UNITED STATES
                      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 30, 2003

                                       OR

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

                         Commission file number 1-11056

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

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

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

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

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

                                      None

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

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


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

     Total  revenues  for  registrant's  fiscal  year ended  March 30, 2003 were
$9,146,743.

     As of June 19, 2003, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $13,800,000.

     As of June 19, 2003 there were  13,376,092  shares of Class A Common  Stock
and 31,691 shares of Class B Common Stock outstanding.

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  registrant's   knowledge,  in  any  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. __

                       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 LAAPD (large area avalanche photodiode).  The avalanche photodiode
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  our  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 light-emitting diode ("LED") assemblies and LED displays
o FILTRODE(R) - patented technology integrating optical filters directly on
  photodiode chips
o Small area avalanche photodiodes (SAAPDs)
o Large area avalanche photodiodes (LAAPDs) - discrete, with and without
  thermoelectric coolers, and with integrated modules

Markets
-------
These  products  serve  customers  in a variety  of global  markets.  The target
markets and applications served by the Company are as follows:

Military & Aerospace:
o Missile guidance
o Laser range finders
o Optical proximity fuse
o Heads-up displays
o Satellite positioning




                                       2
<PAGE>

Industrial & Commercial:
o Optical encoders
o Laboratory Instrumentation
o X-ray baggage scanners
o Bar code scanners
o Laser positioning systems

Medical:
o Blood analysis
o Medical diagnostics
o Medical imaging

Automotive:
o Laser detectors and jammers
o Collision avoidance
o Automatic power windows

Communications:
o Feedback detectors for laser diodes
o InGaAs optical monitors
o Wireless communications

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 various 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 2003 and 2002,  research and development  expenses amounted to $511,000
and  $467,000  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 may in
the future,  undertake customer funded, as well as internally  funded,  research
and development  projects when they are in support of the Company's  development
objectives.

As the Company has completed the initial  development and  commercialization  of
its LAAPD technology,  it has reduced outlays for research and development.  The
Company  continues  to conduct  research on avalanche  photodiodes.  Much of the
emphasis in APD  development  has shifted  toward  established  markets for this
technology, leveraging the development knowledge already held by the Company. It
is also  pursuing  ways to reduce the cost of  manufacturing  the LAAPD,  and to
improve its  performance,  lending it increased  adaptability  for customers who
currently use photomultiplier tubes (PMTs).

Projects currently underway in research and development include:

o    LAAPD arrays - the Company's patented technology in which the rear surface
     of an LAAPD is segmented to create isolated pixels, each with a separate
     electronic lead to be accessed in parallel fashion for imaging
     applications.

o    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. In such cases the customer is 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
2003,  the  Company  had  approximately  $7.8  million in backlog as compared to
backlog of approximately  $10.5 million at the end of fiscal 2002. The reduction
in backlog during fiscal 2003 can be attributed to orders that were removed from
the backlog after Management's assessment that these orders,  primarily from the
telecom sector, are no longer valid.

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,  primarily to Europe and the 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  it  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

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>

                                       5
<PAGE>

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 19, 2003 the Company had 75 full time  employees  (including 3 officers)
and 8 part time employees. Included are 7 engineering and development personnel,
7 sales and  marketing  personnel,  61 operations  personnel,  and 8 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  55,000 square feet in two facilities.
One is located at 1240 Avenida Acaso in Camarillo,  California,  leased  through
February  2004.  The Company  fully expects to extend the lease and is currently
negotiating the terms of such lease extension.  A second manufacturing  facility
is  located  at 305  County  YZ,  Dodgeville,  Wisconsin,  with a lease  through
November 2007. The Company also holds a lease on the prior Texas Optoelectronics
facility in Garland,  Texas.  The  facility  is no longer  operational,  and the
Company has terminated the lease 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 19,  2003,  the Company had 105 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 2003 and 2002.
<TABLE>
<CAPTION>

                           Quarterly Stock Market Data
---------------------------- -------------------- -------------------- -------------------- --------------------
                                 1st Quarter          2nd Quarter          3rd Quarter          4th Quarter
                              2003       2002       2003      2002      2003       2002      2003       2002
---------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Common Stock(1)
<S>                            <C>        <C>       <C>        <C>        <C>       <C>       <C>        <C>
      High                     1.66       1.35      1.00       1.09       .94       .82       1.50       1.20
      Low                       .95        .61       .60        .70       .66       .60        .82        .66
---------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
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.

RESULTS OF OPERATIONS

Fiscal year 2003 Compared to Fiscal Year 2002

REVENUES
--------
The  Company's  revenues for the fiscal year ended March 30, 2003  ("2003") were
$9.147 million,  an increase of $2.216 million,  or 32%, from revenues of $6.931
million for the fiscal year ended March 31, 2002 ("2002").

The increase in net product sales reflects significant increases in shipments to
customers in the industrial  sensing,  military/aerospace  and medical segments,
and is primarily  attributable  to revenues  added as a result of the  Company's
acquisitions of Silicon Sensors, Inc. and Texas  Optoelectronics,  Inc., both of
which occurred during fiscal 2003. During 2003, sales to the industrial  sensing
markets, which represent 44% of total revenues,  increased 31% to $4.02 million,
as   compared   to  $3.06   million   for  fiscal   year  2002.   Sales  to  the
military/aerospace markets, representing 36% of total revenues, increased 31% to
$3.30 million, as compared to $2.52 million, during fiscal 2002. Likewise, sales
to the medical markets, which represent 17% of total revenues,  increased 29% to
$1.52 million, compared to $1.18 million in fiscal year 2002.

The Company is pleased with the market  diversification  and stability  that has
been achieved as a result of the two acquisitions and continues to expect strong
revenue  growth in the  military  and medical  markets.  As the year end results
include only a fractional year of revenue for both  subsidiaries,  we anticipate
overall  revenue  growth of  approximately  40% in the upcoming  year,  based on
annualized sales projections of all divisions,  and specific new projects coming
on line during fiscal year 2004,  through both existing and new  customers.  The
current backlog and shipping  schedule  indicate that the majority of the growth
will be realized during the latter half of the year.

COSTS AND EXPENSES
------------------
Cost of product  sales  increased to $6.45 million in 2003 from $4.17 million in
2002.  Cost  of  product  sales  as a  percent  of net  sales  increased  by ten
percentage  points and gross  profit  margin on net product  sales  decreased 10
percentage  points to 30% as compared  to 40% in 2002.  The  reduction  in gross
margin is  primarily  attributable  to increased  material  and  overhead  costs
experienced  throughout  the Company,  part of which are inherent  costs assumed
through  the  acquisition  of  subsidiaries.  Material  and  labor  costs  as  a
percentage of net sales  increased to 30% and 7%,  respectively,  as compared to
21% and 5% in the prior year. The  company-wide  increases in material costs are
attributable to heightened competitiveness in the marketplace over the past year
which  has  caused  us to absorb  increases  in  certain  material  costs  while
maintaining  existing pricing in our efforts to generate new business as well as
retain  existing  business.  In addition,  inherited cost  structures of certain
subsidiary contracts  contributed to the overall increase in material costs. The
costs of maintaining three manufacturing  facilities resulted in increased labor
and overhead  costs which the Company  plans to reduce in the upcoming  year. As
the Company has  completed  the closing of the Garland,  Texas  facility and has
only building  lease  obligations  through  September  2003, it has absorbed the
manufacturing  processes of that  facility  into the  Dodgeville,  Wisconsin and
Camarillo,  California locations and expects to see improved overhead rates as a
result of improved  asset  utilization  and  operational  efficiencies.  Company
management also expects to realize future improvements in material costs through
leveraging  our buying power through  consolidation  of  operations  and overall
improvements  in cost of sales through our continued  efforts to increase  sales
and control both direct and indirect costs of manufacturing. The Company expects
these  savings  from  consolidation  to provide the  foundation  for  profitable
operations in the future.

                                       9
<PAGE>

Research and  development  ("R&D")  costs  increased by $44,000 (9%) to $511,000
during 2003 compared to 2002. R & D costs have fluctuated slightly over the past
two years as we  implemented  planned  reductions  in overall  R&D  expenditures
during fiscal year 2002.  During 2003, R & D expenditures were focused primarily
on developing value added  enhancements and additional  product offerings to our
line of PIN and  core  technology  products  as well as on  improvements  to the
current  line of LAAPD  array  products.  In the past,  the  primary  use of R&D
resources has been to develop a base family of proprietary  LAAPD  products.  As
the primary  development  phase of the LAAPD  technology has been completed,  we
have  narrowed  our LAAPD  expenditures  to those  products  which will  satisfy
existing  needs in the  marketplace.  In the upcoming  year, the Company will go
forward  with  its  planned  reductions  and  expects  to  further  reduce R & D
expenditures   as   resources   are   shifted   toward  the  support  of  custom
optoelectronic  projects in our target markets.  However, the possibility exists
that R&D costs may fluctuate or even increase,  as they have in the past, should
the level of activity associated with  customer-requested  development contracts
increase significantly.

Marketing and sales  expenses  increased by $117,000  (12%) to $1.085 million in
2003.  The increase in marketing and sales expense is due primarily to increased
absorption  of expenses  resulting  from the Company's  acquisitions  during the
current  fiscal  year  (see Note 2).  Excluding  the  impact  of the  subsidiary
expenses,  year to date  marketing and sales expenses were $46,000 less than the
prior  year,  a result of  decreased  recruitment,  advertising,  marketing  and
outside  representative sales commission expenses which were partially offset by
increases in benefits and bad debt  expenses.  To insure that we can  adequately
serve our  consolidated  customer  base,  we  expect  that  marketing  and sales
expenses will remain at the same level throughout the upcoming year.

Total general and  administrative  expenses increased by $162,000 (9%) to $1.974
million  in  2003  as  compared  to  $1.812  million  in  2002  (which  included
acquisition   investigation   expenses   of   $616,000).   Total   general   and
administrative expenses for 2003 include non-recurring charges totaling $237,000
which relate to the  resignation  and  severance  agreement  with the  Company's
former  President and Chief  Executive  Officer,  who resigned in February 2003.
Excluding  the  impact  of  additional  expenses  directly  attributable  to the
Company's   subsidiaries   ($427,000)  and  one-time  charges   described  above
($237,000),  general and administrative expenses were $1.31 million, or $114,000
higher than the $1.196  million  reported in 2002  (exclusive  of  non-recurring
charges  during  that  year  of  $616,000).  The net  increase  in  general  and
administrative expenses is primarily due to increased legal and insurance costs.
The  Company's  legal  fees  increased  $65,000  over the prior  year due to the
development  and  implementation  of a  shareholder  rights  agreement and other
miscellaneous issues. As noted throughout the year, the Company has continued to
realize  increases in liability  insurance  premiums and  experienced  a $48,000
increase in its Directors & Officers liability premiums during 2003. General and
administrative  expenses are expected to remain at approximately  the same level
during fiscal year 2004.

Interest  income for 2003  totaled  $70,000,  a decrease of $133,000  over 2002.
Interest  expense  for the year was  $13,000,  as  compared  to $0 in 2002.  The
decrease in interest  income is primarily  due to  consistently  lower  interest
rates in addition to lower cash reserves available for investment.  The increase
in interest  expense is due to obligations  assumed  through the  acquisition of
Texas Optoelectronics, Inc.

Net loss for fiscal year 2003 was ($803,000),  or $519,000  greater than the net
loss of  ($284,000)  reported in fiscal year 2002.  Excluding  the impact of the
one-time severance charges,  net loss for 2003 would be ($566,000),  or $282,000
greater than net loss reported for 2002.



                                       10
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

At March 30,  2003,  the  Company  had cash,  cash  equivalents  and  short-term
investments of $2.3 million,  working capital of $4.8 million and an accumulated
deficit of $19.0 million.  The Company's cash,  cash  equivalents and short-term
investments  decreased  $2.181  million during the twelve months ended March 30,
2003.  $76,000 was obtained  through the issuance and exercise of stock  options
and $390,000 was used by operating activities.  Operating cash flow was impacted
by a  decrease  in  inventories  of  $891,000,  due to the  usage  of  materials
purchased in the prior year to meet several long-term production contracts which
began to ship in 2003, and by increases in accounts  receivable and other assets
totaling $506,000.

$1.799  million  was  expended  during  the  year as the  Company  formed  a new
subsidiary,  Silicon  Sensors,  Inc.,  and  purchased  the  business  (including
selected net assets and liabilities) of Silicon Sensors,  LLC, a privately owned
manufacturer of optoelectronic  devices,  located in Dodgeville,  Wisconsin (see
Note 2).

Other capital  spending during 2003 totaled $68,000  compared to $417,000 during
2002.  All  capital  expenditures  during 2003 were due to  necessary  equipment
upgrades and/or replacements.  The amount expended for capital items in 2002 was
primarily  due to the  purchase  of a new  Enterprise  Resource  Planning  (ERP)
system,  which was installed during that year. The Company anticipates that cash
outlays for capital  items will be  approximately  $200,000  during  fiscal year
2004, the largest portion of which will be for production equipment upgrades and
enhancements.  The remainder will be spent on the  installation of both hardware
and software components of a wide area network (WAN) communication  system which
will be utilized to enhance efficiencies between the two facilities.

The Company is exposed to interest rate risk for marketable  securities.  Due to
continually  declining  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 thus  transferred  the majority of its
available cash reserves from longer term investment instruments to such accounts
during the year.  At March 30,  2003,  the Company held $1.4 million in a highly
liquid  equity fund  account  which  carried an average  interest  rate of 1.3%.
During 2004, the Company will continue to monitor  available  interest rates and
will attempt to utilize the best possible  avenues of investment  for its excess
liquid assets.

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 30, 2003                                         14-15

Statements of Operations
  for the Years Ended March 30, 2003
  and March 31, 2002                                         16

Statements of Shareholders' Equity
  for the Years Ended March 30, 2003 and
  March 31, 2002                                             17

Statements of Cash Flows
  for the Years Ended March 30, 2003 and
  March 31, 2002                                           18-19

Notes to Financial Statements                              20-27


-----------------------------------------------------------------

                                       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 30, 2003 and the related consolidated
statements  of  operations,  shareholders'  equity  and cash flows for the years
ended March 30, 2003 and March 31, 2002. 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 auditing standards generally accepted
in the 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
30,  2003 and the  results  of its  operations  and its cash flows for the years
ended March 30, 2003 and March 31, 2002 in conformity with accounting principles
generally accepted in the United States.





/s/ Farber & Hass LLP
June 6, 2003









                                       13
<PAGE>

                             ADVANCED PHOTONIX, INC.

                           CONSOLIDATED BALANCE SHEET
                                 MARCH 30, 2003


ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                       $    902,000
Short-term investments                                             1,400,000
Accounts receivable,
  less allowance of $92,000                                        2,204,000
Inventories                                                        2,628,000
Prepaid expenses and other current assets                            317,000
                                                                ------------
Total current assets                                               7,451,000
                                                                ------------

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost                      4,754,000
Less accumulated depreciation and amortization                    (3,212,000)
                                                                ------------
Equipment and leasehold improvements, net                          1,542,000
                                                                ------------

OTHER ASSETS:
Goodwill, net of accumulated amortization
  of $353,000                                                      2,410,000
Patents, net of accumulated amortization
  of $44,000                                                          19,000
Non-Compete Agreement, net of accumulated amortization
  Of $44,000                                                         106,000
Security deposits                                                     24,000
                                                                ------------
Total other assets                                                 2,559,000
                                                                ------------

TOTAL ASSETS                                                    $ 11,552,000
                                                                ============


                                                                  (Continued)



                                       14
<PAGE>



                             ADVANCED PHOTONIX, INC.

                     CONSOLIDATED BALANCE SHEET - Continued
                                 MARCH 30, 2003


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Line of Credit                                                  $  1,200,000
Accounts payable                                                     536,000
Accrued salaries, wages and benefits                                 430,000
Current portion of capital lease payable                              43,000
Note Payable                                                          12,000
Other accrued expenses                                               419,000
                                                                ------------
Total current liabilities                                          2,640,000
                                                                ------------

Capital Lease Payable, net of current portion                         22,000
                                                                ------------

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;
    13,369,258 shares issued and outstanding;
    5,807,992 shares reserved for future issuance                     13,000
Class B common stock, $.001 par value;
    4,420,113 shares authorized; 31,691 shares
    issued and outstanding                                              --
Additional paid-in capital                                        27,625,000
Accumulated deficit                                              (18,780,000)
                                                                -------------
Total shareholders' equity                                         8,858,000
                                                                -------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      $ 11,552,000
                                                                ============

See notes to consolidated financial statements.

                                       15
<PAGE>

                            ADVANCED PHOTONIX, INC.


                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002

                                                2003                  2002
                                                ----                  ----

SALES                                        $9,147,000            $6,931,000

COST OF GOODS SOLD                            6,448,000             4,170,000
                                             ----------            ----------

GROSS PROFIT                                  2,699,000             2,761,000

RESEARCH AND DEVELOPMENT EXPENSES               511,000               467,000

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                     3,058,000             2,165,000

ACQUISITION INVESTIGATION EXPENSES                 --                 616,000
                                             ----------            ----------

LOSS FROM OPERATIONS                           (870,000)             (487,000)
                                             ----------            ----------

OTHER INCOME (EXPENSE):
Interest income                                  70,000               203,000
Interest expenses                               (13,000)                 --
Other, net                                        5,000                 2,000
                                             ----------            ----------
Other income, net                                62,000               205,000
                                             ----------            ----------

LOSS BEFORE PROVISION (BENEFIT)
  FOR INCOME TAXES                             (808,000)             (282,000)

PROVISION (BENEFIT) FOR INCOME TAXES             (5,000)                2,000
                                             ----------            ----------

NET LOSS                                     $ (803,000)           $ (284,000)
                                             ==========            ==========

BASIC AND DILUTED EARNINGS (LOSS)
  PER SHARE                                  $    (0.06)           $    (0.02)
                                             ==========            ==========

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                12,356,349            12,208,992
                                             ==========            ==========

See notes to consolidated financial statements.

                                       16
<PAGE>


                             ADVANCED PHOTONIX, INC.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002
<TABLE>
<CAPTION>

                                                                                 Additional                 Accumulated
                                          Class A              Class B            Paid-in                      Other
                                        Common Stock         Common Stock         Capital    Accumulated    Comprehensive
                                     Shares     Amount    Shares     Amount       Amount       Deficit         Income      Total
                                     ------     ------    ------     ------       ------       -------         ------      -----

<S>                                <C>         <C>        <C>        <C>       <C>           <C>             <C>         <C>
BALANCE, MARCH 25, 2001            12,207,648  $12,000    31,691     $  -0-    $26,573,000   $(17,693,000)   $  29,000   $8,921,000

EXERCISE OF OPTIONS                     4,000                                        3,000                                    3,000
UNREALIZED GAIN ON
  INVESTMENTS
NET LOSS                                                                                         (284,000)                 (284,000)
                                                                                                               (29,000)     (29,000)
NET COMPREHENSIVE LOSS             ----------  -------    ------     ------    -----------   -------------   ----------  -----------

BALANCE, MARCH 31, 2002            12,211,648   12,000    31,691        -0-     26,576,000    (17,977,000)          -0-   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)   $      -0-  $8,858,000
                                   ==========  =======    ======     ======    ===========   =============   ==========  ===========

See notes to consolidated financial statements.
</TABLE>



                                       17
<PAGE>
<TABLE>
<CAPTION>

                             ADVANCED PHOTONIX, INC.


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002

                                                                        2003                     2002
                                                                        ----                     ----

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                  <C>                    <C>
Net loss                                                             $ (803,000)            $  (284,000)
Adjustments to reconcile net loss to net cash used by
  operating activities:
  Depreciation                                                          192,000                 201,000
  Amortization                                                           48,000                  37,000
  Provision for doubtful accounts                                        40,000                    --
  Provision for obsolete inventory                                      (14,000)                   --
  Changes in operating assets and liabilities:
    Short-term investments                                             (398,000)                 80,000
    Accounts receivable                                                (359,000)               (139,000)
    Inventories                                                         891,000                (844,000)
    Prepaid expenses and other current assets                           (79,000)                 23,000
    Other assets                                                       (147,000)                   --
    Accounts payable                                                    146,000                  73,000
    Accrued expenses                                                     93,000                  16,000
                                                                     -----------            -----------
Net cash used by operating activities                                  (390,000)               (837,000)
                                                                     -----------            -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                                    (68,000)               (417,000)
Intangible assets acquired                                                 --                    (3,000)
Purchase of selected net assets of Silicon Sensors, LLC              (1,799,000)                430,000
                                                                     -----------            -----------
Net cash provided by (used by) investing activities                  (1,867,000)                 10,000
                                                                     -----------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise and issuance of stock options                     76,000                   3,000
                                                                     -----------            -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                            (2,181,000)               (824,000)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                                   3,083,000               3,907,000
                                                                     -----------            -----------

CASH AND EQUIVALENTS, END OF YEAR                                    $  902,000              $3,083,000
                                                                     ===========             ==========
                                                                                            (Continued)
</TABLE>

                                       18
<PAGE>
<TABLE>
<CAPTION>

                             ADVANCED PHOTONIX, INC.


                CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
              FOR THE YEARS ENDED MARCH 30, 2003 AND MARCH 31, 2002

                                                                        2003                     2002
                                                                        ----                     ----

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
<S>                                                                   <C>                   <C>
Cash paid for interest                                                $  13,000             $     -0-
Cash paid for taxes                                                   $   1,600             $   1,600

NON-CASH FINANCING  ACTIVITY:  In January 2003, the Company purchased all of the
issued and outstanding 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.

See notes to consolidated financial statements.
</TABLE>


                                       19
<PAGE>


ADVANCED PHOTONIX, INC.

NOTES TO CONSOLIDATED 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 30,  2003,
          contain fifty-three weeks and fifty-two weeks, respectively.

     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 2003 and 2002, the Company had export sales of approximately
          $1,848,000  and  $1,590,000,   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.

     Short-Term  and  Long-Term  Investments  - 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.

                                       20
<PAGE>

          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 30, 2003:


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

          Cash                                      $  493,000          $-0-
          Mutual Funds               $    6,000          6,000           -0-
          Equity securities           1,400,000      1,400,000           -0-
                                     ----------     ----------          ----

          Totals                     $1,406,000     $1,899,000          $-0-
                                     ==========     ==========          ====

          All of the Company's  short-term  investments as of March 30, 2003 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 30, 2003, 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  Mutual  Funds  and  Government  Securities.
          Approximately 0.3% of the Company's investments are invested in Mutual
          Funds. 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 30,  2003,  two
          customers comprised 13% and 13%, respectively, of accounts receivable.

     Accounts  Receivable - Accounts  receivable  are reported at the customers'
          outstanding   balances  less  any  allowance  for  doubtful  accounts.
          Interest is not accrued on overdue  accounts  receivable.  The Company
          does require advance payments on certain large orders.

     Allowance for Doubtful  Accounts - The allowance  for doubtful  accounts on
          accounts  receivable  is charged to income in  amounts  sufficient  to
          maintain  the  allowance  for   uncollectible   accounts  at  a  level
          management   believes  is  adequate  to  cover  any  probable  losses.
          Management   determines  the  adequacy  of  the  allowance   based  on
          historical  write-off   percentages  and  information  collected  from
          individual customers.  Accounts receivable are charged off against the
          allowance when collectibility is determined to be permanently impaired
          (bankruptcy, lack of contact, account balance over one year old, etc.)

                                       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 30, 2003:

          Raw material                               $2,498,000
          Work-in-process                               656,000
          Finished products                             483,000
                                                   ------------
          Total inventories                           3,637,000
          Less reserve                                 (855,000)
          Progress bill inventory                      (154,000)
                                                   ------------
          Inventories, net                           $2,628,000
                                                   ============

     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
          30, 2003:

          Machinery and equipment                    $3,738,000
          Furniture and fixtures                        163,000
          Leasehold improvements                        271,000
          Data processing equipment                     249,000
          Vehicles                                       26,000
          Capitalized software                          258,000
          Construction-in-process                        49,000
                                                     ----------
          Total                                      $4,754,000
                                                     ==========

     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   2003  and  2002,
          respectively.

     Goodwill - The Company adopted Statement of Financial  Accounting Standards
          ("SFAS") 142,  Goodwill and Other Intangible  Assets on April 1, 2002.
          Accordingly,  on that date the Company ceased amortizing  Goodwill and
          other  intangible  assets with an indefinite  life.  Prior to April 1,
          2002 the Company  amortized the excess of cost over the purchase price
          of acquired net assets on a straight-line basis over a 25-year period.
          Goodwill   amortization   expense  was  $33,000  in  fiscal  2002.  In
          accordance  with  SFAS  142,  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.

     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.

                                       22
<PAGE>

          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  $106,000 and $122,000 in fiscal
          2003 and 2002, 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  $15,000
          and $13,000 in fiscal 2003 and 2002, respectively.

     Net  Income (Loss) Per Share - Net income (loss) per share calculations are
          in  accordance  with  Statement  of  Financial   Accounting  Standards
          ("SFAS") No. 128,  "Earnings per Share".  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 fiscal 2003 and
          2002 as the impact is anti-dilutive.

     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).

     New  Accounting  Pronouncements  - In June 2002,  the Financial  Accounting
          Standards  Board ("FASB")  issued SFAS No. 146,  "Accounting for Costs
          Associated with Exit or Disposal Activities". This Statement addresses
          financial  accounting and reporting for costs  associated with exit or
          disposal  activities and nullifies Emerging Issues Task Force ("EITF")
          Issue  No.  94-3,   "Liability   Recognition   for  Certain   Employee
          Termination  Benefits  and Other Costs to Exit an Activity  (including
          Certain Costs  Incurred in a  Restructuring)".  The provisions of this
          Statement  are  effective  for exit or  disposal  activities  that are
          initiated after December 31, 2002, with early application  encouraged.
          The Company adopted this Statement on January 1, 2003.

                                       23
<PAGE>

          In  December  2002,  the FASB issued  SFAS No.  148,  "Accounting  for
          Stock-Based Compensation - Transition and Disclosure".  This Statement
          amends  SFAS  No.   123,   "Stock-Based   Compensation",   to  provide
          alternative  methods of transition for a voluntary  change to the fair
          value   based   method  of   accounting   for   stock-based   employee
          compensation.  In  addition,  this  Statement  amends  the  disclosure
          requirements of SFAS No. 123 to require prominent  disclosures in both
          annual and interim financial statements about the method of accounting
          for  stock-based  employee  compensation  and the effect of the method
          used on reported  results.  The  alternative  methods of transition of
          SFAS 148 are  effective  for fiscal years  ending  after  December 15,
          2002. The Company  follows APB 25 in accounting for its employee stock
          options.  The disclosure  provision of SFAS 148 is effective for years
          ending after December 15, 2002 and have been  incorporated  into these
          consolidated financial statements and accompanying  footnotes.  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 is effective at the  beginning of the first  interim  period
          beginning  after June 15, 2003.  The Company will adopt this Statement
          on July 1, 2003. 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 1,059,110
     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.

     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 $.001 per share. 40,000 shares of Class
     A Redeemable  Convertible Preferred Stock ("Class A Preferred") were issued
     and  outstanding  at March  25,  2001.  The Class A  Preferred  Stock has a
     liquidation  preference  equal to its issue  price  ($.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.

                                       24
<PAGE>

4.  INCOME TAXES

     At March 30, 2003,  the Company had net  operating  loss  carryforwards  of
     approximately  $23 million for Federal income tax purposes and $4.1 million
     for state income tax purposes that expire at various  dates through  fiscal
     year 2022. 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 30,  2003 are  substantially
     composed of the Company's net operating loss  carryforwards,  for which the
     Company has made a full valuation allowance.

     The valuation allowance increased  approximately $803,000 in the year ended
     March 30, 2003,  representing primarily the net taxable loss 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 benefit for the year ended March 30, 2003 is primarily  composed of
     the California franchise tax credits.

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:

                                                      2003              2002
                                                      ----              ----

         Net income (loss), as reported            $(803,000)        $(284,000)
         Net income (loss), pro forma              $(942,910)        $(310,000)
         Basic income (loss) per share,
            as reported                            $   (0.06)        $   (0.02)
         Basic income (loss) per share -
           pro forma                               $   (0.07)        $   (0.03)

     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  2003  and   2002,
     respectively: risk-free interest rates of 4% and 6%, expected volatility of
     2.5% and 5% and  expected  lives of 10 years in all  periods.  No dividends
     were assumed in the calculations.

                                       25
<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 2003 are summarized as follows:
                                                                   Weighted
                                                                   Average
                                               Shares              Exercise
                                                (000)               Price
                                               ------              --------

         Outstanding, beginning of year         2,090               $1.44
         Granted                                  245               $0.63
         Exercised                                (99)              $0.72
         Cancelled                               (432)              $1.17
                                                -----

         Outstanding, end of year               1,804               $1.44
                                                =====               =====

         Exercisable, end of year               1,463               $1.59
                                                =====               =====

     Information  regarding stock options outstanding as of March 30, 2003 is as
     follows:

                                             Options Outstanding
                              --------------------------------------------------
                             (in 000s)     Weighted Average     Weighted Average
         Price Range           Shares       Exercise Price       Remaining Life
         -----------------------------------------------------------------------
         $0.50 - $1.25          1,256           $0.73              6.25 years
         $1.63 - $2.50            146           $1.98              4.66 years
         $3.09 - $5.34            402           $3.45              6.72 years


                                    Options Exercisable
                             ----------------------------------------
                             (in 000s)             Weighted Average
         Price Range           Shares               Remaining Life
         ------------------------------------------------------------
         $0.50 - $1.25            962                   7.16 years
         $1.63 - $2.50            100                   5.10 years
         $3.09 - $5.34            401                   7.03 years

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  ($1,899,000 at March 30, 2003).  Minimum  payments of a
     variable  interest  rate of  2.80%  which is 1.50%  above  "LIBOR"  (London
     Interbank Offered Rate). The line of credit is repayable upon demand and is
     secured by a brokerage account balance.

                                       26
<PAGE>

7.  CAPITALIZED LEASE OBLIGATION

     The Company has various  capitalized  lease  obligations  which provide for
     monthly  payments of $6,037.  The leases  mature at varying  dates  through
     fiscal 2007 and are  collateralized  by certain  equipment  with a net book
     amount of  approximately  $82,000.  Future payments on the lease obligation
     are as follows:

         2004                                              $56,000
         2005                                               18,000
         2006                                               15,000
         2007                                                2,000
                                                           -------

         Total minimum lease payments                      $91,000
         Less interest                                     (26,000)
                                                           -------
         Present value of net minimum lease payments       $65,000
                                                           =======

8.  NOTE PAYABLE

     The Company  entered  into an agreement  with a finance  company to finance
     certain insurance  premiums.  The agreement calls for monthly payments of
     $3,991 including 8.0% interest. The note matures in June, 2003.

9.  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 2007, are as follows:

         2004                                             $422,961
         2005                                               74,220
         2006                                               46,470
         2007                                                7,620
                                                          --------
         Total                                            $551,271
                                                          ========

     Rent  expense was  approximately  $362,000  and $349,000 in fiscal 2003 and
     2002, respectively.

10. 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.

11. 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  $64,000 and
     $62,000  in fiscal  2003 and 2002,  respectively.

                                       27
<PAGE>

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

     None.


                                    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                     51              Chairman of the Board and
                                                       Chief Executive Officer

M. Scott Farese                      46              Director

Ward Harper                          50              Director

Stephen P. Soltwedel                 56              Director

Paul D. Ludwig                       40              President

Susan A. Schmidt                     37              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's career reflects 25 years in sales,
marketing and strategic planning for various aerospace, automotive, distribution
and  medical  companies.  Most  recently,  he was Vice  President  of Sales  and
Marketing for Filtertek Inc. an ESCO Technology company for over 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.

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.


                                       28
<PAGE>


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.








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 3 by Paul  Ludwig  to report
initial  ownership of securities upon being appointed Chief Operating Officer on
August 21, 2003, which was reported on September 10, 2003.




                                       29
<PAGE>



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                2003    22,000      -       11,500          -            -          -           100
Chairman of the Board and       2002     n/a       n/a      10,000          -         245,000       -           n/a
Chief Executive Officer (2)     2001     n/a       n/a      10,000          -         150,000       -           n/a
-------------------------------------------------------------------------------------------------------------------------
Paul D. Ludwig                  2003    97,000      -        4,000          -         100,000       -          7,000
President                       2002     n/a       n/a        n/a          n/a          n/a        n/a          n/a
                                2001     n/a       n/a        n/a          n/a          n/a        n/a          n/a
-------------------------------------------------------------------------------------------------------------------------
Brock Koren                     2003    155,000     -          -            -            -          -         86,000
President and Chief Executive   2002    175,000     -          -            -         100,000       -         16,300
Officer (3)                     2001    175,000     -          -            -          50,000       -          9,400
-------------------------------------------------------------------------------------------------------------------------
(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) Mr. Koren resigned from his position as President in February 2003.
    Compensation continues through December 2003 under a severance agreement.
</TABLE>

Employment Agreements
---------------------
The Company has employment and  termination  agreements with certain current and
former employees under which the employees may receive severance pay through the
end of the term of the  contract.  The  contract  terms  vary from 6 months to 3
years.  Total  compensation  under these agreements in the event of unemployment
through the full term would be approximately $562,000 in fiscal year 2004.

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 2003

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

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

Richard D. Kurtz                          -                   -                    -                      -

Paul D. Ludwig                         100,000               41%                  $.61                 8/21/12

Brock Koren                               -                   -                    -                      -


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


                                       30
<PAGE>


<TABLE>
<CAPTION>

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


                                                        Number of Securities Underlying     Value of Unexercised
                        Shares                           Unexercised Options at Fiscal      In-the-Money Options
                      Acquired on        Value                   Year End (#)              at Fiscal Year End ($)
Name (1)              Exercise (#)      Realized          Exercisable/Unexercisable       Exercisable/Unexercisable
-------------------   ------------      --------        -------------------------------   -------------------------
<S>                    <C>              <C>                    <C>                             <C>
Richard D. Kurtz          -                -                   420,000 / -                     $57,200 / -

Paul D. Ludwig            -                -                    20,000 / 80,000                 $7,000 / $28,000

Brock Koren             60,000           $8,500                      - / -                           - / -

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

Compensation of Directors
-------------------------
During  2003,  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.


Item 11.    Security Ownership of Certain Beneficial Owners and Management

The  following  table  sets  forth,  as of June 20,  2003,  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)     823,800            --              6.2

Richard D. Kurtz(4)              45,000         420,000            3.4

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

M. Scott Farese(4)               15,000         289,000            2.2

Paul D. Ludwig(4)                71,100          20,000             .7

Susan A. Schmidt(4)                 500          77,334             .6

Directors & Officers as a       145,600       1,106,334            8.6
Group


(1) Includes shares under options exercisable on March 30, 2003 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 owned beneficially 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.



                                       31
<PAGE>



The following table sets forth, as of March 30, 2003, 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        1,804,034            $1.44             757,889
approved by shareholders

Equity  compensation plans
not approved by shareholders           -                 -                  -

          Total                   1,804,034            $1.44             757,889
</TABLE>

Item 12.    Certain Relationships and Related Transactions

     See Item 10. Executive Compensation.


Item 13.    Exhibits and Reports on Form 8-K

     (a)  The  following  is a list of the financial  statements, 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)  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

           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

                                       32
<PAGE>

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

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

           10.3*        Advanced  Photonix, Inc. 1997 Employee Stock Option Plan
                        -  incorporated  by reference to Exhibit 10.13 to the
                        Registrant's March 30, 1997 Annual report on Form 10-K

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

           10.5*        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

           21.1         List of Subsidiaries of Registrant

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

           99.2         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




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

     (3)  Reports on Form 8-K:

          The Company filed forms 8-K and 8-K/A on January 31, 2003 and April 2,
          2003,    respectively,    to   report   the   acquisition   of   Texas
          Optoelectronics,  Inc. on January 17, 2003.  The filings  included the
          purchase  agreement,   financial  statements  and  proforma  financial
          information, as required.




                                       33
<PAGE>
Item 14.    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.


                                   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
                                               ----------------------------
Date: June 26, 2003                            Paul D. Ludwig, President



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of the  Registrant in
the capacities and on the dates indicated.

Signature                      Title                                  Date

/s/ Richard D. Kurtz           Chairman of the Board
------------------------        and Chief Executive Officer       June 26, 2003
Richard D. Kurtz                                                  -------------


/s/ M. Scott Farese            Director                           June 26, 2003
------------------------                                          -------------
M. Scott Farese


/s/ Ward Harper                Director                           June 26, 2003
------------------------                                          -------------
Ward Harper


/s/ Stephen P. Soltwedel       Director                           June 26, 2003
------------------------                                          -------------
Stephen P. Soltwedel


/s/ Susan A. Schmidt           Chief Financial Officer            June 26, 2003
------------------------        and Secretary                     -------------
Susan A. Schmidt               (Principal Financial and
                                 Accounting Officer)





                                       34
<PAGE>