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Apogee Technology, Inc. (AMEX: ATA), a global provider
of integrated circuits and an emerging Micro-Electromechanical Systems
("MEMS") device supplier, has reported financial results for the
second quarter of 2005. Revenue for the three months ended June 30,
2005 was $1,315,000 compared with $1,338,000 for the same period in
2004 as restated, and $1,115,000 for the prior quarter. The Company's
net loss for the second quarter of fiscal year 2005 was $1,599,000 or
($0.14) per share. This compares to a loss of $969,000 or ($0.08) per
share for the second quarter of fiscal year 2004 restated and a loss
of $1,438,000 or ($0.12) per share for the first quarter of 2005. The
increase in loss for the second quarter was primarily due to
professional fees associated with the Company's financial restatement.
For the six-month period ended June 30, 2005, the Company reported
revenue of $2,429,000 and a loss of $3,037,000 or ($0.26) per share.
This compares to restated revenue of $3,487,000 and a loss of
$1,191,000 or ($0.10) per share for the same period in 2004. In
addition to the professional fees noted above, the increase in loss
for the six-month period was due to lower consulting and royalty
revenue, increased inventory reserves and higher operational expenses.
Research and Development expenditures were $733,000 for the second
quarter 2005. This compares with $606,000 as restated for the second
quarter of fiscal year 2004 and $790,000 for the first quarter of
2005. The year on year increase was due to the formation of the MEMS
Division and the related increase in human resource costs. Selling,
General and Administrative expenditures were $1,293,000 in the second
quarter 2005. This compares with $624,000 as restated for the same
period in 2004 and $800,000 in the first quarter of 2005. The year on
year and quarterly increase was primarily due to increased
nonrecurring professional fees associated with the Audit Committee's
investigation and the restatement of the Company's financials. With
the completion of its financial filings, the Company expects to reduce
professional fees in the second half of the year.
Paul Murphy, Apogee's Chief Financial Officer and Vice President
of Finance said, "We are pleased to have completed the past financial
filings and restatement of our financial statements, and we expect to
remain current on an ongoing basis. We hope to regain compliance with
AMEX listing standards for reporting requirements and resolve the
de-listing process."
David Meyers, Apogee's Chief Operating Officer said, "We achieved
sequential quarterly revenue growth in our audio business from the
fourth quarter of 2004 through second quarter of this year. However,
the overall revenue growth rate was below our projected forecast,
which was based on expected sales from TV, gaming and the DVD receiver
design wins achieved in the first quarter of 2005. We believe the
reduced revenue is the result of lower demand from retail buyers to
our customers in addition to a general industry trend of delaying
orders until later in the year to reduce finished goods inventory
costs prior to the holiday season. Because of these market conditions,
it is difficult to project year to year revenue growth, as previously
forecasted."
"We are continuing to make progress in the development of our
MEMS-based sensor products and transdermal drug delivery platform. We
have sampled our first Sensilica(TM) "all silicon" pressure sensors to
automotive and industrial customers for product qualification. In
addition, we have completed the design of six more Sensilica sensors
supporting pressure ranges up to 1000 PSI. We believe our Sensilica
products have size, cost, performance and reliability advantages over
competitive solutions making them ideal for industrial, consumer,
automotive, medical and HVAC pressure measurement applications. We
expect to ship production Sensilica devices to customers this year."
"In the development of our MEMS-based transdermal drug delivery
("TDD") platform, we have recently achieved a key milestone by
demonstrating improved drug delivery rates through human skin in
laboratory tests. The next two steps in the development plan are to
verify the effectiveness of our platform with a specific drug
application and to perform testing to support FDA compliance. In
conjunction with completing these key milestones, we plan to pursue
partnerships with pharmaceutical companies to support the
commercialization of the device. Our goal is to apply our MEMS
technology to develop a solution that will provide painless drug
delivery for a wide range of applications avoiding the problems
associated with oral and intramuscular drug delivery."
Recent Accomplishments & Developments
-- Completed the design of six MEMS Sensilica(TM) pressure
sensors
-- Applied for trademark for Sensilica(TM) brand name for its
sensor products
-- Demonstrated improved delivery rates with a model drug in
laboratory tests using the Company's MEMS-based transdermal
drug delivery device
-- Filed patent application for the Company's MEMS-based
transdermal drug delivery device
-- Completed transition and certification of semiconductor
products to meet new Restriction of Hazardous Substances
(RoHS) requirements
-- Secured new design wins in the LCD, Rear Projection and Plasma
TV markets with the new fully integrated DDXi products
broadening the Company's market coverage
-- Retained Miller Wachman as the Company's registered public
accounting firm
-- Appointed Paul J. Murphy as Chief Financial Officer, Vice
President of Finance and Treasurer
-- Completed all financial filings
-- Completed financing raising $1.8 million in net proceeds
through the sale of a 120 day secured term note
About Apogee Technology, Inc
Apogee Technology is a fabless semiconductor company that designs,
develops and markets silicon based products that incorporate
proprietary technologies. The Company's patented all-digital, high
efficiency Direct Digital Amplification (DDX(R)) ICs have been used by
over 20 major consumer electronic brands in a wide range of audio
products. The company is developing new system-on-chip products using
its analog and digital circuit designs and Micro-Electromechanical
Systems ("MEMS") technology for the consumer, automotive,
communications and medical markets. The Company operates a worldwide
marketing and sales organization and has offices in the US, China,
Hong Kong, Japan and Taiwan. For more information please visit our 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
"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
JUNE 30, DECEMBER 31,
2005 2004
----------------------------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 363,944 $ 1,886,883
Accounts receivable, net of allowance for
doubtful accounts of $130,000 and
$105,000, respectively 581,953 533,113
Inventories, net 2,620,487 2,725,308
Prepaid expenses and other current assets 149,971 252,728
----------------------------
Total current assets 3,716,355 5,398,032
----------------------------
Property and equipment, net of
accumulated depreciation of $408,193 and
$376,951, respectively 134,133 103,189
----------------------------
Other assets
Patent, net of accumulated amortization
of $140,675 and $127,442, respectively 246,615 211,901
----------------------------
$ 4,097,103 $ 5,713,122
----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued expenses $ 1,906,544 $ 1,107,111
Deferred distributor revenue 2,100,479 1,955,563
Officer and shareholder loans 500,000 --
Deferred contract revenue 72,686 95,788
----------------------------
Total current liabilities 4,579,709 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 118,383 118,383
Additional paid-in capital at June 30,
2005 and December 31, 2004 18,073,223 18,073,223
Accumulated deficit (18,674,212) (15,636,946)
----------------------------
Total stockholders' equity (deficiency) (482,606) 2,554,660
----------------------------
$ 4,097,103 $ 5,713,122
----------------------------
The accompanying notes in the Company's 10-QSB filing for the
three-month period ending June 30, 2005 are an integral part of these
consolidated financial statements.
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
-------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------
(Restated) (Restated)
Revenues
Product sales $ 1,154,661 $ 899,247 $ 2,168,449 $ 2,538,710
Royalties 159,978 238,396 260,931 443,973
Consulting -- 200,000 -- 504,484
-------------------------------------------------------
1,314,639 1,337,643 2,429,380 3,487,167
-------------------------------------------------------
Costs and expenses
Product sales 885,885 1,076,876 1,853,228 2,086,740
Research and
development 732,868 606,227 1,523,007 1,318,593
Selling, general and
administrative 1,293,144 623,523 2,093,084 1,272,860
-------------------------------------------------------
2,911,897 2,306,626 5,469,319 4,678,193
-------------------------------------------------------
Operating
(loss) income (1,597,258) (968,983) (3,039,939) (1,191,026)
Other (expense) income
Interest expense (3,452) -- (3,452) --
Interest income 1,728 5,662 6,125 10,977
-------------------------------------------------------
(1,724) 5,662 2,673 10,977
-------------------------------------------------------
Net (loss)
income (1,598,982) (963,321) (3,037,266) (1,180,049)
Accumulated
deficit -
beginning (17,075,230) (12,468,475) $(15,636,946) $(12,251,748)
-------------------------------------------------------
Accumulated
deficit -
ending $(18,674,212) $(13,431,796) $(18,674,212) $(13,431,797)
-------------------------------------------------------
Basic and diluted
(loss) income per
common share $ (0.14) $ (0.08) $ (0.26) $ (0.10)
-------------------------------------------------------
Weighted average common
shares outstanding -
basic and
diluted 11,838,332 11,380,790 11,838,332 11,359,469
-------------------------------------------------------
The accompanying notes in the Company's 10-QSB filing for the
three-month period ending June 30, 2005 are an integral part of these
consolidated financial statements.
*T