Apogee Technology, Inc. (AMEX: ATA), an emerging
Micro-Electromechanical Systems ("MEMS") device supplier, today
reported financial results for the third quarter of 2005. Revenue
for the three months ended September 30, 2005 was $1,520,000
compared with $1,996,000 for the same period in 2004 as restated,
and $1,315,000 for the prior quarter. The Company's net loss for
the third quarter of fiscal year 2005 was $1,577,000 or ($0.13) per
share. This compares to net loss of $449,000 or ($0.06) per share
for the third quarter of fiscal year 2004 restated and a net loss
of $1,599,000 or ($0.14) per share for the second quarter of 2005.
For the nine-month period ended September 30, 2005 the Company
reported revenue of $3,950,000 and a loss of $4,614,000 or ($0.39)
per share. This compares to restated revenue of $5,483,000 and net
loss of $1,629,000 or ($0.14) per share for the same period in
2004. The increase in net loss for the nine-month period was
generally due to increased professional fees associated with the
Company's financial restatement, lower revenue, lower gross margin,
and increased R&D expenses including expenses associated with
the formation of the Company's MEMS division. Research and
Development expenditures were $785,000 for the third quarter 2005.
This compares with $664,000 as restated for the third quarter of
fiscal year 2004 and $733,000 for the second quarter of 2005. The
year on year increase is due to the acquisition of the MEMS
Division and the related increased human resource costs. Selling,
General and Administrative (SG&A) expenditures were $1,159,000
in the third quarter 2005. This compares with the $633,000 as
restated for the same period in 2004 and $1,293,000 in the second
quarter of 2005. This year on year and quarterly increase is
primarily due to increased professional fees associated with the
restatement of the Company's financials. The Company believes that
a majority of the professional fees are nonrecurring and expects
professional fees to be reduced in the fourth quarter. Paul Murphy,
Apogee's Chief Financial Officer said, "On October 5, 2005, we
completed a transaction with SigmaTel, Inc., whereby we sold our
audio division through the sale of certain assets, including the
Direct Digital Amplifier (DDX(R)) technology, for $9.4 million plus
a one-year earn-out of potentially up to $4.5 million, with
$420,000 held in escrow for 18 months. In addition, 21 of the
Company's engineering and marketing staff related to the audio
division were offered positions at SigmaTel as a part of the sale
of assets. Our financial position was significantly strengthened as
a result of this transaction. Part of the proceeds were used to pay
off approximately $2.1 million of secured promissory notes issued
to a financial institution, including the accrued interest, and
repay approximately $500,000 of loans from related parties. We also
reduced other liabilities and trade accounts payables. In total,
our Working Capital increased by $8.2 million, with a positive
impact on our cash position. The transaction increased our Equity
by approximately $8.2 million with no tax effects due to NOL carry
forwards. We also expect the run rate of our operating expenses to
be reduced by approximately $750K quarterly, beginning in the
fourth quarter of 2005." David Meyers, Apogee's Chief Operating
Officer said, "We are in the process of completing the transition
of our audio business and are now focusing our development efforts
on commercializing our family of Sensilica(TM) pressure sensors and
our developing our MEMS based devices to enhance transdermal drug
delivery. We recently received from manufacturing 10 different
Sensilica pressure sensors supporting pressure ranges from 15 to
1000 PSI. These devices are in the qualification phase and we
expect to ship limited quantities of Sensilica devices to customers
this quarter. In the development of our MEMS-based transdermal drug
delivery ("TDD") platform, we completed initial efficacy testing
and are expanding our testing to establish additional statistical
results." Recent Accomplishments & Developments -- Sold the
audio division, including the DDX(R) IP, to Sigmatel for $9.4
million with a potential one year earn-out of $4.5 million. --
Increased working capital by $8.2 million. -- Paid off outstanding
notes and accrued interest thereon totaling $2.6 million dollars.
-- Reduced operating expenses by $750,000 per quarter with the
transition of staff from Apogee to Sigmatel. -- Completed
manufacturing of 10 different Sensilica(TM) pressure sensors
spanning a measurement range from 15 to 1000 PSI. These products
are currently in qualification testing. -- Completed initial
testing validating the efficacy of the Company's MEMS-based
transdermal drug delivery device. About Apogee Technology, Inc.
Apogee Technology designs, develops and markets proprietary
products using its Micro-Electromechanical Systems ("MEMS")
technologies for the automotive, industrial, consumer and medical
markets. The Company has developed a family of pressures sensors,
under the Sensilica(TM) brand and is currently developing a MEMS
based medical device for enhanced drug delivery. The Company
operates a worldwide marketing and sales organization and has
offices in the US, Hong Kong 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 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 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. -0- *T APOGEE
TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
September 30, December 31, 2005 2004 ----------------------------
(Unaudited) (Audited) ASSETS Current assets Cash and cash
equivalents $ 812,485 $ 1,886,883 Accounts receivable, net of
allowance for doubtful accounts of $145,000 and $105,000,
respectively 465,456 533,113 Inventories, net 1,751,900 2,725,308
Deferred costs other 367,525 -- Deferred note financing costs
306,000 -- Prepaid expenses and other current assets 61,956 252,728
---------------------------- Total current assets 3,765,322
5,398,032 ---------------------------- Property and equipment, net
of accumulated depreciation of $427,240 and $376,951, respectively
116,526 103,189 ---------------------------- Other assets Patent,
net of accumulated amortization of $147,206 and $127,442,
respectively 266,387 211,901 ---------------------------- $
4,148,235 $ 5,713,122 ---------------------------- LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities Accounts
payable and accrued expenses $ 1,705,754 $ 1,107,111 Deferred
distributor revenue 1,724,009 1,955,563 Note payable other
2,000,000 -- Notes payable Officer and shareholder 500,000 --
Advances 205,000 -- Deferred contract revenue 72,686 95,788
---------------------------- Total current liabilities 6,207,449
3,158,462 ---------------------------- Commitments and
Contingencies -- -- Stockholders' equity (deficiency) Common stock,
$.01 par value; 20,000,000 shares authorized, 11,838,332 issued and
outstanding at September 30, 2005 and December 31, 2004 118,383
118,383 Additional paid-in capital 18,073,223 18,073,223
Accumulated deficit (20,250,821) (15,636,946)
---------------------------- Total stockholders' equity
(deficiency) (2,059,215) 2,554,660 ---------------------------- $
4,148,235 $ 5,713,122 ---------------------------- The accompanying
notes in the Company's 10-QSB filing for the three month period
ending September 30, 2005 are an integral part of these
consolidated financial statements. APOGEE TECHNOLOGY, INC. AND
SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) THREE
MONTHS ENDED NINE MONTHS ENDED September, 30 September, 30
----------------------------------------------------- 2005 2004
2005 2004 -----------------------------------------------------
(Restated) (Restated) Revenues Product sales $ 1,157,789 $
1,388,132 $ 3,326,238 $ 3,926,841 Royalties 212,397 446,415 473,328
890,388 Consulting 150,000 161,270 150,000 665,754
----------------------------------------------------- 1,520,186
1,995,817 3,949,566 5,482,983
----------------------------------------------------- Costs and
expenses Product sales 1,122,084 1,153,299 2,975,312 3,240,038
Research and development 785,403 664,032 2,308,410 1,982,625
Selling, general and administrative 1,158,569 632,733 3,251,653
1,905,500 -----------------------------------------------------
3,066,056 2,450,064 8,535,375 7,128,163
----------------------------------------------------- Operating
loss (1,545,870) (454,247) (4,585,809) (1,645,180)
----------------------------------------------------- Other
(expense) income Interest/finance expense (35,552) -- (38,930) --
Interest income 4,814 5,365 10,865 16,249
----------------------------------------------------- (30,738)
5,365 (28,065) 16,249
----------------------------------------------------- Net loss
(1,576,608) (448,882) (4,613,874) (1,628,931) Accumulated deficit -
beginning (18,674,212) (13,431,796) $(15,636,946)$(12,251,748)
----------------------------------------------------- Accumulated
deficit - ending $(20,250,820)$(13,880,678)
$(20,250,820)$(13,880,678)
----------------------------------------------------- Basic and
diluted loss per common share $ (0.13)$ (0.06) $ (0.39)$ (0.14)
----------------------------------------------------- Weighted
average common shares outstanding - basic and diluted 11,838,332
11,566,166 11,838,332 11,438,871
----------------------------------------------------- The
accompanying notes in the Company's 10-QSB filing for the three
month period ending September 30, 2005 are an integral part of
these consolidated financial statements. APOGEE TECHNOLOGY, INC.
AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (unaudited) (in
Thousands) Effect of DDX As Reported Sale and Pro Forma September
30, Note September 30, 2005 Repayment 2005
---------------------------------------- ASSETS Current assets Cash
and cash equivalents $ 812 $5,519 (1)(2) $ 6,331 Accounts
receivable, net of allowance 465 -- 465 Inventories, net 1,952 --
1,952 Deferred costs other 368 (368)(3) -- Deferred note financing
costs 306 (306)(4) -- Prepaid expenses and other current assets 62
-- 62 ---------------------------------------- Total current assets
3,965 4,845 8,810 ---------------------------------------- Property
and equipment, net of accumulated depreciation of $427 117 (100)(3)
17 ---------------------------------------- Other assets Patent,
net of accumulated amortization of $147 266 (170)(3) 96 Escrow --
320 (1)(3) 320 ---------------------------------------- $ 4,348
$4,895 $ 9,243 ---------------------------------------- LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities Accounts
payable and accrued expenses $ 1,706 $ (676)(1)(2) $ 1,030 Deferred
distributor revenue 1,724 - 1,724 Note payable other 2,000
(2,000)(2) -- Officer and shareholder loans 500 (500)(2) --
Advances 205 (205)(1) -- Deferred contract revenue 73 -- 73
---------------------------------------- Total current liabilities
6,208 (3,381) 2,827 ----------------------------------------
Commitments and Contingencies -- -- -- Stockholders' equity
(deficiency) Common stock, $.01 par value; 20,000,000 shares
authorized, 11,838,332 issued and outstanding at September 30, 2005
and December 31, 2004 118 -- 118 Additional paid-in capital 18,074
-- 18,074 Accumulated deficit (20,052) 8,276 (3)(4) (11,776)
---------------------------------------- Total stockholders' equity
(deficiency) (1,861) 8,276 6,416
---------------------------------------- $ 4,348 $4,895 $ 9,243
---------------------------------------- The accompanying notes in
the Company's 10-QSB filing for the three month period ending
September 30, 2005 are an integral part of these consolidated
financial statements. *T
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