Apogee Reports Third Quarter Results

  
    
  
  
    
      Apogee Technology, Inc. (AMEX: ATA), an emerging micro-systems and 
      nanotechnology company that designs, develops and commercializes medical 
      devices and sensor products, today reported its results for the third 
      quarter ended September 30, 2006. Revenue for the three months ended 
      September 30, 2006 was $509,000 compared with $1.5 million for the same 
      period in 2005. The Company’s net loss for the 
      third quarter of fiscal year 2006 was $739,000 or ($0.06) per share, 
      compared to net loss of $1.6 million or ($0.13) per share for the third 
      quarter of 2005.
    
    
      For the nine-month period ended September 30, 2006, the Company reported 
      revenue of $1.8 million and a loss of $2.4 million or ($0.20) per share. 
      This compares to revenue of $3.9 million and net loss of $4.6 million or 
      ($0.39) per share for the same period in 2005. The decline in revenue is 
      related to the selling of certain assets of the Company’s 
      former audio division, including the DDX® 
      technology and associated royalties to SigmaTel, Inc. in October 2005.
    
    
      Research and Development (“R&D”) 
      expenditures were $421,000 for the third quarter of 2006, compared to 
      $785,000 for the third quarter of 2005. Selling, General and 
      Administrative expenditures were $817,000 in the third quarter of 2006, 
      compared to $1.2 million for the same period last year. The decrease in 
      expenses reflects a reduction in the Company’s 
      human resource expenses in connection with the SigmaTel transaction and 
      one-time costs associated with the restatement of the Company’s 
      financial statements, which was completed in 2005.
    
    
      David Meyers, Apogee’s Chief Operating Officer 
      said, “In the Medical Group, we are developing 
      advanced transdermal drug delivery products and technologies designed 
      for pain-free, self-administration of both FDA-regulated and 
      non-regulated applications. In the regulated area we are in preclinical 
      development of our PyraDerm™ intradermal 
      delivery platform. This injection-free solution utilizes precision 
      micro-needle containing nano and micro-structured polymer drug delivery 
      formulations. The system is designed to create micro-channels through 
      the outer layer of the skin, or stratum corneum, to deliver drugs and 
      vaccines into the viable epidermis, which is potentially a needle-free 
      alternative for fast and efficient drug delivery. Over the last several 
      months, we have made significant progress toward the development of this 
      platform in the areas of intellectual property protection and the 
      development of our drug formulation technologies.
    
    
      “In September, we expanded our intellectual 
      property base by filing five U.S. provisional patent applications. Three 
      of these applications pursue the protection of methods and compositions 
      for the delivery of therapeutics, vaccines and cosmetic compounds. Two 
      patent applications relate to novel drug delivery formulations and 
      micro-fabrication methods to coat our microneedles and similar medical 
      devices. If issued, we believe these patents will provide us a broad 
      proprietary position to pursue a range of drug delivery applications.
    
    
      “In the past several months we have worked in 
      cooperation with four leading Universities to optimize our drug/polymer 
      coating formulations as well as the related manufacturing processes. 
      When fully developed we believe our approach will allow for fast 
      dissolution time resulting in rapid drug onset, efficiency of drug 
      encapsulation, high formulation stability and ease of storage. In order 
      to accelerate these efforts and to support the transition from the 
      research to development phase, we have retained leading researchers and 
      begun the installation of a formulation laboratory at our Norwood 
      facility. Our team now includes Dr. Alexander Andrianov, Vice President 
      of Research and Development and Dr. Alexander Marin, Senior Polymer 
      Scientist, who are experts in polymer/drug delivery technology. When 
      completed we believe our new laboratory will allow us to accelerate our 
      development progress at a lower cost while providing better control over 
      our intellectual property developments.”
    
    
      Dr. Alexander Andrianov, Apogee’s Vice 
      President of Research and Development said, “Our 
      laboratory is being designed to carry out a broad range of formulation 
      and analytical activities. This laboratory will be critical to the 
      support of the upcoming in vivo evaluation of our PyraDerm delivery 
      system. The purpose of this testing will be to demonstrate the 
      advantages of our delivery system with a model vaccine antigen compared 
      to traditional needle injections. Upon the successful completion of 
      these tests, we plan to pursue licensing and development partnerships 
      with leading pharmaceutical companies. We believe that PyraDerm can 
      potentially address key market needs such as patient compliance, 
      self-administration, increased product shelf life and the protection of 
      market share by extending drug patent life through new transdermal 
      formulations. In particular, we intend to focus our partnership efforts 
      on companies that have, or are developing, small dosage, protein 
      therapeutics which could benefit from a transdermal delivery. Many such 
      proteins are currently being used to treat such diseases as diabetes, 
      osteoporosis, hepatitis and cancer.
    
    
      “In addition, we believe PyraDerm can provide 
      additional advantages for vaccine delivery. This is because our systems 
      are designed to follow the natural pathway for protection by targeting 
      the epidermis rich in immunocompetent cells. We believe that this 
      approach has the potential to improve vaccine efficacy or conversely to 
      allow a lower dose to achieve the same efficacy, thereby increasing the 
      number of people who can be treated from a limited vaccine supply. This 
      benefit may be critical in a flu epidemic or bioterrorism attack. 
      Stability of our solid state formulation is another benefit that can be 
      especially important for viability and utility of such vaccines.”
    
    
      Dr. Nena Golubovic-Liakopoulos, Vice President of Medical Products said, “In 
      addition to FDA regulated markets for our drug delivery technologies, we 
      plan to commercialize non regulated topical delivery products. Our 
      strategy is to leverage our delivery technologies to create products for 
      the cosmeceutical and netraceutical markets that could potentially 
      generate near term revenue growth for the Company. The key technology we 
      plan to leverage is our polymer delivery system formulated in a 
      specialized patch to deliver active ingredients to the skin. Potential 
      product applications are the delivery of polypeptide and protein 
      treatments, which could potentially serve the skincare market, estimated 
      to be $7 billion in the US.”
    
    
      David Meyers continued, “In the Sensor Group, 
      we are focusing our efforts on the qualification and marketing of 
      Sensilica® die products as well as the 
      development of packaged sensor solutions. Sensilica devices are produced 
      using a unique “all-silicon” 
      manufacturing approach that reduces cost and size while improving 
      reliability over more traditional pressure sensor designs. We believe 
      these benefits can meet a wide range of pressure measurement 
      applications from vacuum to 1000 PSI including, barometric pressure 
      measurement, engine control and blood pressure monitoring. We recently 
      completed the qualification of our low-pressure sensor die and began 
      qualification testing of our medium and high-pressure die. We are also 
      working with several customers to develop customized packaged solutions 
      to meet their specific requirements. As an example, we recently shipped 
      samples of a metal packaged sensor to a company developing medical 
      products. Our strategy is to have a vertically integrated sensor product 
      line to support customer applications and reduce time to market.”
    
    
      About Apogee Technology, Inc.
    
    
      Apogee Technology designs, develops and commercializes proprietary 
      medical device and sensor products using its MEMS and nanotechnology for 
      the medical, automotive, industrial and consumer markets. The Company is 
      developing its PyraDerm™ solution for 
      enhanced intradermal drug delivery and has introduced a family of 
      pressure sensors under the Sensilica™ brand. 
      Apogee’s goal is to provide value-added and 
      cost-savings solutions for our customers and, in so doing, to become a 
      global leader in the sensor and medical device fields. For more 
      information please visit our web site at: http://www.apogeemems.com.
    
    
      PyraDerm™, Sensilica™ 
      and BlueSensor™ are trademarks 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, 
      including those relating to the timing and progress of development of 
      its drug delivery products and its sensor products, the size of 
      potential markets for these products and the effects of such products 
      once developed, 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
          
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          SEPTEMBER 30,
        
        
        
        
          DECEMBER 31,
        
        
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
      
      
        
        
        
        
        
          (Unaudited)
        
        
        
        
          (Audited)
        
        
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current assets
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $
        
        
          2,991,632 
        
        
        
        
          $
        
        
          5,512,974 
        
        
        
      
      
        
          Accounts receivable, net of allowance for doubtful accounts of 
          $13,245 and $145,000, in 2006 and 2005 respectively
        
        
        
        
          389,052 
        
        
        
        
          152,837 
        
        
        
      
      
        
          Inventories, net
        
        
        
        
          — 
        
        
        
        
          1,327,964 
        
        
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
          22,609 
        
        
        
        
          123,462 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current assets
        
        
        
        
          3,403,293 
        
        
        
        
          7,117,237 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
          50,688 
        
        
        
        
          39,932 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other assets
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Escrow account
        
        
        
        
          422,218 
        
        
        
        
          409,480 
        
        
        
      
      
        
          Patents
        
        
        
        
          171,600 
        
        
        
        
          149,536 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          $
        
        
          4,047,799 
        
        
        
        
          $
        
        
          7,716,185 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS’ EQUITY
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current liabilities
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
          $
        
        
          559,349 
        
        
        
        
          $
        
        
          766,930 
        
        
        
      
      
        
          Deferred distributor revenue
        
        
        
        
          — 
        
        
        
        
          1,337,022 
        
        
        
      
      
        
          Deferred contract revenue
        
        
        
        
          — 
        
        
        
        
          72,686 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current liabilities
        
        
        
        
          559,349 
        
        
        
        
          2,176,638 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Commitments and Contingencies
        
        
        
        
          — 
        
        
        
        
          — 
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders’ equity
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Common stock, $.01 par value; 20,000,000 shares authorized, 
          11,968,332 shares issued and outstanding at September 30, 2006 and 
          December 31, 2005
        
        
        
        
          119,683 
        
        
        
        
          119,683 
        
        
        
      
      
        
          Additional paid-in capital
        
        
        
        
          18,104,423 
        
        
        
        
          18,104,423 
        
        
        
      
      
        
          Deferred stock compensation
        
        
        
        
          348,698 
        
        
        
        
          — 
        
        
        
      
      
        
          Accumulated deficit
        
        
        
        
          (15,084,354 
        
        
          )
        
        
          (12,684,559 
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total stockholders’ equity
        
        
        
        
          3,488,450 
        
        
        
        
          5,539,547 
        
        
        
      
      
        
        
        
        
        
          $
        
        
          4,047,799 
        
        
        
        
          $
        
        
          7,716,185 
        
        
        
      
    
    
    
    
      
        
          
            APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
          
        
      
      
        
          
            CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
          
        
      
      
        
          
            (UNAUDITED)
          
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          THREE MONTHS ENDED

          
            September 30,
          
        
        
        
        
          NINE MONTHS ENDED

          
            September 30,
          
        
      
      
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Product sales
        
        
          $
        
        
          509,015 
        
        
        
        
          $
        
        
          1,157,789 
        
        
        
        
          $
        
        
          1,833,961 
        
        
        
        
          $
        
        
          3,326,238 
        
      
      
        
          Royalties
        
        
          — 
        
        
        
        
          212,397 
        
        
        
        
          1,250 
        
        
        
        
          473,328 
        
      
      
        
          Consulting
        
        
          — 
        
        
        
        
          150,000 
        
        
        
        
          — 
        
        
        
        
          150,000 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          509,015 
        
        
        
        
          1,520,186 
        
        
        
        
          1,835,211 
        
        
        
        
          3,949,566 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Costs and expenses
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Product sales
        
        
          354,160 
        
        
        
        
          1,122,084 
        
        
        
        
          1,351,248 
        
        
        
        
          2,975,312 
        
      
      
        
          Research and development
        
        
          421,189 
        
        
        
        
          785,403 
        
        
        
        
          1,421,501 
        
        
        
        
          2,308,410 
        
      
      
        
          Selling, general and administrative
        
        
          816,508 
        
        
        
        
          1,158,569 
        
        
        
        
          1,975,102 
        
        
        
        
          3,251,653 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          1,591,857 
        
        
        
        
          3,066,056 
        
        
        
        
          4,747,851 
        
        
        
        
          8,535,375 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating loss
        
        
          
            (1,082,842)
          
        
        
        
        
          
            (1,545,870)
          
        
        
        
        
          
            (2,912,640)
          
        
        
        
        
          
            (4,585,809)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other (expense) income
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          SigmaTel earn-out
        
        
          299,090 
        
        
        
        
          — 
        
        
        
        
          383,198 
        
        
        
        
          — 
        
      
      
        
          Interest/other expense
        
        
          
            (1,754)
          
        
        
        
        
          
            (35,552)
          
        
        
        
        
          
            (24,205)
          
        
        
        
        
          
            (38,930)
          
        
      
      
        
          Interest income
        
        
          46,346 
        
        
        
        
          4,814 
        
        
        
        
          153,852 
        
        
        
        
          10,865 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          343,682 
        
        
        
        
          
            (30,738)
          
        
        
        
        
          512,845 
        
        
        
        
          
            (28,065)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
          
            (739,160)
          
        
        
        
        
          
            (1,576,608)
          
        
        
        
        
          
            (2,399,795)
          
        
        
        
        
          
            (4,613,874)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Accumulated deficit - beginning
        
        
          
            (14,345,194)
          
        
        
        
        
          
            (18,674,212)
          
        
        
        
        
          
            (12,684,559)
          
        
        
        
        
          
            (15,636,946)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Accumulated deficit - ending
        
        
          $
        
        
          
            (15,084,354)
          
        
        
        
        
          $
        
        
          
            (20,250,820)
          
        
        
        
        
          $
        
        
          
            (15,084,354)
          
        
        
        
        
          $
        
        
          
            (20,250,820)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted loss per common share
        
        
          $
        
        
          
            (0.06)
          
        
        
        
        
          $
        
        
          
            (0.13)
          
        
        
        
        
          $
        
        
          
            (0.20)
          
        
        
        
        
          $
        
        
          
            (0.39)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average common shares outstanding - basic and diluted
        
        
          11,968,332 
        
        
        
        
          11,838,332 
        
        
        
        
          11,968,332 
        
        
        
        
          11,838,332 
        
      
    
  
Apogee Technology, Inc. (AMEX: ATA), an emerging micro-systems and
nanotechnology company that designs, develops and commercializes
medical devices and sensor products, today reported its results for
the third quarter ended September 30, 2006. Revenue for the three
months ended September 30, 2006 was $509,000 compared with $1.5
million for the same period in 2005. The Company's net loss for the
third quarter of fiscal year 2006 was $739,000 or ($0.06) per share,
compared to net loss of $1.6 million or ($0.13) per share for the
third quarter of 2005.

   For the nine-month period ended September 30, 2006, the Company
reported revenue of $1.8 million and a loss of $2.4 million or ($0.20)
per share. This compares to revenue of $3.9 million and net loss of
$4.6 million or ($0.39) per share for the same period in 2005. The
decline in revenue is related to the selling of certain assets of the
Company's former audio division, including the DDX(R) technology and
associated royalties to SigmaTel, Inc. in October 2005.

   Research and Development ("R&D") expenditures were $421,000 for
the third quarter of 2006, compared to $785,000 for the third quarter
of 2005. Selling, General and Administrative expenditures were
$817,000 in the third quarter of 2006, compared to $1.2 million for
the same period last year. The decrease in expenses reflects a
reduction in the Company's human resource expenses in connection with
the SigmaTel transaction and one-time costs associated with the
restatement of the Company's financial statements, which was completed
in 2005.

   David Meyers, Apogee's Chief Operating Officer said, "In the
Medical Group, we are developing advanced transdermal drug delivery
products and technologies designed for pain-free, self-administration
of both FDA-regulated and non-regulated applications. In the regulated
area we are in preclinical development of our PyraDerm(TM) intradermal
delivery platform. This injection-free solution utilizes precision
micro-needle containing nano and micro-structured polymer drug
delivery formulations. The system is designed to create micro-channels
through the outer layer of the skin, or stratum corneum, to deliver
drugs and vaccines into the viable epidermis, which is potentially a
needle-free alternative for fast and efficient drug delivery. Over the
last several months, we have made significant progress toward the
development of this platform in the areas of intellectual property
protection and the development of our drug formulation technologies.

   "In September, we expanded our intellectual property base by
filing five U.S. provisional patent applications. Three of these
applications pursue the protection of methods and compositions for the
delivery of therapeutics, vaccines and cosmetic compounds. Two patent
applications relate to novel drug delivery formulations and
micro-fabrication methods to coat our microneedles and similar medical
devices. If issued, we believe these patents will provide us a broad
proprietary position to pursue a range of drug delivery applications.

   "In the past several months we have worked in cooperation with
four leading Universities to optimize our drug/polymer coating
formulations as well as the related manufacturing processes. When
fully developed we believe our approach will allow for fast
dissolution time resulting in rapid drug onset, efficiency of drug
encapsulation, high formulation stability and ease of storage. In
order to accelerate these efforts and to support the transition from
the research to development phase, we have retained leading
researchers and begun the installation of a formulation laboratory at
our Norwood facility. Our team now includes Dr. Alexander Andrianov,
Vice President of Research and Development and Dr. Alexander Marin,
Senior Polymer Scientist, who are experts in polymer/drug delivery
technology. When completed we believe our new laboratory will allow us
to accelerate our development progress at a lower cost while providing
better control over our intellectual property developments."

   Dr. Alexander Andrianov, Apogee's Vice President of Research and
Development said, "Our laboratory is being designed to carry out a
broad range of formulation and analytical activities. This laboratory
will be critical to the support of the upcoming in vivo evaluation of
our PyraDerm delivery system. The purpose of this testing will be to
demonstrate the advantages of our delivery system with a model vaccine
antigen compared to traditional needle injections. Upon the successful
completion of these tests, we plan to pursue licensing and development
partnerships with leading pharmaceutical companies. We believe that
PyraDerm can potentially address key market needs such as patient
compliance, self-administration, increased product shelf life and the
protection of market share by extending drug patent life through new
transdermal formulations. In particular, we intend to focus our
partnership efforts on companies that have, or are developing, small
dosage, protein therapeutics which could benefit from a transdermal
delivery. Many such proteins are currently being used to treat such
diseases as diabetes, osteoporosis, hepatitis and cancer.

   "In addition, we believe PyraDerm can provide additional
advantages for vaccine delivery. This is because our systems are
designed to follow the natural pathway for protection by targeting the
epidermis rich in immunocompetent cells. We believe that this approach
has the potential to improve vaccine efficacy or conversely to allow a
lower dose to achieve the same efficacy, thereby increasing the number
of people who can be treated from a limited vaccine supply. This
benefit may be critical in a flu epidemic or bioterrorism attack.
Stability of our solid state formulation is another benefit that can
be especially important for viability and utility of such vaccines."

   Dr. Nena Golubovic-Liakopoulos, Vice President of Medical Products
said, "In addition to FDA regulated markets for our drug delivery
technologies, we plan to commercialize non regulated topical delivery
products. Our strategy is to leverage our delivery technologies to
create products for the cosmeceutical and netraceutical markets that
could potentially generate near term revenue growth for the Company.
The key technology we plan to leverage is our polymer delivery system
formulated in a specialized patch to deliver active ingredients to the
skin. Potential product applications are the delivery of polypeptide
and protein treatments, which could potentially serve the skincare
market, estimated to be $7 billion in the US."

   David Meyers continued, "In the Sensor Group, we are focusing our
efforts on the qualification and marketing of Sensilica(R) die
products as well as the development of packaged sensor solutions.
Sensilica devices are produced using a unique "all-silicon"
manufacturing approach that reduces cost and size while improving
reliability over more traditional pressure sensor designs. We believe
these benefits can meet a wide range of pressure measurement
applications from vacuum to 1000 PSI including, barometric pressure
measurement, engine control and blood pressure monitoring. We recently
completed the qualification of our low-pressure sensor die and began
qualification testing of our medium and high-pressure die. We are also
working with several customers to develop customized packaged
solutions to meet their specific requirements. As an example, we
recently shipped samples of a metal packaged sensor to a company
developing medical products. Our strategy is to have a vertically
integrated sensor product line to support customer applications and
reduce time to market."

   About Apogee Technology, Inc.

   Apogee Technology designs, develops and commercializes proprietary
medical device and sensor products using its MEMS and nanotechnology
for the medical, automotive, industrial and consumer markets. The
Company is developing its PyraDerm(TM) solution for enhanced
intradermal drug delivery and has introduced a family of pressure
sensors under the Sensilica(TM) brand. Apogee's goal is to provide
value-added and cost-savings solutions for our customers and, in so
doing, to become a global leader in the sensor and medical device
fields. For more information please visit our web site at:
http://www.apogeemems.com.

   PyraDerm(TM), Sensilica(TM) and BlueSensor(TM) are trademarks 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, including those relating to the timing and
progress of development of its drug delivery products and its sensor
products, the size of potential markets for these products and the
effects of such products once developed, 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
                                           SEPTEMBER 30, DECEMBER 31,
                                                   2006         2005
                                           ------------- ------------
                                            (Unaudited)   (Audited)
ASSETS

Current assets
  Cash and cash equivalents                  $2,991,632   $5,512,974
  Accounts receivable, net of allowance
   for doubtful accounts of $13,245 and
   $145,000, in 2006 and 2005 respectively      389,052      152,837
  Inventories, net                                   --    1,327,964
  Prepaid expenses and other current
   assets                                        22,609      123,462
                                           ------------- ------------

    Total current assets                      3,403,293    7,117,237
                                           ------------- ------------

Property and equipment, net                      50,688       39,932
                                           ------------- ------------

Other assets
  Escrow account                                422,218      409,480
  Patents                                       171,600      149,536
                                           ------------- ------------

                                             $4,047,799   $7,716,185
                                           ============= ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses      $  559,349   $  766,930
  Deferred distributor revenue                       --    1,337,022
  Deferred contract revenue                          --       72,686
                                           ------------- ------------

    Total current liabilities                   559,349    2,176,638
                                           ------------- ------------

Commitments and Contingencies                        --           --

Stockholders' equity
  Common stock, $.01 par value; 20,000,000
   shares authorized, 11,968,332 shares
   issued and outstanding at September 30,
   2006 and December 31, 2005                   119,683      119,683
  Additional paid-in capital                 18,104,423   18,104,423
  Deferred stock compensation                   348,698           --
  Accumulated deficit                       (15,084,354 )(12,684,559 )
                                           ------------- ------------

    Total stockholders' equity                3,488,450    5,539,547
                                           ------------- ------------
                                             $4,047,799   $7,716,185
                                           ============= ============
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                APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                             (UNAUDITED)

                   THREE MONTHS ENDED           NINE MONTHS ENDED
                      September 30,               September 30,
               --------------------------- ---------------------------
                       2006          2005          2006          2005
               ------------- ------------- ------------- -------------

Revenues
Product sales  $    509,015  $  1,157,789  $  1,833,961  $  3,326,238
Royalties                --       212,397         1,250       473,328
Consulting               --       150,000            --       150,000
               ------------- ------------- ------------- -------------

                    509,015     1,520,186     1,835,211     3,949,566
               ------------- ------------- ------------- -------------

Costs and
 expenses
Product sales       354,160     1,122,084     1,351,248     2,975,312
Research and
 development        421,189       785,403     1,421,501     2,308,410
Selling,
 general and
 administrative     816,508     1,158,569     1,975,102     3,251,653
               ------------- ------------- ------------- -------------

                  1,591,857     3,066,056     4,747,851     8,535,375
               ------------- ------------- ------------- -------------

Operating loss   (1,082,842)   (1,545,870)   (2,912,640)   (4,585,809)
               ------------- ------------- ------------- -------------

Other (expense)
 income

SigmaTel earn-
 out                299,090            --       383,198            --
Interest/other
 expense             (1,754)      (35,552)      (24,205)      (38,930)
Interest income      46,346         4,814       153,852        10,865
               ------------- ------------- ------------- -------------

                    343,682       (30,738)      512,845       (28,065)
               ------------- ------------- ------------- -------------

Net loss           (739,160)   (1,576,608)   (2,399,795)   (4,613,874)
               ============= ============= ============= =============

Accumulated
 deficit -
 beginning      (14,345,194)  (18,674,212)  (12,684,559)  (15,636,946)

Accumulated
 deficit -
 ending        $(15,084,354) $(20,250,820) $(15,084,354) $(20,250,820)
               ============= ============= ============= =============

Basic and
 diluted loss
 per common
 share         $      (0.06) $      (0.13) $      (0.20) $      (0.39)
               ============= ============= ============= =============

Weighted
 average common
 shares
 outstanding -
 basic and
 diluted         11,968,332    11,838,332    11,968,332    11,838,332
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