Good day, everyone, and welcome to Advanced Photonix's 2013 (sic) [ 2014 ] First Quarter Earnings Conference Call. Today's conference is being recorded. At this time for opening remarks and introduction, I would like to turn the call over to Mr. Jim McDonald from Torrey Hills Capital. Please go ahead, sir.

Thank you. Before we get started, I want to remind listeners that this conference call will contain forward-looking statements, which involve known and unknown risks and uncertainties about the company's business and the economy and other factors that may cause actual results to differ materially from our expected achievements and anticipated results, including unforeseen technological obstacles, which may prevent or slow the development and/or manufacture of new products, problems with the integration of acquired companies and technology and possible inability to achieve expected synergies; and limited or slower-than-anticipated customer acceptance of new products, which has been and are being developed by the company. Please see our press release of today and our periodic reports filed with the Securities and Exchange Commission for a fuller statement of such risks factors. Given these uncertainties, listeners are cautioned not to place undue reliance on any forward-looking statements contained in this conference call. The forward-looking information given during this teleconference represents management's expectations and beliefs as of the date hereof. The continued availability of this teleconference on the Internet or through other media does not mean that the company is reaffirming or confirming its continued validity, except as may otherwise be required by law. The company expressly disclaims any obligation to update or alter any of the forward-looking statements made herein as a result of any event occurring after the date hereof. This conference call also contains presentation of non-GAAP financial measures as defined in the SEC's Regulation G. Reconciliations of the non-GAAP financial measures to the company's GAAP-based financial statements are included in the company's year-end earnings press release dated August 12, 2013, and are available on its website at www.advancedphotonix.com. On today's call, we'll hear first from Jeff Anderson, CFO; then Robin Risser, COO; and Rick Kurtz, CEO, who'll discuss the business of the company. Let's turn it over to Jeff.

Thank you, Jim, and thanks to all of you for joining us this afternoon. I'd like to review just briefly a few financial highlights from our first quarter ending June 28, 2013, and then I'll turn the call over to Rob for an update on business activities. When you look at this quarter's management discussion and analysis section of our 10-Q, you will find that they we retroactively changed some market definitions to focus you on what we feel are the end markets for our products. Prior to fiscal 2014, we reported, as telecommunications market revenue, the combined telecommunication transmission products sales and Communications Test and Measurement product sales, also referring to as Comtest, for those of you that follow the telecommunication market space. Going forward, we have retroactively split this out so that the telecommunication revenue includes solely the transmission revenue. We have included the Comtest product sales in a new category titled Test & Measurement. In addition, we have categorized the previous industrial market product sales as Test & Measurement, since in practice they are used to test, verify or take measurements. Therefore, the new Test & Measurement market includes the Comtest products, the former Optosolutions Industrial products and the former Terahertz industrial products. The mil/aero, medical and homeland security market definitions remain unchanged. With these new market definitions in mind, let's review our sales in the first quarter. Our total sales for the quarter ended June 28, 2013, were approximately $7.1 million, an increase of 14% or $862,000 from revenues of $6.2 million for the quarter ended June 29, 2012. Revenues increased 18% or $1.1 million from the quarter ended March 31, 2013. We experienced revenue increases in 3 of the 5 markets for the quarter ending June 28, 2013 compared to the prior-year period. The Test…

Thank you, Jeff. Good afternoon, everyone, and thank you for joining us on the call today. Our first quarter has us moving in the right direction after we hit bottom in the fourth quarter last year. Revenue was up 14% compared to last year's first quarter and up 18% compared to last quarter. In addition, we significantly improved our adjusted EBITDA, which was a negative $68,000 this quarter compared to a negative $456,000 in last year's first quarter and a negative $572,000 last quarter. Revenue in the quarter was also substantially ahead of our plan due primarily to increased high-speed optical receiver revenue despite the fact that the supply chain interruption was not stalled until late in the quarter. In addition, adjusted EBITDA was substantially ahead of plan in all 3 product platforms. Our high-speed optical receiver product platform was up 42% compared to last quarter, with transmission products up 227%, as supply-chain constraints on our 100-gig coherent receivers, used in the long-haul market, were resolved late in the quarter. And we began shipping a new 40-gig receiver design win used in the long-haul market. Demand for our high-speed optical receiver products has been robust this fiscal year. This robust demand, combined with the resolution of supply chain issues, positions our high-speed optical receiver product platform for strong growth in the second quarter in both the telecom transmission and the Comtest markets. We've been on a continuous cost improvement program in our high-speed optical receiver product platform, as we mentioned on our last conference call. It's been very successful to date and we are continuing to cost-reduce the labor and material content in these products. We are rightsizing our operating expenses, supply chain second sourcing, engineering for manufacturability, new technology deployment, learning curve economies of scale and selective automation in…

Thank you, Rob, and good afternoon, everyone, and thank you for joining us on the call today. Our first quarter came in above plan and we expect to be able to achieve our revenue growth target in excess of 35% for the fiscal year. In addition, we are diligently monitoring our cost and have taken some actions that we expect will benefit us in the latter half of the year and help keep the total operating expenses at or below the levels of last fiscal year. Given our efforts control cost and our current revenue trajectory, we anticipate that we'd be able to generate positive adjusted EBITDA during the second half of the fiscal year. As disclosed in the management discussion and analysis of the financial condition and results of the operation section of our quarterly report on Form 10-Q, we have now reclassified sales to the industrial market as sales to the newly created test and measurement market category in order to more accurately reflect how our optical sensors are being used. We've also included sales of our communication testing products, or Comtest equipment and sales of our T-Gauge product in this new market category. Going forward, the telecommunication market will solely reflect our telecommunication transmission product sales. We recently added Shimadzu Precision instruments as a sales representative in Japan, with a focus on sales for the Japanese military market. This was a direct result of our work on the F-35 program with Lockheed and Northrop. And we expect to build on this work with other F-35 partners such as in the United Kingdom, Italy, Turkey, Canada and others. We continue to explore other value added resellers and expect to be making more announcements regarding additions later this year. We are looking forward to expand our contract manufacturing network…

[Operator Instructions] We'll take our first question from Edward Perry [ph], private investor.

You've been very busy on the Terahertz sector and it looks to me like it's going to be a long lead time. You won't see anything for at least 6 months and then probably after 2 years, is that a fair assessment?

Are you talking -- you're referring to orders being dropped in? Are you talking about new opportunities? I'm not sure what you're asking about.

Well, basically, the results of our activities. New orders.

And again, we have a plan and that transition going from contract to product is occurring this year. So as Rob mentioned earlier, that we expect revenues to be flat for the year.

All right. Now, you mentioned also that you're expecting a 35% growth in revenue year-to-year?

That's correct.

And you've had 14% this Q. This means you've got to do like greater than 40% the next 3 Qs in order to accomplish the 35%?

That's the math, yes.

Okay. And this is in your scope of the plan for revenue sales?

Right. And as we mentioned in our K, we expected the sequential growth quarter-to-quarter beginning in the first quarter from the fourth quarter. So we saw that revenue growth, we expect that revenue growth to continue, quarter-to-quarter basis.

When you mentioned that the resolution supply-chain was late in the Q, about how much into the Q before you started getting the benefit for the 100-gig sales?

Rob?

More than halfway into the quarter. So at best we got -- we got less than half of a quarter.

Well, so that's going to be a -- that will be the most rapid increase in sales going forward the next 3 Qs?

That'll be a contributor. Yes.

Yes.

All right. Now, another off-the-wall question here. I attended another conference call and there was mention about China major telecoms doing tender offers towards the end of the year, specifically 100-gig market space. Is API in a position to benefit from those type of contract offers?

Well, we do have Chinese customers. And basically, in China -- this China Mobile and China Telecom are these customers. The primary suppliers to China Mobile and China Telecom would be Huawei and the ZTE. And we do business with both, although we do more business with one rather than the other. So we're starting to see a little bit of action there but not a lot yet.

Okay. But that -- towards the end of the year, was the expectation of something happening from those -- that sector?

Yes. They typically -- the Chinese market typically does not give a lot of advanced notice for this planning. So usually, that's our cloudiest visibility. We just have to be ready to react.

Okay. But you seem to have, now, a firm grasp on the ROSA, or 10-gig product line, with an expectation of a Q4 production line, is that going...

That's right, yes, that's right. We'll be sampling in Q3 with products that have been assembled in Asia for us, and we'll be shipping in Q4.

All right. Now, in terms of your competition in this market space, where does API stand relative to your competitors?

Well, we have been in the 10-gig APD space. We've been in a niche portion of that space for a while at a higher cost different package. So that's for the long haul on the metro side. So it's an evolution in that package and cost for that market. The fiber-to-the-home market is just beginning from 2.5 gig. It's just -- they're just initially prototyping. And so, to refresh everybody, our design for our APDs were always designed to be high-volume products, since there's a particular technique that we use that provides high-yield at the semiconductor level on this. And APDs traditionally have had low yields at the semiconductor level. But there has never really been a real high-volume market available for 10-gig APDs until it is -- this fiber-to-the-home market is beginning to evolve. To give you some sense, at the 2.5 -- and all receivers for fiber-to-the-home are based on using APDs, or avalanche photodiodes. So those are high-volume markets, and we would participate in that market in the early stages with ROSAs and probably evolve into selling chips. Because they're in the millions of units a year.

That's a remarkably substantial opportunity for API given your competitive posture in this area.

Yes, but it just really depends on how fast that rolls out and transitions from 2.5 to 10 gig.

When you speak of that rollout, you're talking specifically of a China market or will there be...

China drives fiber-to-the-home. Yes, China drives it. Well, to give you an idea, I think when the new leadership in China came in this last year, they had announced another initiative where they wanted to wire another 45 million homes during the next decade.

Substantial. The one last question, then I can let others, of course, ask, the Shimadzu...

Shimadzu, yes.

Shimadzu relationship, is that a VAR relationship? Or is that strictly like a lobbying concern?

No, it's a sales representative agreement, okay? Shimadzu sells a lot of various instruments, and they really don't do a lot of integration to manufacturing lines. So they're really -- they have the relationship with the aerospace and the military market in Japan. And so they're acting as our agent in our behalf, I guess, I would say.

[Operator Instructions] I show no other questions at this time. Would you like to make some closing remarks?

Okay, well, I don't have anything other to say than thank you, everybody, for taking the time to listen to our report today. I appreciate it and for our entire team, we appreciate your continued support of our company. We're very focused on growing our revenues and increasing both non-GAAP and EBITDA and translating this into GAAP profits. So, have a great week and thank you again.

Thank you again. That does conclude today's conference call. We appreciate your participation and you may now disconnect.