Apogee Reports Fiscal 2005 and Fourth Quarter Results.NORWOOD Norwood. 1 Town (1990 pop. 28,700), Norfolk co., E Mass.; settled 1678, set off from Dedham and Walpole and inc. 1872. Chiefly residential, its industries include printing and publishing and the manufacture of plastics, apparel, computer software, and , Mass. -- Apogee apogee (ăp`əjē), point farthest from the earth in the orbit of a body about the earth. See apsis. The farthest point. Technology, Inc. (AMEX AMEX See: American Stock Exchange : ATA (1) (AT Attachment) The specification for IDE drives. See IDE. (2) See analog telephone adapter. ATA - Advanced Technology Attachment ), an emerging micro-electrical mechanical systems ("MEMS (MicroElectroMechanical Systems) Tiny mechanical devices that are built onto semiconductor chips and are measured in micrometers. In the research labs since the 1980s, MEMS devices began to materialize as commercial products in the mid-1990s. ") and nanotechnology nanotechnology: see micromechanics. nanotechnology Manipulation of atoms, molecules, and materials to form structures on the scale of nanometres (billionths of a metre). company that designs, develops and markets sensors
Revenues for fiscal year 2005 were $5.2 million, compared to revenues of $6.2 million for the fiscal year of 2004. The Company's net income for 2005 was $3.0 million or $0.24 per share compared to a net loss of $3.4 million, or ($0.29) per share for the previous fiscal year. Revenues for the three months ended December 31, 2005 were $1.2 million with a net profit of $7.6 million or $0.62 per share, compared to revenues of $0.7 million with a net loss of $1.8 million or ($0.15) per share for the same period in 2004. On October 5, 2005, the Company completed the sale of certain assets of the Company's audio division to SigmaTel, Inc. ("SigmaTel") for approximately $9.4 million. As of December 31, 2005, the Company recorded a one-time gain on the transaction, net of expenses of approximately $8.9 million. Research and development ("R&D") expenses for the year ended December 31, 2005 were approximately $2.7 million compared to $2.8 million for the previous fiscal year. Selling, General and Administrative ("SG&A") expenditures were $4.0 million for fiscal year 2005 compared with the $2.8 million for the same period in 2004. This increase was primarily due to nonrecurring accounting and legal expenses related to the Company's financial restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. . Combined R&D and SG&A expenses dropped significantly from $1.9 million in the third quarter to $1.2 million in the fourth quarter of 2005. This reduction was the result of reduced human resource expenses related to the sale of the audio division, and the reduction in accounting and legal expenses associated with the Company's financial restatement. The Company's key achievements over the past year were: --Reorganized the Company into the sensor A device that measures or detects a real-world condition, such as motion, heat or light and converts the condition into an analog or digital representation. An optical sensor detects the intensity or brightness of light, or the intensity of red, green and blue for color systems. products and medical products groups and added five experienced scientists and staff in the areas of MEMS design, product development and marketing to support the commercialization of its sensor and medical products. --Introduced a family of nine new Sensilica(TM) pressure sensor A pressure sensor measures the pressure, typically of gases or fluids. Pressure is an expression of the force required to stop a gas or fluid from expanding, and is usually stated in terms of force per unit area. A pressure sensor generates a signal related to the pressure imposed. products and received trademark acceptance of the Sensilica(TM) brand name. --Filed a patent application for MEMS based micro-needle device for transdermal transdermal /trans·der·mal/ (-der´m'l) entering through the dermis, or skin, as in administration of a drug via ointment or patch. trans·der·mal adj. Through or by way of the skin. drug delivery. --Testing of the Company's micro-needle delivery system demonstrated significant improvement in drug delivery rates relative to a passive transdermal patch transdermal patch: see skin patch. , as well as, the ability to deliver large molecule proteins into a living tissue model. --Sold audio division, including the DDX DDx abbreviation for differential diagnosis; used in medical records. (R) intellectual property to SigmaTel for $9.4 million plus a potential one year earn-out Earn-out Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement. of $4.5 million, which cannot be assured. As a result of the sale, working capital increased to $4.9 million for fiscal year ended December 31, 2005 compared to approximately $2.2 million for the prior fiscal year. --Significantly reduced operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. with the transition of the audio business design and support staff to SigmaTel. The Company closed its offices in Taiwan, Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. and China and relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. its MEMS Division operations to Norwood and closed its New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of office. --Appointed Paul J. Murphy as Chief Financial Officer, Vice President of Finance and Treasurer. --Retained Miller Wachman as the Company's new registered independent public accounting firm. David Meyers, Apogee's Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. said, "The year 2005 was a transition year for the Company. We sold our audio business to SigmaTel because the high efficiency audio IC market was increasingly commodity driven and we could no longer achieve our financial goals. We established ourselves as a technology innovator by designing, developing and marketing our proprietary DDX technology. The strategy going forward is to leverage these core strengths together with the proceeds from the SigmaTel transaction to accelerate the commercialization of our sensor and medical products. Progress has been made with the recent introduction of the Company's family of Sensilica(TM) pressure sensors into the marketplace as well as the recent demonstration of the feasibility of our MEMS based medical devices for the transdermal drug delivery." "In December of 2005, we released nine Sensilica pressure sensor die supporting measurement applications up to 1000 PSI. We believe that the competitive advantage of our Sensilica products is derived from the novel manufacturing approach that creates a buried bur·y tr.v. bur·ied, bur·y·ing, bur·ies 1. To place in the ground: bury a bone. 2. a. To place (a corpse) in a grave, a tomb, or the sea; inter. b. cavity cavity /cav·i·ty/ (kav´i-te) 1. a hollow place or space, or a potential space, within the body or one of its organs. 2. in dentistry, the lesion produced by caries. within the silicon, thereby reducing manufacturing cost, sensor size and improved reliability. We are currently marketing these die to sensor and transducer transducer, device that accepts an input of energy in one form and produces an output of energy in some other form, with a known, fixed relationship between the input and output. manufacturers and recently displayed our products at a national manufacturing show. In addition, we are designing and developing a family of packaged sensor solutions to increase the value and expand the market acceptance of our products. We plan to exhibit these new products at the Sensor Expo and Conference in June. Based upon our progress to date, we believe that the Sensor Products Group will be the first of our new product groups to generate revenue." "In the past year, we internally validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. the feasibility of our MEMS based transdermal delivery device by demonstrating improved drug delivery through cadaver cadaver /ca·dav·er/ (kah-dav´er) a dead body; generally applied to a human body preserved for anatomical study.cadav´ericcadav´erous ca·dav·er n. and living skin with small molecule drugs and large molecule proteins. We also established manufacturing relationships to produce our future medical products to support additional clinical and biocompatibility biocompatibility the quality of not having toxic or injurious effects on biological systems. biocompatibility 1. The extent to which a foreign, usually implanted, material elicits an immune or other response in a recipient 2. testing. With the basic concept and feasibility internally validated, we are now in the process of refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar and protecting the technology and selecting the appropriate applications for our transdermal delivery system transdermal delivery system: see skin patch. . We expect to complete this selection in the first half of 2006 and to add the resources to pursue the timely development of our transdermal system. Depending upon the results of our development activities, we may license our technology, or develop and market through distributors our own medical products, or partner with third party pharmaceutical companies to help commercialize and obtain regulatory approval for our products. As the medical regulatory approval process for this type of device is typically long we are working to explore other applications for our technology." About Apogee Technology, Inc. Apogee Technology designs, develops and markets proprietary sensor and medical device products using its MEMS and nanotechnology for the automotive, industrial, consumer and medical markets. The Company has introduced a family of pressures sensors, under the Sensilica(TM) brand and is currently developing a MEMS based medical device for enhanced transdermal drug delivery. Apogee has significant experience in bringing high-performance and high volume MEMS components to market quickly. Our objective is to provide value-added and cost-savings solutions for our customers, and in so doing, to become a global leader in the field. The Company operates a worldwide marketing and sales organization and has offices in the US and Japan. For more information please visit our web site at: http://www.apogeemems.com. Sensilica(TM) is a trademark of Apogee Technology, Inc. All other product names noted herein may be trademarks of their respective holders. Certain statements made herein that use the words "anticipate," "hope," "estimate," "project," "intend," "plan," "expect," "believe" and similar expressions are intended to identify forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements involve known and unknown risks and uncertainties, which could cause the actual results, performance or achievements of the company to be materially different from those that may be expressed or implied. Please refer to the company's risk factors as set forth in the company's filings with the Securities and Exchange Commission, including its reports on Forms 10-KSB and 10-QSB.
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2005 2004
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ASSETS
Current assets
Cash and cash equivalents $5,512,974 $1,886,883
Accounts receivable, net of allowance for
doubtful accounts of $145,000 and
$105,000, in 2005 and 2004 respectively 152,837 533,113
Inventories, net 1,327,964 2,725,308
Prepaid expenses and other current assets 123,462 252,728
------------ ------------
Total current assets 7,117,237 5,398,032
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Property and equipment, net 39,932 103,189
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Other assets
Escrow account 409,480 --
Patents, net of accumulated amortization of
$-0- and $127,442, in 2005 and 2004
respectively 149,536 211,901
------------ ------------
$7,716,185 $5,713,122
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 766,930 $1,107,111
Deferred distributor revenue 1,337,022 1,955,563
Deferred contract revenue 72,686 95,788
------------ ------------
Total current liabilities 2,176,638 3,158,462
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Commitments and Contingencies -- --
Stockholders' equity
Common stock, $.01 par value; 20,000,000
shares authorized, 11,968,332 and
11,838,332 issued and outstanding at
December 31, 2005 and 2004, respectively 119,683 118,383
Additional paid-in capital 18,104,423 18,073,223
Accumulated deficit (12,684,559) (15,636,946)
------------ ------------
Total stockholders' equity 5,539,547 2,554,660
------------ ------------
$7,716,185 $5,713,122
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APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
------------------------
2005 2004
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Revenues
Product sales $4,502,333 $ 4,383,912
Royalties 480,468 1,057,867
Consulting 190,000 715,854
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5,172,801 6,157,633
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Costs and expenses
Product sales 3,966,265 3,890,917
Research and development 2,709,487 2,829,612
Selling, general and administrative 4,014,571 2,845,544
----------- ------------
10,690,323 9,566,073
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Operating loss (5,517,522) (3,408,440)
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Other income (expense)
Gain on sale to SigmaTel 8,862,073 --
Laurus financing costs (424,000) --
Interest/other income 70,187 23,334
Interest expense (38,352) (93)
----------- ------------
8,469,908 23,241
----------- ------------
Net income (loss) $2,952,387 $(3,385,199)
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Basic income (loss) per common share $ 0.25 $ (0.29)
Diluted income (loss) per common share $ 0.24 $ (0.29)
Weighted average common shares outstanding--
basic 11,869,026 11,523,510
Weighted average common shares outstanding--
diluted 12,132,394 11,523,510
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