Apogee Technology, Inc. Reports First Quarter.

Business/Technology Editors

NORWOOD, Mass.--(BUSINESS WIRE)--May 15, 2002

Apogee Technology, Inc. (NASDAQ: APGT), a leading developer of digital audio amplification technology, today reported revenues, for the three months ending March 31, 2002, of $421,000 with a net loss of $769,000 or ($0.15) per share. This compares to revenue of $1,520,000 for the three months ending March 31, 2001, with net income of $861,000, or $0.17 per share. The drop in first quarter revenue compared to the previous year was the result of a $1,420,000 one-time licensing fee received from STMicroelectronics in the first quarter of 2001.

Company revenue during the first quarter consisted primarily of semiconductor product sales and royalty income received under a licensing agreement with STMicroelectronics. Product revenue for the first quarter of 2002 was $286,000 compared to $12,500 for the first quarter of 2001. In addition, royalties increased to $122,000 compared to $62,500 for the first quarter of 2001.

"We are very pleased with our first quarter results. Our licensing and product revenue is increasing and we continue to expand our customer base," said David Meyers, Apogee's Chief Operating Officer. "Currently there are 97 companies designing DDX-based solutions, of which five are in pre-production and six have started full production. Since the production release one year ago over one million DDX ICs have been sold. We expect this number to increase substantially this year as additional customers transition from the design phase into full production. With the establishment of these supply contracts we expect strong quarterly revenue growth for the balance of the year."

In March 2002 the company signed a Development Agreement with STMicroelectronics. Under this agreement the company expects to develop new royalty bearing products and expand its portfolio of DDX ICs to address new market opportunities. Currently the company is shipping five DDX ICs to manufacturers producing a variety of audio products including DVD receivers, digital TV and professional audio equipment.

"We continued to build our sales and marketing infrastructure during the first quarter to maintain our leadership position in digital audio amplification," continued David Meyers. "We opened a sales office in Hong Kong, relocated sales staff to Taiwan and increased the number of distributors in the important markets of Taiwan and China. We are also in the process of signing a representative organization in Brazil to support our sales efforts in the South American market."

"In addition to our expanded sales organization, we adopted a new customer support strategy whereby the company is developing and providing complete DDX amplifier reference designs. We expect this approach will accelerate our IC sales by reducing the development time to bring a quality product to market. For the key application of the DVD receiver, which combines a DVD player with six channels of audio amplification, we released 6x35 watt and 6x100 watt reference designs along with all the manufacturing support information. Within the next several months we expect to release additional reference designs including a 6x50 watt design based upon our new DDX-2100 power device."

About DDX(R)

Many existing audio products use analog amplifier ICs to amplify analog audio signals. This approach is suitable for products such as record players and cassette tapes that output analog signals. However, with digital playback systems such as the DVD, the digital signal has to be converted using a digital to analog converter (DAC) prior to amplification. DDX directly amplifies digital audio signals, eliminating the need and cost of the DAC. This approach removes potential analog signal corruption and quality losses that can occur in traditional analog audio systems. With DDX, consumers can enjoy the excitement and quality of true digital audio reproduction in a low cost product.

In addition to superior sound quality, DDX amplifiers operate at up to three times the efficiency of a traditional analog amplifier solution. This advantage significantly reduces amplifier size and manufacturing cost making DDX the perfect solution for new compact products such as the DVD receiver. A smaller amplifier size is achieved because DDX designs do not require a large heat sink to dissipate the wasted energy from analog amplifiers' low efficiency operation. Power supply savings are also achieved. For example, a typical DVD receiver system providing 300 watts of audio output would require a 500-watt supply using an analog amplifier operating at a peak efficiency of 60%. An equivalent system using a DDX amplifier, which operates at a peak efficiency of 90%, would only require a 330-watt supply, or a savings of 170 watts per system.

About Apogee

Apogee Technology, Inc. designs, develops and markets integrated circuits that incorporate the company's patented Direct Digital Amplification (DDX(R)) technology. This all-digital high efficiency audio amplifier technology has significant commercial benefits for consumer electronic manufacturers, as well as, end users compared to traditional analog amplifier technology. The benefits include reduced product size, lower manufacturing cost, increased quality, expanded functionality through digital integration and extended playback time for battery powered applications. The company has released five DDX-based semiconductor products and expects to expand its product offerings by leveraging its power and digital processing expertise. The company operates a worldwide marketing and sales organization and targets manufacturers developing high growth consumer electronic applications such as DVD, digital TVs, Internet and portable audio players, digital speakers, game machines and mini audio systems. Additional, information about Apogee and DDX products can be found at the company's web site at: http://www.apogeeddx.com.

DDX(R) is a registered 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 "estimate", "project", "intended", "expect", "believe", and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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, which may be expressed or implied. Factors that may cause or contribute to such differences include, but are not limited to, the Company's limited operating history; unpredictability of operating results; inability to build market share and pressure on prices from competition in various aspects of its business; the risks of rapid growth; the Company's dependence on key personnel; uncertainty of product acceptance; inability to timely develop and introduce new technologies, products and applications; the risks associated with market collaborations and the ability of strategic partners to achieve manufacturing and shipping schedules and deadlines; changes in the level of activity in the audio industry; changes in economic conditions; and an inability to obtain financing.

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