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APA Optics, Inc. Reports Record Revenue for Second Quarter and First Half Of Fiscal 2004

Posted on: Wednesday, 5 November 2003, 06:00 CST

MINNEAPOLIS, Nov. 5 /PRNewswire-FirstCall/ -- APA Optics, Inc. , today reported record revenues for the quarter and first six months of fiscal 2004. Revenues were $3,557,586 and $5,124,578 for the three and six months ended September 30, 2003. The net loss expanded to $1,667,488 or 14 cents per share for the quarter compared to a loss of $1,318,737 or 11 cents per share for the same quarter in fiscal 2003. The net loss for the quarter reflected one-time expenditures of $181,000 at the company's wholly owned subsidiary, APA Cables and Networks, associated with operating and consolidating several facilities of the recently acquired Computer System Products, Inc. (CSP) and Americable, Inc. For the six months ended September 30, 2003, the net loss was $3,212,887 or 27 cents per share compared to a net loss of $2,571,730 or 22 cents per share for the same period in fiscal 2003.

"The second quarter marked the first time that the operations of both our recent acquisitions are reflected," commented Anil Jain, the president and chief executive officer. "We had strong demand for our APA Cables and Networks products through the second quarter and were able to continue production, sales and marketing throughout our relocation and consolidation," added Jain. "We expect to see the financial benefits of the consolidation from the elimination of duplicate expenses, more efficient operations, and integrated sales teams and sales channels over the next several quarters," continued Jain.

APA continues to pursue opportunities in Gallium Nitride (GaN) based UV detection products and its R&D activities in the area of GaN based Hetero-junction Field Effect Transistors (HFETs) for high-speed communication, a technology with substantial market potential. "We believe our GaN based technology and our patents will be an instrumental part of APA Optics, Inc.'s future success," said Jain. "We continue to pursue our consumer and industrial GaN detector based products, namely, the Sun(UV)Personal UV Monitor (formerly SunWatch) and TrUVMeter(TM), respectively. We believe that the Sun(UV)Personal UV Monitor will be introduced into the market, and small volume orders fulfilled, during the 3rd quarter of Fiscal 2004. We have, however, delayed the introduction of the TrUVMeter(TM) into the market due mainly to continued modifications to meet the specific requirements of its intended applications, and to focus on the introduction of the Sun(UV)Personal UV Monitor."

The weighted average shares outstanding for the second quarter of the 2004 fiscal year totaled, 11,872,331 as compared to the 11,874,957 weighted average shares outstanding during the three months ended September 30, 2002. For the six months ended September 30, 2003 the weighted average shares outstanding were 11,872,331 compared to 11,875,396 for the six months ended September 30, 2002.

Forward-looking statements contained herein are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation, delays in or increased costs of production, delays in or lower than anticipated sales of the Company's new products, the Company's ability to sell such products at a profitable price, the Company's ability to fund operations, and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to update such statements to reflect actual events.

FINANCIAL RESULTS

Three Months Ended Six Months Ended

September 30, September 30,

2003 2002 2003 2002

Revenues $3,557,586 $38,900 $5,124,578 $111,351

Costs and expenses:

Cost of sales 3,339,257 718,944 5,207,138 1,476,677

Research and

development 210,861 336,680 407,529 689,847

Selling, general and

administrative 1,705,663 397,824 2,724,136 717,935

5,255,781 1,453,448 8,338,803 2,884,459

Loss from

operations (1,698,195) (1,414,548) (3,214,225) (2,773,108)

Interest income 34,657 122,797 60,108 255,889

Interest expense (3,200) (26,736) (57,770) (54,011)

31,457 96,061 2,338 201,878

Loss before

income taxes (1,666,738) (1,318,487) (3,211,887) (2,571,230)

Income taxes 750 250 1,000 500

Net loss $(1,667,488) $(1,318,737) $(3,212,887) $(2,571,730)

Net loss per share:

Basic and diluted ($0.14) ($0.11) ($0.27) ($0.22)

Weighted average

shares outstanding:

Basic and diluted 11,872,331 11,874,957 11,872,331 11,875,396

FINANCIAL RESULTS (Continued)

September 30, March 31,

2003 2003

Assets:

Cash and cash equivalents $16,653,485 $22,235,686

Other current assets 4,229,513 2,075,824

Property, plant and equipment, net 4,283,499 3,989,344

Other assets 3,838,497 3,532,842

Total assets $29,004,994 $31,833,696

Liabilities:

Current liabilities 2,980,974 2,587,993

Long-term liabilities 288,085 326,760

Shareholders' equity:

Common stock 118,723 118,723

Additional-paid-in-capital 52,031,560 52,001,681

Accumulated deficit (26,414,348) (23,201,461)

Total shareholders' equity 25,735,935 28,918,943

Total liabilities and

shareholders' equity $29,004,994 $31,833,696

APA designs, manufactures, sources from third parties, and markets a

variety of fiber optic and copper components to the data communication and

telecommunication industries. We are also active in the design,

manufacture and marketing of ultraviolet (UV) detection and measurement

devices, optical components and in research and development in the area of

Gallium Nitride (GaN) based transistors. APA Cables & Networks,

established in March 2003, combines the assets and potentials of Computer

System Products, Inc. (CSP) and Americable, Inc. and provides cost

effective, quick-turn, products to their diverse customer bases. CSP

designed, manufactured and marketed standard and custom fiber optic

assemblies, copper cable assemblies, value-added fiber optic frames,

panels and modules for the data communication and telecommunication

industries, and Americable developed, manufactured, and marketed fiber and

copper distribution products to deliver complete physical layer

connectivity solutions in broadband and premise data networks to any

aspect of service provider or premise data network customers. APA Cables &

Networks is a fully owned subsidiary of APA Optics, a publicly traded

company.

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