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Apogee Technology, Inc. (AMEX: ATA), an emerging
micro-electrical mechanical systems ("MEMS") and nanotechnology
company that designs, develops and markets sensors and medical
devices, reported its financial results for the fourth quarter and
fiscal year ended December 31, 2005.
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. 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 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
products and received trademark acceptance of the
Sensilica(TM) brand name.
-- Filed a patent application for MEMS based micro-needle device
for transdermal drug delivery.
-- Testing of the Company's micro-needle delivery system
demonstrated significant improvement in drug delivery rates
relative to a passive transdermal patch, as well as, the
ability to deliver large molecule proteins into a living
tissue model.
-- Sold audio division, including the DDX(R) intellectual
property to SigmaTel for $9.4 million plus a potential one
year earn-out 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 with the transition
of the audio business design and support staff to SigmaTel.
The Company closed its offices in Taiwan, Hong Kong and China
and relocated its MEMS Division operations to Norwood and
closed its New York 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 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 cavity
within the silicon, thereby reducing manufacturing cost, sensor size
and improved reliability. We are currently marketing these die to
sensor and transducer 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 the feasibility of our
MEMS based transdermal delivery device by demonstrating improved drug
delivery through cadaver 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 testing. With the basic
concept and feasibility internally validated, we are now in the
process of refining and protecting the technology and selecting the
appropriate applications for our transdermal delivery system. 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 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.
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APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2005 2004
------------ ------------
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
------------ ------------
Property and equipment, net 39,932 103,189
------------ ------------
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
------------ ------------
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
------------ ------------
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
------------ ------------
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
------------------------
2005 2004
----------- ------------
Revenues
Product sales $4,502,333 $ 4,383,912
Royalties 480,468 1,057,867
Consulting 190,000 715,854
----------- ------------
5,172,801 6,157,633
----------- ------------
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
----------- ------------
Operating loss (5,517,522) (3,408,440)
----------- ------------
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)
----------- ------------
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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