growth  of
approximately  8% - 12% overall for fiscal year 2005.  The Company  continues to
actively  seek  appropriate  acquisition  candidates,  and to expose its growing
customer base to its expanded product line.

COSTS AND EXPENSES
------------------
Cost of product  sales  increased to $8.10 million in 2004 from $6.45 million in
2003.  Stated as  percent  of net  sales,  cost of  product  sales  decreased  5
percentage  points  to  65%,  bringing  gross  profit  margin  to 35% in 2004 as
compared  to 30% in  fiscal  year  2003.  The  improvement  in gross  margin  is
primarily  attributable  to a reduction in material costs which decreased to 25%
as compared to 30% in the prior year. In addition,  margins  benefited  from the
consolidation  of the  Company's  acquired  businesses  and  steps  taken by the
Company  to  maximize  production   efficiencies  between  its  two  facilities,
including load and inventory sharing,  inventory reduction plans, and other cost
management  techniques.  Direct  labor as a  percentage  of net  sales  remained
relatively  flat at 8% in 2004 as compared to 7% in 2003, as did other fixed and
variable  overhead  expenses,  which amounted to 32% for 2004 compared to 33% in
2003. The Company  continually  seeks ways to improve gross margin,  and expects
that the  current  margin of 35% is  indicative  of what can be  expected in the
future, given the current operational structure.

Research and  development  (R&D) costs  decreased by $231,000  (45%) to $280,000
during  2004  compared  to  $511,000  in  2003.  R &  D  costs  have  fluctuated
significantly  over the past two years as we have restructured and refocused our
efforts.  During 2004,  the Company  discontinued  projects which did not have a
clearly identified customer demand in our current market segments. We expect R&D
expenditures for fiscal year 2005 to be slightly higher than in 2004.

Marketing  and sales  expenses  decreased  slightly,  by $59,000  (5%) to $1.026
million in 2004.  During 2004,  the Company  focused on bringing  more sales and
marketing  functions in-house and improving the effectiveness and utilization of
its  internal  sales  force,   thereby  decreasing  the  use  of  outside  sales
representatives and  advertising/marketing  services. As a result,  decreases in
bad debt expense ($78,000) and advertising and marketing expenses ($40,000) were
offset by increases in travel,  salary and benefit  expenses.  To insure that we
can continue to provide excellent service to our consolidated  customer base, we
will continue to build our sales  department and expect that marketing and sales
expenses will increase in 2005, due primarily to planned  additions to the sales
department staff.

Total general and  administrative  expenses increased by $174,000 (9%) to $2.148
million in 2004 as  compared  to $1.974  million in 2003.  The net  increase  in
general and  administrative  expenses is  primarily  due to  increased  software
support and travel costs, representing  approximately $105,000. In addition, the
Company posted increased  consultant and non-compete expenses of $40,000 as well
as an  increase  to its  Directors & Officers  liability  insurance  of $24,000.
General  and  administrative  expenses  are  expected to increase in fiscal year
2005, due to the addition of an in-house information  technology  specialist and
the continued  strengthening of the administrative  infrastructure  necessary to
support the Company's growth.




                                       10
<PAGE>



Interest  income for 2004  totaled  $20,000,  a decrease  of $50,000  over 2003.
Interest  expense for the year was  $30,000 as compared to $13,000 in 2004.  The
decrease in interest income is primarily due to consistently  low interest rates
available  throughout the past year and the increase in interest  expense is due
to obligations assumed through the acquisition of Texas Optoelectronics, Inc. as
well as  expenses  associated  with the  Company's  secured  line of credit.  In
addition,  the Company reported a $40,000 net loss on sale of fixed assets,  due
primarily  to the  disposal  or  sale  of  select  assets  acquired  from  Texas
Optoelectronics, Inc. for which the Company had no useful application.

Net income for fiscal year 2004 was $794,000,  an improvement of $1.597 million,
or 199%, over the net loss of ($803,000) reported in 2003.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
At March 28,  2004,  the  Company  had cash,  cash  equivalents  and  short-term
investments of $3.0 million,  working capital of $5.8 million and an accumulated
deficit of $18.0  million.  The Company's  cash and cash  equivalents  increased
$397,000  during the twelve  months ended March 28, 2004.  Operating  activities
generated  $916,000 (after giving effect to a $300,000 transfer of cash to short
term investments), and benefited from a $307,000 decrease in inventories, due to
the usage of materials  purchased in prior periods as well as planned  inventory
reduction measures taken by the Company.

Cash generated from  operations  was reduced by a $300,000  payment  against the
Company's  secured  line of credit  and by  outlays  for  capital  expenditures.
Capital spending during 2004 totaled  $298,000  compared to $68,000 during 2003.
Capital  expenditures  during 2004 were  primarily due to  production  equipment
purchases,  upgrades  and  replacements,  as  well as  enhancements  made to the
computer  network  infrastructure  and  deployment of the  Company's  Enterprise
Resource  Planning  (ERP) system at the  Dodgeville,  WI  facility.  The Company
anticipates that cash outlays for capital items will be  approximately  $315,000
during  fiscal year 2005,  the largest  portion of which will be for  production
equipment  upgrades  and  enhancements.  The  remainder  is budgeted  for office
equipment and computer upgrades.

The Company is exposed to interest rate risk for marketable  securities.  Due to
very low  interest  rates  available to the Company  pursuant to its  investment
policy,  the Company was able to achieve the best yields on liquid  money market
and  equity  fund  accounts  and has held the  majority  of its  available  cash
reserves in such accounts. At March 28, 2004, the Company held $1.7 million in a
highly  liquid  equity fund account  which  carried an average  interest rate of
1.2%.


FORWARD LOOKING STATEMENTS
--------------------------
The information  contained herein includes  forward looking  statements that are
based on assumptions  that management  believes to be reasonable but are subject
to  inherent  uncertainties  and risks  including,  but not  limited  to,  risks
associated  with  the  integration  of  newly  acquired  businesses,  unforeseen
technological  obstacles  which  may  prevent  or slow  the  development  and/or
manufacture  of new  products,  limited  (or slower than  anticipated)  customer
acceptance  of new  products  which  have  been and are being  developed  by the
Company,  the availability of other competing  technologies and a decline in the
general demand for optoelectronic products.





                                       11
<PAGE>



Item 7.     Financial Statements and Supplementary Data

The following financial statements of Advanced Photonix, Inc. are included in
Item 7:
                                                                    Page

INDEPENDENT AUDITORS' REPORT                                         13


FINANCIAL STATEMENTS:

Balance Sheet,
    March 28, 2004                                                 14-15

Statements of Operations
  for the Years Ended March 28, 2004
  and March 30, 2003                                                 16

Statements of Shareholders' Equity
  for the Years Ended March 28, 2004 and
  March 30, 2003                                                     17

Statements of Cash Flows
  for the Years Ended March 28, 2004 and
  March 30, 2003                                                   18-19

Notes to Financial Statements                                      20-29







                                       12
<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders
  of Advanced Photonix, Inc.:

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Advanced
Photonix, Inc. (the "Company") as of March 28, 2004 and the related consolidated
statements  of  operations,  shareholders'  equity  and cash flows for the years
ended March 28, 2004 and March 30, 2003. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We conducted our audits in accordance  with the Standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall  presentation of the consolidated
financial statements.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion,  the  accompanying  consolidated  financial  statements  present
fairly, in all material respects, the financial position of the Company at March
28,  2004 and the  results  of its  operations  and its cash flows for the years
ended March 28, 2004 and March 30, 2003 in conformity with accounting principles
generally accepted in the United States.





/s/ Farber & Hass LLP
May 28, 2004






                                       13
<PAGE>








                            ADVANCED PHOTONIX, INC.


                           CONSOLIDATED BALANCE SHEET
                                 MARCH 28, 2004

<TABLE>
<CAPTION>

ASSETS

CURRENT ASSETS:
<S>                                                                                                    <C>
Cash and cash equivalents                                                                              $            1,299,000
Investments                                                                                                         1,700,000
Accounts receivable, less allowance of $56,000                                                                      2,416,000
Inventories, less allowance of $925,000                                                                             2,249,000
Prepaid expenses and other current assets                                                                             290,000
                                                                                                       ----------------------

Total current assets                                                                                                7,954,000
                                                                                                       ----------------------


EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost                                                                       4,905,000
Less accumulated depreciation and amortization                                                                     (3,500,000)
                                                                                                       ----------------------

Equipment and leasehold improvements, net                                                                           1,405,000
                                                                                                       ----------------------


OTHER ASSETS:
Goodwill, net of accumulated amortization of $353,000                                                               2,421,000
Patents, net of accumulated amortization of $47,000                                                                    16,000
Non-Compete Agreement, net of accumulated amortization of $119,000                                                     31,000
Security deposits and other assets                                                                                     41,000
                                                                                                       ----------------------

Total other assets                                                                                                  2,509,000
                                                                                                       ----------------------


TOTAL ASSETS                                                                                           $           11,868,000

                                                                                                       ======================


                                                                                                                  (Continued)
</TABLE>




                                       14
<PAGE>



                            ADVANCED PHOTONIX, INC.


                     CONSOLIDATED BALANCE SHEET - Continued
                                 MARCH 28, 2004

<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
<S>                                                                                                     <C>
Line of Credit                                                                                          $             900,000
Accounts payable                                                                                                      772,000
Accrued salaries, wages and benefits                                                                                  398,000
Current portion of capital lease payable                                                                               16,000
Other accrued expenses                                                                                                 66,000
                                                                                                        ---------------------
Total current liabilities                                                                                           2,152,000
                                                                                                        ---------------------

CAPITAL LEASE PAYABLE, Net of current portion                                                                          11,000
                                                                                                        ---------------------

COMMITMENTS AND CONTINGENCIES

Class A Redeemable Convertible Preferred Stock,
  $.001 par value; 780,000 shares authorized;
  40,000 shares issued and outstanding                                                                                 32,000
                                                                                                        ---------------------

SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value;
  10,000,000 shares authorized; 780,000 shares
designated                                                                                                               --
    Class A redeemable convertible; no shares issued and outstanding
Class A common stock, $.001 par value; 50,000,000 shares
    authorized; 13,397,059 shares issued and outstanding;                                                              13,000
    5,780,191 shares reserved for future issuance
Class B common stock, $.001 par value; 4,420,113 shares authorized; 31,691
  shares issued and
outstanding                                                                                                              --

Additional paid-in capital                                                                                         27,646,000
Accumulated deficit                                                                                              ( 17,986,000)
                                                                                                        ---------------------
Total shareholders' equity                                                                                          9,673,000
                                                                                                        ---------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                              $          11,868,000
                                                                                                        =====================

See notes to consolidated financial statements.
</TABLE>



                                       15
<PAGE>



                            ADVANCED PHOTONIX, INC.


                     CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED MARCH 28, 2004 AND MARCH 30, 2003
<TABLE>
<CAPTION>

                                                                                              2004                    2003
                                                                                              ----                    ----

<S>                                                                                       <C>                      <C>
SALES                                                                                     $12,401,000              $9,147,000

COST OF GOODS SOLD                                                                          8,104,000               6,448,000
                                                                                          -----------              ----------

GROSS PROFIT                                                                                4,297,000               2,699,000

RESEARCH AND DEVELOPMENT EXPENSES                                                             280,000                 511,000

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE                                                 3,174,000               3,058,000
                                                                                          -----------              ----------

INCOME (LOSS) FROM OPERATIONS                                                                 843,000                (870,000)
                                                                                          -----------              ----------

OTHER INCOME (EXPENSE):
Interest income                                                                                20,000                  70,000
Interest expense                                                                              (30,000)                (13,000)
Other, net                                                                                    (34,000)                  5,000
                                                                                          -----------              ----------
Other income, net                                                                             (44,000)                 62,000
                                                                                          -----------              ----------

INCOME (LOSS) BEFORE PROVISION
  (BENEFIT) FOR INCOME TAXES                                                                  799,000                (808,000)

PROVISION (BENEFIT) FOR INCOME TAXES                                                            5,000                  (5,000)
                                                                                          -----------              ----------

NET INCOME (LOSS)                                                                         $   794,000              $ (803,000)
                                                                                          ===========              ==========


BASIC AND DILUTED EARNINGS (LOSS)
  PER SHARE                                                                               $      0.06              $    (0.06)
                                                                                          ===========              ==========

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                                                              13,400,000              12,356,349
                                                                                          ===========              ==========


See notes to consolidated financial statements.
</TABLE>



                                       16
<PAGE>


<TABLE>
<CAPTION>

ADVANCED PHOTONIX, INC.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 28, 2004 AND MARCH 30, 2003
--------------------------------------------------------------------------------------------------------------------------
                                                                                  Additional
                                        Class A                  Class B            Paid-in
                                      Common Stock             Common Stock         Capital        Accumulated
                                   Shares      Amount       Shares      Amount       Amount          Deficit            Total
                                   ------      ------       ------      ------       ------          -------            -----

<S>                             <C>          <C>           <C>          <C>      <C>             <C>                 <C>
BALANCE, MARCH 31, 2002          12,211,648   $12,000       31,691       $-0-     $26,576,000     $(17,977,000)       $8,611,000

OPTIONS ISSUED TO ACQUIRE
  SSI (Below market price)                                                              5,000                              5,000

EXERCISE OF OPTIONS                  98,500                                            71,000                             71,000

SHARES ISSUED TO ACQUIRE
  TOI ASSETS                      1,059,110     1,000                                 973,000                            974,000

NET LOSS                                                                                              (803,000)         (803,000)
                                 ----------   -------      ------        ----     -----------     ------------        ----------

BALANCE, MARCH 30, 2003          13,369,258    13,000      31,691         -0-      27,625,000      (18,780,000)        8,858,000

EXERCISE OF OPTIONS                  77,801                                            67,000                             67,000

RETURN OF SHARES ISSUED TO
  ACQUIRE TOI ASSETS (Final         (50,000)                                          (46,000)                           (46,000)
    settlement of shares
    held in escrow)

NET INCOME                                                                                             794,000           794,000
                                 ----------   -------      ------        ----     -----------     ------------        ----------
BALANCE, MARCH 28, 2004          13,397,059   $13,000      31,691        $-0-     $27,646,000     $(17,986,000)       $9,673,000
                                 ==========   =======      ======        ====     ===========     ============        ==========

See notes to consolidated financial statements.
</TABLE>



                                       17
<PAGE>



<TABLE>
<CAPTION>


                            ADVANCED PHOTONIX, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED MARCH 28, 2004 AND MARCH 30, 2003

                                                                                               2004                     2003
                                                                                               ----                     ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                       <C>                     <C>
Net income (loss)                                                                         $   794,000             $  (803,000)
Adjustments to reconcile net income (loss) to net cash
provided by (used by) operating activities:
    Depreciation                                                                              328,000                 192,000
    Amortization                                                                               78,000                  48,000
    Disposal of fixed assets                                                                   39,000                      --
    Provision for doubtful accounts                                                           (36,000)                 40,000
    Provision for obsolete inventory                                                           70,000                 (14,000)
    Changes in operating assets and liabilities:
      Short-term investments                                                                 (300,000)               (398,000)
      Accounts receivable                                                                    (176,000)               (359,000)
      Inventories                                                                             307,000                 891,000
      Prepaid expenses and other current assets                                                27,000                 (79,000)
    Other assets                                                                              (17,000)               (147,000)
    Accounts payable                                                                          (73,000)                146,000
    Accrued expenses                                                                         (125,000)                 93,000
                                                                                          -----------             -----------
Net cash provided by (used by) operating activities                                           916,000                (390,000)
                                                                                          -----------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                                                         (298,000)                (68,000)
Intangible assets acquired                                                                    (10,000)                     --
Purchase of selected net assets of Silicon Sensors, LLC                                            --              (1,799,000)
                                                                                          -----------             -----------
Net cash used by investing activities                                                        (308,000)             (1,867,000)
                                                                                          -----------             -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit                                                                  (300,000)                     --
Proceeds from sale of fixed assets                                                             23,000                      --
Proceeds from issuance of stock options                                                            --                   5,000
Proceeds from exercise of stock options                                                        66,000                  71,000
                                                                                          -----------             -----------
Net cash provided by (used by) financing activities                                          (211,000)                 76,000
                                                                                          -----------             -----------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                                                        397,000              (2,181,000)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                  902,000               3,083,000
                                                                                          -----------             -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                                    $ 1,299,000             $   902,000
                                                                                          ===========             ===========

                                                                                                                  (Continued)

</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>

                            ADVANCED PHOTONIX, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
             FOR THE YEARS ENDED MARCH 28, 2004 AND MARCH 30, 2003

                                                                                             2004                     2003
                                                                                             ----                     ----

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
<S>                                                                                       <C>                     <C>
Cash paid for interest                                                                    $    30,000             $    13,000
Cash paid for taxes                                                                       $     5,000             $     1,600
</TABLE>

NON-CASH FINANCING ACTIVITY:
In January 2003, the Company purchased all of the issued and outstanding  shares
of common stock of Texas  Optoelectronics  Inc. (see Note 2). In connection with
the  purchase,  the  Company  incurred  a  secured  debt of  $1,200,000  with an
investment  brokerage  company,  of which $300,000 was repaid during fiscal year
2004.  At March 28,  2004,  the  outstanding  balance  of the  secured  debt was
$900,000.


See notes to consolidated financial statements.





                                       19
<PAGE>



                            ADVANCED PHOTONIX, INC.

                         NOTES TO FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Business  Description  - Advanced  Photonix,  Inc. (the Company or API), is
     engaged in the development and manufacture of optoelectronic  semiconductor
     based components, hybrid assemblies and other proprietary solid state light
     and radiation detection devices, including proprietary advanced solid state
     silicon  photodetection  devices which utilize  Avalanche  Photodiode (APD)
     technology. API is located in Camarillo, California.

     The Company's wholly-owned subsidiary, Silicon Sensor, Inc. (SSI) (see Note
     2  -   Acquisitions),   manufactures   silicon   photodiodes   and  optical
     sub-assemblies in a manufacturing facility in Dodgeville, Wisconsin.

     The Company's wholly-owned  subsidiary,  Texas Optoelectronics,  Inc. (TOI)
     (see  Note 2 -  Acquisitions),  manufactured  optical  sub-assemblies  in a
     facility in Garland,  Texas.  The Company shut down the Garland facility in
     May 2003 and  relocated  the TOI  assets  to the  Company's  facilities  in
     Dodgeville, Wisconsin and Camarillo, California.

     Principles of Consolidation - The consolidated financial statements include
     the financial statements of the Company and its wholly-owned  subsidiaries.
     All  significant   inter-company   balances  and  transactions   have  been
     eliminated in consolidation.

     Fiscal  Year-End - The  Company's  fiscal  year ends on the last  Sunday in
     March.  Fiscal  years in the  two-year  period ended March 28, 2004 contain
     fifty-two weeks each.

     Operating Segment Information - The Company  predominantly  operates in one
     industry segment, light and radiation detection devices.  Substantially all
     of the  Company's  assets  and  employees  are  located  at  the  Company's
     facilities in Camarillo, California and Dodgeville, Wisconsin.

     In fiscal  2004 and 2003,  the Company  had export  sales of  approximately
     $1,202,000  and  $1,848,000,  respectively,  to customers in North America,
     Asia, Australia and Europe.

     Fair Value of Financial  Instruments - The carrying  value of all financial
     instruments  potentially subject to valuation risk (principally  consisting
     of  cash  equivalents,  accounts  receivable  and  accounts  payable)  also
     approximates fair value.

     Cash and  Cash  Equivalents  - The  Company  considers  all  highly  liquid
     investments,  with an  original  maturity  of  three  months  or less  when
     purchased, to be cash equivalents.

                                       20
<PAGE>

     Short-Term  and Long-Term  Investments - Statement of Financial  Accounting
     Standards (SFAS) No. 115,  "Accounting for Certain  Investments in Debt and
     Equity Securities", requires that all debt and marketable equity securities
     be classified in one of three categories: trading,  available-for-sale,  or
     held-to-maturity.  It  is  the  Company's  intent  to  maintain  a  diverse
     portfolio to take  advantage of investment  opportunities.  The Company has
     classified   all   investments   as   current   assets,    which   includes
     available-for-sale and held-to-maturity. Available-for-sale investments are
     redeemable  within  one  year.  Held-to-maturity  securities  are  callable
     government  issues;  however,  market  rates  make the call  remote and the
     Company has the intent and ability to not redeem the issue.

     Available-for-sale  securities  are  recorded at market  value.  Unrealized
     holding  gains and  losses,  net of the  related  income  tax  effect,  are
     excluded  from  earnings  and  are  reported  as a  separate  component  of
     shareholders' equity until realized.  The amortized cost of debt securities
     is adjusted  for  amortization  of premiums  and  accretion of discounts to
     maturity.  Such amortization and accretion are included in interest income.
     At the time of  sale,  any  realized  gains or  losses,  calculated  by the
     specific  identification method, are recognized as a component of operating
     results.

     Held-to-maturity securities are carried at amortized cost.

     Short-term and long-term  investments  consist of the following as of March
     28, 2004:

                                                         Fair        Holding
                                     Cost               Value     Gain/(Losses)
                                     ----               -----     -------------

         Cash                  $                   $       85,000      $-0-
         Equity securities          1,700,000           1,700,000      $-0-
                               --------------      --------------      ----
         Totals                $    1,700,000      $    1,785,000      $-0-
                               ==============      ==============      ====

     All of the Company's  short-term  investments  as of March 28, 2004 are due
     within one year.

     Concentration  of Credit Risk -  Financial  instruments  which  potentially
     subject the Company to concentrations of credit risk consist principally of
     cash  equivalents,  short-term  investments  and accounts  receivable.  The
     Company maintains cash balances at a financial  institution that is insured
     by the Federal Deposit  Insurance  Corporation up to $100,000.  As of March
     28, 2004, the Company had cash  equivalents  at a financial  institution in
     excess of Federally insured amounts.  The Company invests in short-term and
     long-term  investments,  primarily  consisting  of  Government  Securities.
     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.  As of March 28, 2004, two customers comprised 14% and
     13%, respectively, of accounts receivable.

     Significant  Customer - During the fiscal  years  ended  March 28, 2004 and
     March 30, 2003,  no customer  accounted  for more than 10% of the Company's
     net sales.

                                       21
<PAGE>

     Inventories - Inventories,  which include material, labor and manufacturing
     overhead  are stated at  standard  cost (which  approximates  the first in,
     first out method) or market.

     Inventories consist of the following at March 28, 2004:

         Raw material                                    $       2,566,000
         Work-in-process                                           878,000
         Finished products                                         117,000
                                                         -----------------
         Total inventories                                       3,561,000
         Less reserve                                             (925,000)
         Progress bill and customer prepaid inventory           (1,700,000)
         Construction in progress                                1,313,000
                                                         -----------------

         Inventories, net                                $       2,249,000
                                                         =================

     Equipment and Leasehold Improvements - Equipment and leasehold improvements
     are stated at cost.  Depreciation  and  amortization are computed using the
     straight-line method over the estimated useful lives of the assets or lease
     term ranging from three to nine years.

     Equipment and leasehold  improvements consist of the following at March 28,
     2004:

         Machinery and equipment                              $  3,611,000
         Furniture and fixtures                                    145,000
         Leasehold improvements                                    267,000
         Data processing equipment                                 284,000
         Vehicles                                                   26,000
         Capitalized software                                      368,000
         Construction-in-process                                    93,000
         Assets held for sale or disposal                          111,000
                                                             -------------

         Total                                               $   4,905,000
                                                             =============

     Long-Lived Assets - The Company recognizes  impairment losses on long-lived
     assets used in operations when indicators of impairment are present and the
     undiscounted  cash flows estimated to be generated by those assets are less
     than the assets' carrying amount. In such  circumstances,  those assets are
     written down to estimated fair value.  Long-lived  assets consist primarily
     of goodwill and fixed assets.

     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
     approximately $3,000 in fiscal 2004 and 2003, respectively.

     Goodwill  - The  excess of cost over the  purchase  price of  acquired  net
     assets  is  amortized  on a  straight-line  basis  over a  25-year  period.
     Amortization  expense was $33,000 in fiscal 2002. In  accordance  with SFAS
     142,  Goodwill and other Intangible  Assets,  the Company ceased amortizing
     goodwill  on  April  1,  2002.   The   Company   annually   evaluates   the
     recoverability  of goodwill by assessing  whether the recorded value of the
     goodwill will be recovered through future expected operating results.

                                       22
<PAGE>

     Revenue   Recognition  -  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.

     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.

     Advertising   Expense  -  Advertising   costs  are  expensed  as  incurred.
     Advertising  expense was approximately  $57,000 and $106,000 in fiscal 2004
     and 2003, respectively.

     Warranties - The Company typically warrants its products against defects in
     material and workmanship for a period of 90 days from the date of shipment.
     A provision for estimated  future  warranty costs is recorded when products
     are  shipped.  Warranty  costs were  approximately  ($7,000) and $15,000 in
     fiscal 2004 and 2003, respectively.

     Net Income (Loss) Per Share - Net income (loss) per share  calculations are
     in accordance with SFAS No. 128, "Earnings per Share".  Accordingly,  basic
     earnings  (loss) per share is computed by dividing net income (loss) by the
     weighted  average  number  of shares  outstanding  for each  year.  Diluted
     earnings  (loss) per share has not been  presented  in 2004 and 2003 as the
     impact is immaterial.

     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.

     Pervasiveness  of Estimates - The  preparation  of financial  statements in
     conformity  with  generally   accepted   accounting   principles   requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities  and disclosure of contingent  assets and
     liabilities  at the  date of the  financial  statements  and  the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from those estimates.

     Accounting for Stock Option Based Compensation - SFAS No. 123,  "Accounting
     for  Stock  Based  Compensation",   sets  forth  accounting  and  reporting
     standards for stock based employee  compensation  plans. As allowed by SFAS
     123, the Company  continues to measure  compensation  cost under Accounting
     Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
     Employees" and complies with the pro forma  disclosure  requirements of the
     standard (see Note 5).

                                       23
<PAGE>

     New Accounting  Pronouncements - In May 2003, the FASB issued SFAS No. 150,
     "Accounting for Certain Financial  Instruments with Characteristics of both
     Liabilities and Equity".  This Statement  establishes  standards for how an
     issuer of debt classifies and measures certain  financial  instruments with
     characteristics  of both liabilities and equity. It requires that an issuer
     classify certain financial  instruments as a liability (or an asset in some
     circumstances)  instead of equity. The Statement is effective for financial
     instruments  entered into or modified after May 31, 2003, and otherwise was
     effective at the beginning of the first interim period beginning after June
     15, 2003. The Company adopted this Statement on July 1, 2003.

     In December  2003,  the FASB issued  Interpretation  46(r),  ("FIN  46(r)")
     "Consolidation of Variable  Interest  Entities".  The pronouncement  amends
     Accounting  Research  Bulletin  51 to set  standards  to require  financial
     statement  consolidation  of certain variable  interest  entities that meet
     specific  characteristics  if  the  company  has  a  controlling  financial
     interest.  This  interpretation  shall be applied to all variable  interest
     entities by the end of the first reporting period ending after December 15,
     2004, for  enterprises  that are small business  issuers.  The Company will
     adopt this Interpretation on October 1, 2004.

     The  Company  does  not  believe  that  any  of  these  recent   accounting
     pronouncements  will have a material impact on their financial  position or
     results of operations.

2.   ACQUISITION

     In August 2002, SSI, a newly formed wholly-owned subsidiary of the Company,
     purchased  substantially  all of the assets  and  selected  liabilities  of
     Silicon  Sensors  LLC,  a  closely-held   manufacturer  of  opto-electronic
     semiconductor  based  components  located  in  Dodgeville,  Wisconsin.  The
     financial purchase price was $1,718,675 in cash, plus the assumption of the
     Seller's  trade  accounts  payable and accrued  liabilities,  amounting  to
     approximately  $282,000.  The  Company  incurred  $79,000  of  expenses  in
     connection with this acquisition. In addition, the Company entered into a 3
     year $225,000  non-compete  agreement  with the majority  member of Silicon
     Sensors, LLC and is recording monthly amortization expense of $6,250.

     In January 2003,  the Company  purchased all of the issued and  outstanding
     shares of common  stock of TOI, a privately  owned custom  manufacturer  of
     opto-electric  components and assemblies.  The purchase price was 1,009,110
     shares  of API  Class A Common  Stock  (issued  at  $0.92  per  share)  and
     repayment  of a  debt  of  TOI in the  amount  of  $1,200,000  representing
     principal and interest.

3.   CAPITALIZATION

     The  Company's  Certificate  of  Incorporation  provides for two classes of
     common stock,  a Class A for which  50,000,000  shares are  authorized  for
     issuance  and a Class B for  which  4,420,113  shares  are  authorized  for
     issuance.  The par value of each class is $.001. Subject to certain limited
     exceptions, shares of Class B Common Stock are automatically converted into
     an  equivalent  number of Class A shares  upon the sale or  transfer of the
     Class B Common  Stock by the original  holder.  The holder of each share of
     Class A and Class B Common Stock is entitled to one vote per share.

                                       24
<PAGE>

     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 $.001 per share. 40,000 shares of Class
     A Redeemable  Convertible Preferred Stock ("Class A Preferred") were issued
     and  outstanding  at March  28,  2004.  The Class A  Preferred  Stock has a
     liquidation  preference  equal to its issue  price  ($.80 per share) and is
     convertible  at any time,  at the option of the  holder,  into .3 shares of
     Class B Common Stock for each share of Class A Preferred  Stock  converted.
     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  $25,000 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.

4.   INCOME TAXES

     At March 28, 2004,  the Company had net  operating  loss  carryforwards  of
     approximately  $24 million for Federal income tax purposes and $4.2 million
     for state income tax purposes that expire at various  dates through  fiscal
     year 2023. The tax laws related to the  utilization  of loss  carryforwards
     are complex and the amount of the  Company's  loss  carryforward  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 tax  effects of  temporary  differences  that give rise to  significant
     portions of the  deferred  tax assets at March 28,  2004 are  substantially
     composed of the Company's net operating loss  carryforwards,  for which the
     Company has made a full valuation allowance.

     The valuation allowance decreased  approximately $801,000 in the year ended
     March 28,  2004,  representing  primarily  the net  taxable  income for tax
     return  purposes.  In assessing the  realizability  of deferred tax assets,
     management  considers  whether it is more likely than not that some portion
     or all of the  deferred  tax  assets  will not be  realized.  The  ultimate
     realization  of deferred tax assets is  dependent  upon the  generation  of
     future  taxable  income  during  the  periods  in  which  those   temporary
     differences become deductible.  Management considers the scheduled reversal
     of  deferred  tax  liabilities,  projected  future  taxable  income and tax
     planning strategies in making this assessment.

     The tax  provision  for the year ended  March 28,  2004 is  composed of the
     California franchise tax and Wisconsin state income tax.

                                       25
<PAGE>

     The Company's net operating loss carryforwards will expire on the following
     dates:
                   Federal                                California
         ------------------------------          ------------------------------
            Amount         Expiration               Amount         Expiration
         -----------     --------------          -----------     --------------
         $ 1,498,751     March 31, 2006          $ 2,693,809     March 31, 2005
           3,171,670     March 31, 2007               82,141     March 31, 2011
           2,226,072     March 31, 2008              973,927     March 31, 2014
           3,816,200     March 31, 2009              471,220     March 31, 2015
           1,947,320     March 31, 2010          -----------
              30,267     March 31, 2011
           1,548,581     March 31, 2012
             599,421     March 31, 2013
             250,133     March 31, 2014
           6,096,005     March 31, 2015
              82,471     March 31, 2016
           1,868,504     March 31, 2022
             846,957     March 31, 2023
         -----------

         $23,982,352                             $ 4,221,097
         ===========                             ===========

5.   STOCK OPTIONS

     The Company has four stock option plans:  The 1990  Incentive  Stock Option
     and Non-Qualified  Stock Option Plan, the 1991 Directors' Stock Option Plan
     ("The Directors'  Plan"),  the 1997 Employee Stock Option Plan and the 2000
     Stock Option Plan. The Company measures  compensation for these plans under
     APB Opinion No. 25. No compensation cost has been recognized as all options
     were  granted at the fair  market  value or the  greater of the  underlying
     stock at the date of grant. Had  compensation  expense for these plans been
     determined  consistent  with SFAS No. 123, the  Company's net income (loss)
     and net income (loss) per share would be as follows:
                                                        2004         2003
                                                        ----         ----

         Net income (loss), as reported               $794,000    $(803,000)
         Net income (loss), pro forma                 $723,000    $(942,910)
         Basic income (loss) per share,  as reported  $   0.06    $   (0.06)
         Basic income (loss) per share, pro forma     $   0.05    $   (0.07)

     Because  the SFAS No.  123  method of  accounting  has not been  applied to
     options   granted  prior  to  April  3,  1995,   the  resulting  pro  forma
     compensation  cost  may not be  representative  of that to be  expected  in
     future years.  The fair value of each option grant is estimated on the date
     of grant using the  Black-Scholes  option  pricing model with the following
     weighted-average   assumptions   used  for   grants   in  2004  and   2003,
     respectively:  risk-free interest rates of 5% and 9.0%, expected volatility
     of 5% and 4% and expected  lives of 10 years in all  periods.  No dividends
     were assumed in the calculations.

                                       26
<PAGE>

     The  Company's  various  stock  option  plans  provide for the  granting of
     non-qualified  and  incentive  stock  options to purchase  up to  3,700,000
     shares  of  common  stock for  periods  not to  exceed  10  years.  Options
     typically  vest at the rate of 25% per year over  four  years,  except  for
     options granted under The Directors' Plan, which typically vest at the rate
     of 50% 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 2004 are summarized as follows:
                                                                     Weighted
                                                                      Average
                                               Shares                Exercise
                                                (000)                 Price
                                               ------                --------

         Outstanding, beginning of year         1,804                  $1.44
         Granted                                  300                  $0.92
         Exercised                                (78)                 $0.86
         Expired                                  (65)                 $1.21
                                               ------

         Outstanding, end of year               1,961                  $1.39
                                               ======                  =====

         Exercisable, end of year               1,580                  $1.52
                                               ======                  =====

     Information  regarding stock options outstanding as of March 28, 2004 is as
     follows:
<TABLE>
<CAPTION>

                                                                               Options Outstanding
                                                                ----------------------------------------------
                                         (in 000s)              Weighted Average              Weighted Average
         Price Range                       Shares                Exercise Price                Remaining Life
         -----------------------------------------------------------------------------------------------------
         <S>                                <C>                       <C>                            <C>
         $0.50 - $1.25                      1,452                     $0.77                          7.63
         $1.88 - $2.50                       108                      $2.04                          5.27
         $3.09 - $5.34                       401                      $3.46                          6.35
</TABLE>

<TABLE>
<CAPTION>


                                                                               Options  Exercisable
                                                               -----------------------------------------------
                                         (in 000s)             Weighted Average               Weighted Average
         Price Range                       Shares               Exercise Price                 Remaining Life
         -----------------------------------------------------------------------------------------------------
         <S>                                <C>                       <C>                            <C>
         $0.50 - $1.25                      1,087                     $0.76                          7.28
         $1.88 - $2.50                        92                      $2.06                          5.12
         $3.09 - $5.34                       401                      $3.46                          6.35

</TABLE>








                                       27
<PAGE>



6.   LINE OF CREDIT

     The Company has a line of credit from an investment brokerage company which
     provides  for  borrowings  up to 90% of the  amount  on  deposit  with that
     brokerage  company  ($1,785,000 at March 28, 2004).  Minimum  payments of a
     variable  interest  rate of  2.70%  which is 1.50%  above  "LIBOR"  (London
     Interbank Offered Rate). The line of credit is repayable upon demand and is
     secured by brokerage account balance.


7.   CAPITALIZED LEASE OBLIGATION

     The Company has various  capitalized  lease  obligations which provides for
     monthly  payments of $1,618.  The leases  mature at varying  dates  through
     fiscal 2006 and are  collateralized  by certain  equipment  with a net book
     amount of approximately  $28,000.  Future payments on the lease obligations
     are as follows:

         2005                                           $ 16,000
         2006                                             10,000
                                                        --------
         Total minimum lease payments                   $ 26,000
         Less interest                                    (7,000)
                                                        --------
         Present value of net minimum lease payments    $ 19,000
                                                        ========

8.   COMMITMENTS

     The Company leases its manufacturing and office facility and certain office
     equipment  under  non-cancelable  operating  leases.  Minimum  future lease
     payments  under all  non-cancelable  operating  leases  expiring at various
     dates through fiscal 2009, are as follows:

         2005                                         $  414,000
         2006                                            416,000
         2007                                            394,000
         2008                                            337,000
         2009                                            305,000
                                                      ----------
         Total                                        $1,866,000
                                                      ==========

     Rent  expense was  approximately  $441,000  and $362,000 in fiscal 2004 and
     2003, respectively.

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.

                                       28
<PAGE>

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 and
     administration  costs recognized as expense were approximately  $71,000 and
     $64,000 in fiscal 2004 and 2003, respectively.





                                       29
<PAGE>



Item 8.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure

None.


Item 8A.    Controls and Procedures

Our Chief  Executive  Officer,  President,  and  Chief  Financial  Officer  (the
"Certifying   Officers")  are  responsible  for   establishing  and  maintaining
disclosure controls and procedures for the Company. The Certifying Officers have
designed  such  disclosure  controls  and  procedures  to ensure  that  material
information is made known to them,  particularly during the period in which this
report was prepared. The Certifying Officers have evaluated the effectiveness of
the Company's  disclosure  controls and procedures within 90 days of the date of
this report and believe that the Company's  disclosure  controls and  procedures
are effective based on the required  evaluation.  There have been no significant
changes in internal controls or in other factors that could significantly affect
internal  controls  subsequent  to the date of their  evaluation,  including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.



                                    PART III

Item 9.     Directors and Executive Officers

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

      Name                           Age             Position
      ----                           ---             --------
Richard D. Kurtz                     52              Chairman of the Board and
                                                     Chief Executive Officer

M. Scott Farese                      47              Director

Ward Harper                          51              Director

Stephen P. Soltwedel                 57              Director

Paul D. Ludwig                       41              President

Susan A. Schmidt                     38              Chief Financial Officer
                                                     and Secretary

Richard D. Kurtz, Chairman of the Board and Chief Executive Officer
-------------------------------------------------------------------
Mr.  Kurtz  became a Director  of the  Company in  February  2000,  was  elected
Chairman of the Board in July 2000, and was appointed Chief Executive Officer in
February 2003.  Prior to joining  Advanced  Photonix,  he was Director of Client
Services and Strategic  Planning for Quantum Compliance Systems Inc. a privately
owned software  company  specializing  in the  development  and  installation of
Environmental  Health and Safety Management  systems.  Mr. Kurtz continues as an
equity owner in Quantum and was employed  there from July 2001 through  February
2003. Prior to joining  Quantum,  Mr. Kurtz had been Vice President of Sales and
Marketing for Filtertek Inc. an ESCO Technology company for more than 13 years.

M. Scott Farese, Director
-------------------------
Mr.  Farese  became a director of the Company in August 1998.  He is currently a
Business Unit Director for Filtertek  Inc. Mr. Farese joined  Filtertek in 1991.
Filtertek, a subsidiary of ESCO Technologies,  is the largest worldwide producer
of custom filtration  products and fluid control devices and the world's largest
manufacturer of custom molded filter elements.

                                       30
<PAGE>

Ward Harper, Director
---------------------
Mr.  Harper  became a director of the Company in May 2003.  He is  currently  an
attorney in private  solo  practice in Utah.  Mr.  Harper has been a  practicing
attorney for the past 14 years before the U.S.  Court and U.S. Court of Appeals,
Tenth  Circuit.  Prior  to  going  into  private  practice,  Mr.  Harper  was an
Attorney/Advisor for U.S. Administrative Law Judges and was also the Attorney in
charge  of public  benefits  litigation  for the Salt Lake City  Office of Legal
Services Corporation.

Stephen P. Soltwedel, Director
------------------------------
Mr.  Soltwedel became a director of the Company in February 2000. Since 1972, he
has been employed by Filtertek,  Inc. and is currently  Vice President and Chief
Financial Officer. Prior to joining Filtertek, Mr. Soltwedel was employed by the
public accounting firm of Baillies Denson Erickson & Smith in Lake Geneva, WI.

Paul D. Ludwig, President
-------------------------
Mr. Ludwig joined the Company in August 2002 through the  acquisition of Silicon
Sensors,  LLC, where he was President and co-owner since 1996. Mr. Ludwig became
the  Chief  Operating  Officer  of  Advanced  Photonix,  Inc.  at  the  time  of
acquisition  and was promoted to President  in February  2003.  Prior to joining
Silicon  Sensors,  Mr. Ludwig spent 11 years at Honeywell,  Inc.  holding sales,
marketing and management responsibilities in their Sensing and Control group.

Susan A. Schmidt, Chief Financial Officer and Secretary
-------------------------------------------------------
Ms.  Schmidt  joined  the  Company  in March  2000.  From 1997 to 2000,  she was
Director of Finance - Amphitheaters for SFX  Entertainment,  Inc. in Encino, CA.
SFX was a New  York-based  promoter and producer of live  entertainment  events.
From 1992 to 1997 she was  Controller  for Revchem  Plastics,  Inc., a privately
held distribution  company serving the reinforced plastics industry,  and Durall
Plastics,  Inc., Revchem Plastics Inc.'s sister manufacturing company in Rialto,
CA.

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.

The Board has  determined  that M. Scott  Farese,  Ward  Harper  and  Stephen P.
Soltwedel are "independent"  within the meaning of Securities  Exchange Act Rule
10A-3 and within the applicable American Stock Exchange (AMEX) definition.

Audit Committee
---------------
For the fiscal year ended  March 28,  2004,  the Audit  Committee  consisted  of
Mssrs. Farese, Harper and Soltwedel, all of whom are independent.  The Board has
determined that Stephen P. Soltwedel  qualifies as an Audit Committee  financial
expert as  defined  by Item  401(e)(2)  of  Regulation  S-B  promulgated  by the
Securities and Exchange Commission.

The Audit Committee's primary responsibilities are to: (1) oversee the Company's
financial  reporting  principles and policies  including review of the financial
reports and other financial and related  information  released by the Company to
the public, or in certain  circumstances  governmental bodies; (2) review of the
Company's system of internal controls  regarding finance,  accounting,  business
conduct  and  ethics and legal  compliance  that  management  and the Board have
established;  (3) review of the Company's  accounting  and  financial  reporting
processes;  (4) review and appraisal with  management of the  performance of the
Company's  independent  auditors;  and (5) the  provision  of an open  avenue of
communication between the independent auditors and the Board of Directors.

                                       31
<PAGE>

Nomination Procedures
---------------------
The Company has not made any changes to the procedures by which security holders
may  recommend  nominees to the Company's  Board of Directors  since the Company
last provided  disclosure to security holders in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A of the Exchange Act.

Code of Ethics
--------------
The Company has adopted a Code of Ethics for Senior Financial Officers, pursuant
to the  Sarbanes-Oxley  Act of 2002.  The Code of  Ethics  is  published  on the
Company's web site, www.advancedphotonix.com on the Investor Relations page.

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 beneficial  ownership and changes in beneficial  ownership of
the Company's equity securities with the Securities and Exchange  Commission and
to furnish the Company with copies of these reports.  Based solely on its review
of the copies of the forms received by it, the Company  believes that all of its
officers and directors complied with all filing requirements applicable to them,
except with respect to the late filing of Form 5 in June 2004 by Richard  Kurtz,
Ward Harper and Paul Ludwig to report a stock option grant occurring  during the
fiscal year, which was not previously reported on Form 4.


Item 10.    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>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                                             Long Term Compensation
                                                                       ---------------------------------
                                           Annual Compensation                Awards             Payouts
                                        --------------------------     ------------------------  -------
                                                             Other                   Securities
                                                            Annual      Restricted   Underlying   LTIP       All Other
                               Fiscal   Salary    Bonus   Compensation Stock Awards   Options    Payouts   Compensation
Name and Principal Position     Year     ($)      ($)         ($)          ($)          (#)        ($)         ($)(1)
---------------------------     ----     ----     ----        ---          ----         ----       ----        ----

<S>                             <C>    <C>       <C>        <C>            <C>        <C>          <C>        <C>
Richard D. Kurtz                2004   160,000   32,000        -            -         150,000       -          5,800
Chairman of the Board and       2003    22,000      -       11,500          -            -          -            100
Chief Executive Officer(2)      2002     n/a       n/a      10,000          -         245,000       -           n/a
------------------------------- ------ --------- -------- ------------ ------------- ----------- --------- --------------
Paul D. Ludwig                  2004   160,000   32,000        -            -          50,000       -         16,300
President                       2003    97,000      -        4,000          -         100,000       -          7,000
                                2002     n/a       n/a        n/a          n/a          n/a        n/a          n/a
------------------------------- ------ --------- -------- ------------ ------------- ----------- --------- --------------
Susan A. Schmidt                2004    99,000   16,000        -            -            -          -         14,100
Chief Financial Officer and     2003     n/a       n/a        n/a          n/a          n/a        n/a          n/a
Secretary(3)                    2002     n/a       n/a        n/a          n/a          n/a        n/a          n/a
------------------------------- ------ --------- -------- ------------ ------------- ----------- --------- --------------

Brock Koren                     2004   125,000      -          -            -            -          -            -
President and Chief Executive   2003   155,000      -          -            -            -          -         86,000
Officer(4)                      2002   175,000      -          -            -         100,000       -         16,300
------------------------------- ------ --------- -------- ------------ ------------- ----------- --------- --------------
(1)  Represents amounts paid by the Company on behalf of the named person in
     connection with the Company's benefits plans, 401(k) Retirement Plan,
     vacation pay and car allowance.
(2)  Mr. Kurtz was appointed to the office of Chief Executive Officer in February
     2003, following the resignation of Mr. Koren. Other annual compensation and
     securities underlying options reflect Director's fees and options granted as
     part of plans provided to outside directors.
(3)  Ms. Schmidt joined the Company in March 2000; however, total compensation is
     not reported for fiscal years 2002 and 2003, as annual salary and bonus did
     not exceed $100,000.
(4)  Mr. Koren resigned from his position as President in February 2003.
     Compensation continued through December 2003 under a severance agreement.
</TABLE>

                                       32
<PAGE>


Employment Agreements
---------------------
The Company has  employment  and  termination  agreements  with certain  current
employees under which the employees may receive severance pay through the end of
the term of the  contract.  The  contract  terms  vary from 2 to 3 years.  Total
compensation  under these  agreements in the event of  unemployment  through the
full term would be approximately $336,000 in fiscal year 2005.


Stock Options
-------------
The following  tables set forth  certain  information  concerning  stock options
granted to 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.
<TABLE>
<CAPTION>
                                               Option Grants in Fiscal 2004

                                                    Individual Grants
--------------------------------- ------------------- ------------------- --------------------- ----------------------

                                   Number of Securities   % of Total
                                      Underlying       Options Granted        Exercise or
                                        Options       to Employees in         Base Price            Expiration
Name(1)                                 Granted           Fiscal Year            ($/Sh)                  Date
--------------------------------- ------------------- ------------------- --------------------- ----------------------

<S>                                    <C>                   <C>                  <C>                  <C>
Richard D. Kurtz                       150,000               50%                  $.93                 5/19/13

Paul D. Ludwig                          50,000               17%                  $.93                 5/19/13

Susan A. Schmidt                          -                   -                    -                      -

(1) See "Summary Compensation Table" and Item 9 "Directors and Executive Officers" for principal position.
</TABLE>

<TABLE>
<CAPTION>

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

                                                                  Number of Securities            Value of Unexercised
                                                             Underlying Unexercised Options       In-the-Money Options
                        Shares Acquired        Value               at Fiscal Year End (#)        at Fiscal Year End ($)
Name(1)                 on Exercise (#)       Realized          Exercisable/Unexercisable      Exercisable/Unexercisable
------------------------------------------------------------------------------------------------------------------------

<S>                           <C>                <C>                 <C>       <C>                  <C>        <C>
Richard D. Kurtz              -                  -                   450,000 / 120,000              $357,900 / 134,400

Paul D. Ludwig                -                  -                   50,000 / 100,000               $68,800 / $131,200

Susan A. Schmidt              -                  -                    88,000 / 22,000               $70,800 / $18,550

(1) See "Summary Compensation Table" and Item 9 "Directors and Executive Officers" for principal position.
</TABLE>

Compensation of Directors
-------------------------
During 2004 each independent member of the Board of Directors received an annual
retainer in the amount of $4,000,  plus  directors' fees in the amount of $1,000
for each board meeting attended,  plus $500 for each committee meeting attended.
In addition,  all directors,  including employee  directors,  are reimbursed for
reasonable travel expenses incurred in connection with their attending  meetings
of the Board of Directors  and  committees.  Each of the directors who is not an
employee of the Company is also  eligible for grants of stock options upon their
appointment  to the Board of Directors  and all directors are eligible for stock
option grants on a discretionary basis so long as they remain on the Board under
the Advanced Photonix 2000 Stock Option Plan. Directors who are also officers of
the Company do not receive cash compensation in consideration for their services
as directors.




                                       33
<PAGE>



Item 11.    Security Ownership of Certain Beneficial Owners and Management

The  following  table  sets  forth,  as of June 15,  2004,  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.

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

Burke, Mayborn Co., Ltd.(3)       831,245           --              6.2

Richard D. Kurtz(4)                65,000         480,000           3.9

M. Scott Farese(4)                 25,100         289,000           2.3

Stephen P. Soltwedel(4)            14,000         300,000           2.3

Ward Harper(4)                       -             25,000            .2

Paul D. Ludwig(4)                  86,100          60,000           1.1

Susan A. Schmidt(4)                   500          98,000            .7

Directors & Officers as a         190,700       1,252,000           9.8
Group


(1)  Includes shares under options  exercisable on March 28, 2004 and options
     which become  exercisable  within 90 days thereafter.

(2)  Represents voting power assuming beneficial owner exercises all exercisable
     options and warrants.

(3)  Includes  shares  beneficially  owned by Burke,  Mayborn  Co.,  Ltd.  and
     Frank M. Burke,  Jr. The address of this shareholder is 5500 Preston Road,
     Suite 315, Dallas, TX 75205.

(4)  The address of this shareholder is c/o Advanced Photonix, Inc.
     1240 Avenida Acaso, Camarillo, CA 93012.



The following table sets forth, as of March 28, 2004, the aggregated information
pertaining to all securities  authorized for issuance under the Company's equity
compensation plans:
<TABLE>
<CAPTION>

                                  Number of
                              Securities to be
                                 issued upon       Weighted-average
                                 exercise of        exercise price        Number of
                                 outstanding        of outstanding       securities
                                  options,             options,           remaining
                                warrants and         warrants and      available for
Plan Category                      rights               rights         future issuance
-------------                      ------               ------         ---------------

<S>                               <C>                  <C>               <C>
Equity  compensation plans        1,580,200            $1.52             485,222
approved by shareholders

Equity  compensation plans
not       approved      by            -                  -                  -
shareholders
          Total                   1,580,200            $1.52             485,222

</TABLE>


Item 12.    Certain Relationships and Related Transactions

See Item 10.  Executive Compensation.



                                       34
<PAGE>






                                     PART IV

Item 13.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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

      (1) Financial Statements: No financial statements have been filed with
         this Form 10-KSB other than those listed in Item 7.

      (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.

      (3) Reports on Form 8-K:

         The Company filed form 8-K on February 11, 2004, to report its results
         of operations for the third quarter and year to date periods ending
         December 28, 2003. The filing included a copy of the press release
         issued February 10, 2004.

      (4) Exhibits:

      Exhibit
        No.             Description
      -------           -----------
      3.1               Certificate of Incorporation of the Registrant,
                        as amended - incorporated by reference to Exhibit 3.1 to
                        the Registrant's Registration Statement on Form S-1,
                        filed with the Securities and Exchange Commission
                        on November 23, 1990

      3.1.1             Amendment to Certificate of Incorporation of the
                        Registrant, dated October 29, 1992-incorporated by
                        reference to the Registrant's March 31, 1996 Annual
                        Report on Form 10-K

      3.1.2             Amendment to Certificate of Incorporation of the
                        Registrant, dated September 9, 1992-incorporated by
                        reference to the Registrant's March 31, 1996 Annual
                        Report on Form 10-K

      3.2               By-laws of the Registrant, as amended - incorporated by
                        reference to Exhibit 3.2 to the Registrant's March 30,
                        2003 Annual Report on Form 10-KSB

      4.1               Rights Agreement, dated September 19, 2002 by and
                        between the Company and Continental Stock Transfer and
                        Trust Company, Certificate of Designations for the
                        Company's Series B Junior Preferred Stock - incorporated
                        by reference to Exhibits 4.1 and 4.2 to the Registrant's
                        Form 8-K filed with the Securities and Exchange
                        Commission on September 26, 2002

      10.1*             Advanced  Photonix,  Inc. 1991 Special  Directors  Stock
                        Option Plan - incorporated by reference to Exhibit 10.9
                        to the Registrant's March 31, 1991 Annual Report on
                        Form 10-K

      10.2*             Advanced  Photonix, Inc. 1990  Incentive  Stock  Option
                        and  Non-Qualified  Stock  Option  Plan - incorporated
                        by reference to Exhibit No. 10.11 to the Registrant's
                        Registration  Statement on Form S-1, filed with the
                        Securities and Exchange Commission on November 23, 1990

      10.3*             Advanced Photonix, Inc. 1997 Employee Stock Option Plan
                        -  incorporated  by reference to Exhibit 10.13 to the


                                       35
<PAGE>

                        Registrant's March 30, 1997 Annual Report on Form 10-K

      10.4*             Amendment No. 1 to 1997 Employee Stock Option Plan of
                        Advanced  Photonix,  Inc. -  incorporated  by reference
                        to Exhibit 10.14 to the Registrant's December 28, 1997
                        Quarterly report on Form 10-Q

      10.5*             Advanced  Photonix,  Inc. 2000 Stock Option Plan -
                        incorporated by reference to Exhibit 10.1 to the
                        Registrant's Registration  Statement on Form S-8,
                        filed with the Securities and Exchange Commission on
                        March 15, 2001

      10.9              Lease Agreement dated February 23, 1998 between Advanced
                        Photonix, Inc. and High Tech No. 1, Ltd. -  incorporated
                        by reference to Exhibit 10.9 to the  Registrant's
                        March 29, 1998 Annual Report on Form 10-K

      10.10             Form of Indemnification Agreement provided to Directors
                        and Principal Officers of Advanced Photonix,  Inc. -
                        incorporated by reference to Exhibit 10.15 to the
                        Registrant's  December 28, 1997 Quarterly report on
                        Form 10-Q

      10.11*            Employment  Agreement dated August 21, 2002 between
                        Advanced  Photonix,  Inc. and Paul D. Ludwig -
                        incorporated  by  reference  to  Exhibit  10.1 to the
                        Registrant's  Form  8-K as  filed  with  the
                        Securities and Exchange Commission on September 5, 2002

      10.12*            Employment  Agreement dated February 10, 2003 between
                        Advanced Photonix,  Inc. and Richard D. Kurtz
                        - incorporated  by reference to Exhibit 10.12 to the
                        Registrant's  March 30, 2003 Annual Report on
                        Form 10-KSB

      21.1              List of Subsidiaries of Registrant - incorporated by
                        reference to Exhibit 21.1 to the  Registrant's
                        March 30, 2003 Annual Report on Form 10-KSB

      31                Additional  Certifications  of the  Registrant's
                        Chief  Executive  Officer,  President,  and Chief
                        Financial Officer pursuant to Section 302
                        of the Sarbanes-Oxley Act of 2002

      32                Certification  pursuant  to 18 U.S.C.  Section  1350,
                        as adopted  pursuant  to Section  906 of the
                        Sarbanes-Oxley Act of 2002


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




                                       36
<PAGE>



Item 14.    Principal Accountant Fees and Services.

     The firm of Farber & Hass,  LLP (F&H) has audited the financial  statements
     of the Company for each of the three fiscal years ended March 31, 2004. The
     following table presents fees for professional  audit services  rendered by
     F&H for the audit of the Company's annual  financial  statements and review
     of financial  statements included in the registrant's  quarterly reports on
     Form 10-QSB  ("Audit  Fees") for fiscal 2004 and 2003,  and fees billed for
     other services rendered by F&H.

                                                 2004             2003
                                                 ----             ----
         Audit Fees                            $58,840          $60,087
         Audited Related Fees(1)(2)              9,275           39,700
         Tax Fees(2)(3)                          7,650            7,450
         All Other Fees                             --               --
                                               ------------------------
                  Total                        $75,765         $107,237

         (1) Audit related fees consisted principally of the audit of the
             Company's benefit plan and consultations regarding
             acquisitions.

         (2) The Audit Committee has determined that the provision of all
             non-audit services performed for the Company by F&H is
             compatible with maintaining that firm's independence.

         (3) Tax fees consisted primarily of tax return preparation, state
             tax matters and tax advisory services.

     The Audit  Committee's  policy is to pre-approve all audit services and all
     non-audit services that the Company's  independent  auditor is permitted to
     perform for the Company under applicable  federal  securities  regulations.
     While  it is the  general  policy  of the  Audit  Committee  to  make  such
     determinations  at full Audit Committee  Meetings,  the Audit Committee may
     delegate  its  pre-approval  authority  to one or more members of the Audit
     Committee, provided that all such decisions are presented to the full Audit
     Committee at its next regularly scheduled meeting.






                                       37
<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.
                                         By: /s/ Paul D. Ludwig
                                             ---------------------------------
                                             Paul D. Ludwig, President
Date: June 24, 2004

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/ Richard D. Kurtz       Chairman of the Board and Chief        June 24, 2004
----------------------     Executive Officer                      -------------
Richard D. Kurtz


/s/ M. Scott Farese        Director                               June 24, 2004
----------------------                                            -------------
M. Scott Farese


/s/ Ward Harper            Director                               June 24, 2004
----------------------                                            -------------
Ward Harper


/s/ Stephen P. Soltwedel   Director                               June 24, 2004
------------------------                                          -------------
Stephen P. Soltwedel


/s/ Susan A. Schmidt       Chief Financial Officer                June 24, 2004
-----------------------    and Secretary                          -------------
Susan A. Schmidt           (Principal Financial and Accounting Officer)







                                       38
<PAGE>