Edgar Filing: APOGEE TECHNOLOGY INC

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-10456

APOGEE TECHNOLOGY, INC.

(Exact name of Small Business Issuer in its charger)

DELAWARE		04-3005815
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

129 MORGAN DRIVE, NORWOOD, MASSACHUSETTS 02062

(Address of principal executive offices)

(781) 551-9450

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year,

if changed since last report)

Securities registered under Section 12(g) of the Exchange Act:

Common Stock

(Title of Class)

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes o No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) of this chapter) during the proceeding 12 months (or such shorter periods that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

( Do not check if a smaller

reporting company)

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of July 26, 2010, 13,123,454 the registrant’s common stock were outstanding. See Note 1 Basis of Presentation, Going Concern for cessation of trading in our common stock on April 16, 2010.

APOGEE TECHNOLOGY, INC.

(A Development Stage Company)

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PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements	3
Consolidated Balance Sheets at March 31, 2010 (unaudited) and December 31, 2009 (audited)

Consolidated Statements of Operations and Accumulated Deficit for the Three Months Ended March 31, 2010 and March 31, 2009 and for the period from October 1, 2008 (date re-entering development stage) through March 31, 2010 (unaudited).	4

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and March 31, 2009 and for the period from October 1, 2008 (date re-entering development stage) through March 31, 2010 (unaudited).	5

Notes to Consolidated Financial Statements (unaudited)	6

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3 - Quantitive and Qualitative Disclosures about Market Risk	33

Item 4T - Controls and Procedures	33


PART II - OTHER INFORMATION

Item 1 - Legal Proceedings	34

Item 1A - Risk Factors	35

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3 - Defaults Upon Senior Securities	37

Item 4T - Submission of Matters to a Vote of Security Holders	39

Item 5 - Other Information	39

Item 6 - Exhibits	39

Signatures	41

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

APOGEE TECHNOLOGY, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	MARCH 31,			DECEMBER 31,
	2010			2009
	(Unaudited)			(Audited)
ASSETS

Current assets
Cash	$	3,990		$	4,704
Prepaid expenses and other current assets		967			2,694

Total current assets		4,957			7,398

Property and equipment, net		39,492			44,042

Other assets
Patents, net		185,075			118,570

	$	229,524		$	170,010


LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current liabilities
Accounts payable and accrued expenses		3,400,804			3,092,189
Officer loans and notes payable		1,234,731			1,060,542
Shareholder loans and notes payable		1,230,752			1,206,283
Other loans and notes payable		836,766			796,320

Total current liabilities		6,703,053			6,155,334

Stockholders’ deficiency
Preferred stock, par value $0.0001 per share; 5,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.01 par value; 40,000,000 shares authorized, 12,132,332 issued and outstanding at March 31, 2010 and December 31, 2009		121,323			121,323
Additional paid-in capital		18,941,719			18,973,783
Accumulated deficit		(21,891,704	)		(21,891,704	)
Accumulated deficit during development stage		(3,644,867	)		(3,188,726	)

Total stockholders’ deficiency		(6,473,529	)		(5,985,324	)
	$	229,524		$	170,010

The accompanying notes are an integral part of these consolidated financial statements.

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APOGEE TECHNOLOGY, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

(Unaudited)

	THREE MONTHS ENDED MARCH 31,						Cumulative from Re-entering Development Stage on OCTOBER 1, 2008 to
	2010			2009			MARCH 31, 2010

Revenues
Product sales	$	—		$	—		$	—
Royalties		—			—			—

Costs and expenses
Product sales		—			—			—
Research and development		122,571			274,670			1,304,681
Selling, general and administrative		206,259			331,614			1,756,679

		328,830			606,284			3,061,360

Loss from operations		(328,830	)		(606,284	)		(3,061,360	)

Other income (expense)

Interest and other expense		(127,811	)		(84,617	)		(585,805	)
Interest and other income		500			106			2,298

		(127,311	)		(84,511	)		(583,507	)

Net loss	$	(456,141	)	$	(690,795	)	$	(3,644,867	)

Accumulated deficit - beginning	$	(25,080,430	)	$	(22,881,079	)	$	—

Accumulated deficit - ending		(25,536,571	)		(23,571,874	)		(3,644,867	)

Basic and diluted loss per common share	$	(0.04	)	$	(0.06	)	$	(0.30	)

Weighted average common shares outstanding - basic and diluted		12,132,332			12,132,332			12,132,332

The accompanying notes are an integral part of these consolidated financial statements.

Index

APOGEE TECHNOLOGY, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	THREE MONTHS ENDED MARCH 31,						Cumulative from Re-entering Development Stage on OCTOBER 1, 2008 to MARCH 31, 2010
	2010			2009

Cash flows from operations
Net loss	$	(456,141	)	$	(690,795	)	$	(3,644,867	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		—			—			(9,377	)
Depreciation and amortization		16,174			25,645			171,634
Stock compensation expense for employees and directors		(46,903	)		23,495			44,751
Original issue discount		30,443			25,049			151,830
Patent impairment		—			17,267			205,674
Disposal of sensor equipment
Changes in operating assets and liabilities:		—			—			3,731
Accounts receivable		—			—			9,377
Prepaid expenses and other current assets		1,725			(15,950	)		34,146
Accounts payable and accrued expenses		308,616			142,623			1,528,571

Net cash used in operating activities		(146,086	)		(472,666	)		(1,504,530	)

Cash flows from investing activities
Patent costs		(78,128	)		(6,000	)		(121,824	)

Net cash used by investing activities		(78,128	)		(6,000	)		(121,824	)

Cash flows from financing activities
Cash overdraft		—			(49,236	)		(4,284	)
Proceeds for shareholder loans and notes payable		18,000			95,000			464,665
Proceeds from officer loans and notes payable		175,500			98,900			484,400
Proceeds from other loans and notes payable		30,000			336,500			685,563

Net cash provided by financing activities		223,500			481,164			1,630,344

Increase (decrease) in cash		(714	)		2,498			3,990

Cash — beginning		4,704			—			—

Cash — ending	$	3,990		$	2,498		$	3,990

Supplemental Cash Flow Information:
Cash paid for interest	$	—		$	—		$	—
Warrants issued in connection with notes payable – non-cash	$	14,839		$	45,065		$	150,143
Income taxes	$	—		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements

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1.	The Company and Basis of Presentation

The Company

The accompanying unaudited interim financial statements of Apogee Technology, inc., a Delaware corporation, have been prepared in accordance with accounting principles generally accepted in the United States of American and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in our last Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected therein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Apogee Technology, Inc., (“Apogee”, “we”, “us” or “our”) is developing PyraDerm™, a proprietary intradermal drug delivery system for vaccines and other pharmaceuticals that we intend to market to pharmaceutical and medical device companies. Until March 31, 2009, we were also engaged in the development of IntellaPAL™, a proprietary sensor-based health monitoring systems for the elderly care and other markets that we intended to manufacture and market to individuals and health organizations.

Our Life Science Group is developing PyraDerm, an advanced intradermal drug delivery system, to meet the needs of patients, health insurers, companies developing pharmaceuticals, as well as, governments and international health organizations. PyraDerm is designed to be a low-cost, effective, painless delivery system that can be self administered and easily stored while potentially providing pharmaceutical companies an extended patent position for their current drug formulations. We had previously demonstrated that PyraDerm system containing adjuvanted vaccine formulations is capable of improving the efficiency of immunization and providing a significant dose sparing effect in a relevant animal model. Technologies that reduce the required vaccine dose would allow faster and more efficient production of vaccines, which is especially important in case of vaccine shortages during epidemic emergencies, such as pandemic influenza. The results of these studies were published in 2009 in the Proceedings of the National Academy of Sciences of the USA serving as an important validation of our approach to intradermal vaccination. In 2009 we had to scale down research and development efforts due to financial constraints focusing on the proof-of-concept thermal stability studies of PyraDerm system and relevant formulations and certain efforts on the development of the production process. In these studies we have been able to demonstrate the advantages of some of its systems compared to commonly used solution formulations. We believe that these findings on improved thermal stability are important for future development of PyraDerm as better shelf-life and lower dependence on temperature controlled distribution chains can be one of the critical advantages of our technology. The Company also continued to pursue patent applications related to its technology. Upon completion of our studies, if successful, we intend to pursue licensing and partnership agreements for multiple product applications with pharmaceutical, and medical device companies, and government and world health organizations interested in drug delivery systems and technologies.

We have operated as a technology research and development stage company since October 1, 2008. We have not yet generated revenue from our principal operations. During the fiscal year ended December 31, 2009 and continuing in 2010, we invested our limited resources predominately in the development of our Life Science Group. As of March 31, 2009, we closed down operations of our Health Monitoring Products Group. Costs associated with the closing of this group, as well as the termination of related employees are not material. Our sole focus is and will remain on the development and growth of our Life Science Group.

Basis of Presentation

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has recurring operating losses, negative cash flows from operations, negative working capital of approximately $6.7 million and stockholder’s deficiency of approximately $6.5 million, is in arrears with substantially all of its vendors, and is in default on a majority of its Promissory Notes. This raises substantial doubt about our ability to continue as a going concern. Net losses were approximately $456,000 and negative cash flows from operations were approximately $146,000 for the three months ended March 31, 2010. Given our current cash position, net losses and negative cash flows from operations and our outstanding current obligations, we will not be able to continue as a going concern without raising additional capital which is not assured.

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As of March 31, 2010, we had cash of approximately $4,000. See Note 12 - Subsequent Events – Additional Financing. As of August 11, 2010, we had cash of approximately $100,000.

The long-term success of Apogee is dependent upon our ability to raise additional funds to continue our operations, pay our outstanding liabilities and to successfully develop and market our technologies and products and to attain profitable operations. Although we have modified our business strategy to improve near-term financial performance, there can be no assurance that we will be able to obtain funds, to generate sufficient revenue, if any, or become profitable or that additional funds will be available to us on acceptable terms, if at all. Accordingly, we may be unable to implement current plans. In addition, if sufficient capital cannot be obtained, Apogee may be forced to cease operations. In the event that any future financing is affected, to the extent it includes equity securities; the holders of the common stock may experience additional dilution. In the event of a cessation of operations, there may not be sufficient assets to fully satisfy all creditors, in which case, the holders of securities may be unable to recoup any of their investment.

We are attempting to secure sufficient financing to meet our current obligations and to continue development of our technology. We have been working to obtain financing from outside investors for more than 24 months, but have not yet been successful. In the interim, short-term debt financing provided primarily by two of Apogee’s significant shareholders, including our President, Chief Executive Officer and Chairman of the Board of Directors and Mr. David Spiegel, as well as Mr. Robert Schacter, et al and others, is being utilized to preserve our intellectual property, maintain our technical capabilities and know-how, and support our technology development in accordance with our licensing agreement. There is no assurance that this short-term debt financing will continue. Additionally, cost cutting measures, including deferral of salary for the CEO, deferral of capital expenditures, and reduced general spending were instituted during 2009.

Due to the early stages of development of our products, we cannot estimate at this time the amounts of cash or the length of time that will be required to bring our products under development to market. It is expected that such costs will be funded not only by external funding, if available, but also through partnership activities. Without immediate additional financing, we will be unable to continue operations.

On October 28, 2009, the Company received a “Wells Notice” from the staff of the Securities and Exchange Commission, which states the staff’s intent to recommend that the Commission institute a public administrative proceeding against the Company, alleging that it violated Section 13(a) of the Securities Exchange Act of 1934. In connection with the contemplated proceedings, the staff may seek a suspension or revocation of registration of each class of the Company’s registered securities. Also, the staff may consider whether contempt proceedings in a federal district court are appropriate. The Company submitted a response to this letter on November 16, 2009. Should suspension or revocation of our stock occur, the Company’s ability to raise additional funding may be severely impacted.

As noted elsewhere, the Company, on December 18, 2009, filed its delinquent financial report on Form 10-K for the year ended December 31, 2008. This report contained a Disclaimer of Opinion by its Independent Accountants due to significant uncertainty as to the Company’s ability to be a going concern. On April 16, 2010 the SEC issued an Order for an Administrative Hearing based on a claim that the filing as well as Form 10-Q’s for the first three quarters of 2009, which had been filed on January 15, 2010, were materially deficient due to the Disclaimer of Opinion and thus the filings remained delinquent. The Disclaimer of Opinion was removed on a subsequent filing. The Company was also delinquent on its Form 10-K for the Year ended December 31, 2009. An Order of Suspension of trading in the Company’s securities was enacted at that time. The Company also did not file its Form 10-Q for the quarter ended March 31, 2010. The Disclaimer of Opinion on the 2008 financial statements was removed on a subsequent filing.

The SEC and the Company subsequently entered into a Settlement agreement without the above mentioned Hearing, under which the Company would file all its delinquent filings with out a material deficiency by a mutually agreed date. Failure to do so would activate an Order to revoke the ability for the Company’s securities to trade on an exchange.

Consolidated Financial Statements

The financial statements include the accounts of Apogee Technology, Inc. and its wholly owned inactive subsidiary, DUBLA, Inc. All significant intercompany transactions and accounts have been eliminated.

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2. Summary of Significant Accounting Policies

Accounting Standards:

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, also known as FASB Accounting Standards Codification (“ASC”) 105-10, General Accepted Accounting Principles (“ASC 105-10”). ASC 105-10 established the FASB Accounting Standards Codification (“Codification”) as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards. All other non -grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification. GAAP was not intended to be changed as a result of the FASB’s Codification project, but it will change the way the guidance is organized and presented. As a result, these changes will have a significant impact on how companies reference GAAP in their financial statements and in their accounting policies for financial statements issued for interim and annual periods ending after September 15, 2009. Apogee has implemented the Codification in this quarterly report by providing references to the Codification topics, as appropriate.

Revenue Recognition

Consulting and licensing revenue is recognized as services are performed.

Product revenue will be recognized when the following revenue recognition criteria are met: (1) persuasive evidence of an arrangement exists; (2) the product has been shipped and the customer takes ownership and assumes the risk of loss; (3) the selling price is fixed or determinable; and (4) collection of the resulting receivable is reasonably assured.

Royalty revenue will be recognized when earned in accordance with the underlying agreements.

Use of Estimates in Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Development Stage Company

Apogee follows the presentation and disclosure requirements of Accounting Standards Codification (“ASC”) ASC915 “Accounting and Reporting by Development Stage Enterprises” as we are in the development stage therein as defined since October 1, 2008 and for the year ended December 31, 2009.

Property and Equipment

Major replacements and betterments of equipment are capitalized. Cost of normal maintenance and repairs is charged to expense as incurred. Depreciation is provided over the estimated useful lives of the assets using accelerated methods.

Leasehold Improvements

Leasehold improvements are amortized over either the term of lease or the estimated useful life of the improvement.

Patents

Costs incurred to register and obtain patents are capitalized and amortized on a straight-line basis over five years, their estimated useful lives. Management performs analysis for impairment on a periodic basis.

Impairment of Long-Lived Asset

We assess the carrying values of long-lived assets for possible impairment in accordance with the requirements of ASC 360-10. We conduct impairment tests when we identify events or when we believe that circumstances may have changed to indicate that the carrying amount of a long-lived asset may not be recoverable. Such events or changes in circumstances may include the discontinuation of a product or product line, a sudden or consistent decline in the forecast for a product, changes in technology or in the way an asset is being used, or an adverse change in legal factors or in the business climate. Our impairment review, to determine if a potential impairment charge is required, is based on an undiscounted cash flow analysis. This analysis requires judgment with respect to many factors, including future cash flows, changes in technology, the continued success of product lines and future volume and revenue and expense growth rates. It is possible that our estimates of these assumptions may change in the future, resulting in the need to reassess the carrying value of our long-lived assets for impairment.

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Income Taxes

Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax laws. Allowances are recorded if recovery is uncertain. See Note 10 – Income Taxes and Tax Loss Carryforwards.

Loss Per Share

Basic net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common stock outstanding during the period. Diluted net loss per share is computed based on the weighted average number of common stock and dilutive potential common stock outstanding. Potential common stock consists of incremental common stock issuable upon the exercise of stock options and common stock issuable upon the exercise of common stock warrants. The calculation of diluted net loss per share excludes potential common stock as the effect is anti-dilutive. The weighted average number of shares of common stock outstanding used to compute basic loss per share for the three months ended March 31, 2010 and 2009 was to 12,131,332.

Research and Development

Costs for research and development are expensed as incurred.

Legal Fees

We record legal costs (such as fees and expenses of external lawyers and other service providers) when incurred or when it is probable that a liability has been incurred on or before the balance sheet date and the amount can be reasonably estimated if invoices have not been received. Legal fees incurred pursuant to filing patent applications are capitalized as part of the patent costs.

Contingencies

Apogee is involved in and/or indemnifies others in various legal proceedings. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. See Note 9 – Legal and Related Indemnification Arrangements with our Executives and Others.

Advertising

Advertising costs are expenses when incurred and were not significant for the three months ended March 31, 2010 and 2009.

Stock-Based Compensation

Apogee had a stock-based compensation plan, the 1997 Employee, Director and Consultant Stock Option Plan (the “1997 Plan”), which is described below. This 1997 Plan expired as of May 14, 2007. At our Annual Meeting held on August 28, 2007, the shareholders approved the adoption of a new stock-based compensation plan, the 2007 Employee, Director and Consultant Stock Plan (the “2007 Plan”).

We account for stock-based compensation for employees in accordance with ASC Topic 718, "Compensation-Stock Compensation” using the modified prospective method. Under the fair value recognition provision of ASC Topic 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense as it is earned over the requisite service period, which is the vesting period. The fair value of the options on their grant date is measured using the Black-Scholes option-pricing model, which we believe yields a reasonable estimate of the fair value of the grants made. The valuation provisions of ASC Topic 718 apply to grants issued since January 1, 2006 (the effective date) and to grants that were outstanding as of that date that are subsequently modified. Estimated compensation expense for grants that were outstanding as of the effective date will be recognized over the remaining vesting period.

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Non-employee stock-based compensation is accounted for in accordance with ASC Topic 505, "Equity-based payments to Non-Employees." In accordance with this topic, cost recognized for non-employee share-based payment transactions is determined by the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.

Apogee’s stock compensation activity with respect to the three months ended March 31, 2010 is summarized below:

Stock Options	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term
Outstanding at December 31, 2009	2,929,500	$	4.5383
Granted	—
Exercised	—
Cancelled or expired	9,000	1.0167
Outstanding at March 31, 2010	2,920,500	$	4.5492	3.8664

Vested at March 31, 2010	2,646,500	$	4.9202	3.5025

Exercisable at March 31, 2010	2,646,500	$	4.9202	3.5025

The following table summarizes information about options outstanding as of March 31, 2010:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
Range of Exercise	Number		Contractual		Exercise		Number		Exercise
Prices	Outstanding		Term		Price		Exercisable		Price

$0.45 — 1.69		1,042,900		6.0290	$	1.0411		768,900	$	1.0411
$2.71 — 6.59		1,282,600		2.0139	$	5.4065		1,282,600	$	5.4065
$8.45 — 12.15		595,000		4.0692	$	8.8849		595,000	$	8.8849

Total at March 31, 2010		2,920,500		3.8664	$	4.9202		2,646,500	$	4.9202

During the three months ended March 31, 2010 and 2009, no options were granted. No options were exercised during the three months ended March 31, 2010 and 2009. During the three months ended March 31, 2010, options to purchase 3,000 shares of Apogee common stock vested. The weighted average fair value of these options was $0.6155. During the three months ended March 31, 2010 options to purchase 9,000 shares of Apogee common stock were canceled. As of March 31, 2010, approximately 274,000 options to purchase approximately 274,000 shares of Apogee common stock with an approximate value of $52,783 are not yet vested.

Fair value of financial instruments

Carrying amounts of certain of the our financial instruments, including cash, loans and accounts payable, approximate their fair values due to their relative short maturities and based upon comparable market information available at the respective balance sheet dates. We do not hold or issue financial instruments for trading purposes.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in Codification Subtopic 820-10. The FASB's objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now require:

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• A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and

• In the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

In addition, ASU 2010-06 clarifies the requirements of the following existing disclosures:

• For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and

• A reporting entity should provide disclosure about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements.

ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009 which for us is January 1, 2010 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early application is permitted. We do not expect any significant changes to our financial accounting and reporting as a result of the issuance of ASU 2010-06.

Recently Adopted Accounting Pronouncements and Regulations

In December 2009, the FASB issued ASU 2009-17, "Consolidations (Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities", which codifies FASB Statement No. 167, "Amendments to FASB Interpretation No. 46(R)" and changes how a reporting entity determines when an entity that is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things:

a) The power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance, and

b) The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

ASU 2009-17 also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity's financial statements. ASU 2009-17 is effective at the start of a reporting entity's first fiscal year beginning after November 15, 2009 which for us is January 1, 2010. Early application is not permitted.

In August 2009, the FASB issued ASU 2009-05, "Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value," which makes amendments to Subtopic 820-10, "Fair Value Measurements and Disclosures—Overall" for the fair value measurement of liabilities and provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. Topic 820 assumes that the fair value of a financial instrument is the price that would be paid to transfer a liability in an orderly transaction between market participants. However, most liabilities have restrictions that do not allow them to be transferred and as such there is not a market for transferring the liabilities. ASU 2009-05 states that in the absence of a market for the liability a company can use:

1. The quoted price of the identical liability when traded as an asset;

2. A quoted price for similar liabilities or similar liabilities when traded as assets; or

3. Another valuation technique that is consistent with the principles of Topic 820 such as a present value technique.

Index

When using any of these techniques, companies are to apply all of the provisions of Topic 820 including guidelines for assessing whether the market is active and orderly. ASU 2009-05 applies to us as of September 1, 2009. On February 24, 2010, the FASB issued Accounting Standards Update ("ASU") No. 2010-09 "Subsequent Events - Amendments to Certain Recognition and Disclosure Requirements" ("ASU 2010-09"), which amends FASB ASC Topic 855, "Subsequent Events", so that SEC filers no longer are required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. ASU No. 2010-09 was effective immediately and we adopted this new requirement in the first quarter of 2010.

Apogee does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on their financial position, results of operations or cash flows.

3.	Property and Equipment

Property and equipment at March 31, 2010 and December 31, 2009 are comprised of the following:

Property and Equipment	March 31,			December 31,
	2010			2009

Equipment	$	162,790		$	162,790
Software		32,943			32,943
Furniture and fixtures		22,047			22,047
Leasehold improvements		92,892			92,892

	$	310,672		$	310,672

Less accumulated depreciation		(271,180	)		(266,630	)

	$	39,492		$	44,042

Depreciation expense was $4,550 and $8,141 for the three months ended March 31, 2010 and 2009, respectively.

The estimated useful lives of the classes of physical assets were as follows:

Description		Depreciable Lives

Equipment		5 years
Software		3 years
Furniture and fixtures		7 years
Leasehold improvements		Term of lease

4.	Asset Impairment

We did not record any patent impairment charge at March 31, 2010. For the three months ended March 31, 2010 we amortized approximately $11,600 of patent application related expenses. We did record a patent impairment charge of approximately $17,000 at March 31, 2009. These patent applications were related to our Health Monitoring Group which was closed down as of March 31, 2009. In addition, for the 3 months ended March 31, 2009, we amortized approximately $9,600 of patent application related expenses.

The values of patent costs are summarized in the table below:

	Gross Carrying Value		Accumulated Amortization			Accumulated Impairment			Net Book Value

December 31, 2009	$	436,099		(71,855	)		(245,674	)	$	118,570
March 31, 2010	$	514,227		(83,478	)		(245,674	)	$	185,075

Index

Estimated amortization is as follows:

Year ended December 31,
Nine months ended December 2010			42,087
2011			53,711
2012			53,711
2013			19,941
2014			15,625

5.	Accounts Payable and Accrued Expenses

Accrued expenses are included in accounts payable on the balance sheet. Accounts payable and accrued expenses are as follows:

Accounts Payable	March 31,		December 31,
	2010		2009

Legal and accounting	$	1,796,000	$	1,691,000
Consulting expenses		75,000		70,000
Interest owed to Promissory Note holders		509,000		412,000
Corporate insurance expenses		—		4,000
Director and Advisory Committee fees		114,000		100,000
Rent expenses		84,000		70,000
Other expenses		461,000		420,000

	$	3,039,000	$	2,767,000

Accrued Expenses	March 31,		December 31,
	2010		2009

Accrued audit expenses	$	51,000	$	100,000
Accrued legal expenses		19,000		25,000
Accrued consulting expenses		57,000		46,000
Accrued payroll and payroll taxes		222,000		134,000
Other accrued expenses		12,000		20,000

	$	361,000	$	325,000

6.	Promissory Notes, Loans and Warrants

During the three months ended March 31, 2010, Apogee received $223,500, consisting of $175,500 from Mr. Herbert M. Stein, President, Chief Executive Officer and Chairman of the Board of Directors, $18,000 from Mr. David Spiegel, a major shareholder, $30,000 from Mr. Friedrich Riener. These promissory notes are payable upon demand, not subject to premium or penalty for prepayment, bear simple interest of 8% per annum and are to be repaid in 180 days. An additional 4% interest will be charged after maturity. As of March 31, 2010, total unpaid interest of approximately $509,000 is due, consisting of $198,000 to Mr. Stein, $209,000 to Mr. Spiegel, $79,000 to Mr. Robert Schacter et al, $23,000 to others.

Index

Through March 31, 2010, Apogee has received total proceeds from loans and promissory notes of $3.3 million, consisting of $1.2 million, $1.2 million, $585,000 and $231,000 from Mr. Spiegel, Mr. Stein, Mr. Schacter and others, respectively.

In addition, unpaid rent and utilities of approximately $84,000 and $42,000, respectively, are owed to Mr. Spiegel as of March 31, 2010.

As of March 31, 2010, promissory notes in the amount of $2.6 million are in default and accruing post-maturity interest.

			Promissory Notes and Loans Due To David Spiegel

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

December 11, 2007	$	150,000	March 10, 2008		8.00	%		12.00	%
February 21, 2008		100,000	August 19, 2008		8.00	%		12.00	%
March 20, 2008		100,000	September 16, 2008		8.00	%		12.00	%
April 1, 2008		50,000	September 28, 2008		8.00	%		12.00	%
May 15, 2008		50,000	November 11, 2008		8.00	%		12.00	%
June 16, 2008		65,000	December 13, 2008		8.00	%		12.00	%
June 18, 2008		50,000	December 15, 2008		8.00	%		12.00	%
July 15, 2008		50,000	January 11, 2009		8.00	%		12.00	%
July 28, 2008		50,000	January 24, 2009		8.00	%		12.00	%
August 12, 2008		35,000	February 8, 2009		8.00	%		12.00	%
August 27, 2008		35,000	February 23, 2009		8.00	%		12.00	%
September 5, 2008		35,000	March 4, 2009		8.00	%		12.00	%
October 27, 2008		35,000	April 25, 2009		8.00	%		12.00	%
January 6, 2009		80,000	July 5, 2009		8.00	%		12.00	%
March 19, 2009		64,000	September 15, 2009		8.00	%		12.00	%
May 19, 2009		35,000	November 15, 2009		8.00	%		12.00	%
June 10, 2009		25,000	December 7, 2009		8.00	%		12.00	%
July 1, 2009		32,000	December 28, 2009		8.00	%		12.00	%
November 5, 2009		103,000	May 4, 2010		8.00	%		8.00	%
December 21, 2009		68,000	June 19. 2010		8.00	%		8.00	%
December 29, 2009		4,665	July 24, 2010		8.00	%		8.00	%
April 16, 2010*		10,000	October 13, 2010		8.00	%		8.00	%
June 4, 2010*		8,000	December 1, 2010		8.00	%		8.00	%
	$	1,235,665

* Funds received March 4, 2010 and March 25, 2010, respectively

Index

			Promissory Notes and Loans Due To Herbert M. Stein

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

December 11, 2007	$	250,000	March 10, 2008		8.00	%		12.00	%
February 21, 2008		100,000	August 19, 2008		8.00	%		12.00	%
March 20, 2008		50,000	September 16, 2008		8.00	%		12.00	%

April 1, 2008		50,000	September 28, 2008	8.00	%	12.00	%
May 15, 2008		50,000	November 11, 2008	8.00	%	12.00	%
June 16, 2008		35,000	December 13, 2008	8.00	%	12.00	%
June 18, 2008		40,000	December 15, 2008	8.00	%	12.00	%
July 15, 2008		30,000	January 11, 2009	8.00	%	12.00	%
July 28, 2008		50,000	January 24, 2009	8.00	%	12.00	%
August 12, 2008		35,000	February 8, 2009	8.00	%	12.00	%
August 27, 2008		35,000	February 23, 2009	8.00	%	12.00	%
September 5, 2008		35,000	March 4, 2009	8.00	%	12.00	%
October 27, 2008		25,000	April 25, 2009	8.00	%	12.00	%
February 2, 2009		30,000	August 1, 2009	8.00	%	12.00	%
February 17, 2009		10,000	August 16, 2009	8.00	%	12.00	%
March 19, 2009		25,900	September 15, 2009	8.00	%	12.00	%
April 13, 2009		33,000	October 10, 2009	8.00	%	12.00	%
May 18, 2009		12,000	November 14, 2009	8.00	%	12.00	%
July 1, 2009		20,000	December 28, 2009	8.00	%	12.00	%
November 5, 2009		42,500	May 4, 2010	8.00	%	8.00	%
December 21, 2009		83,500	June 19, 2010	8.00	%	8.00	%
January 25, 2010		79,000	July 24, 2010	8.00	%	8.00	%
February 22, 2010		66,000	August 21, 1010	8.00	%	8.00	%
April 16, 2010*		30,500	October 13, 2010	8.00	%	8.00	%
June 4, 2010**		27,000	December 1, 2010	8.00	%	8.00	%
	$	1,244,400

* Funds received January 29, 2010 and March 4, 2010

** Funds received March 25, 2010

			Promissory Notes and Loans Due To Robert Schacter et al

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

September 5, 2008	$	140,000	March 4, 2009		8.00	%		12.00	%
October 27, 2008		100,000	April 25, 2009		8.00	%		12.00	%
January 8, 2009		100,000	July 7, 2009		8.00	%		12.00	%
February 2, 2009		50,000	August 1, 2009		8.00	%		12.00	%
February 17, 2009		50,000	August 16, 2009		8.00	%		12.00	%
March 19, 2009		50,000	September 15, 2009		8.00	%		12.00	%
April 13, 2009		20,000	October 10, 2009		8.00	%		12.00	%
June 10, 2009		25,000	December 7, 2009		8.00	%		12.00	%
November 5, 2009		50,000	May 4, 2010		8.00	%		8.00	%
	$	585,000

Index

			Promissory Notes and Loans Due To Others

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

July 28, 2008	$	20,000	March 4, 2009		8.00	%		12.00	%
October 27, 2008		6,000	April 25, 2009		8.00	%		12.00	%
January 6, 2009		500	July 5, 2009		8.00	%		12.00	%
February 17, 2009		37,000	August 16, 2009		8.00	%		12.00	%
March 19, 2009		500	September 15, 2009		8.00	%		12.00	%
April 13, 2009*		61,500	October 10, 2009		8.00	%		12.00	%
May 18, 2009		32,500	November 14, 2009		8.00	%		12.00	%
November 5, 2009		70,000	May 4, 2010		8.00	%		8.00	%
December 21, 2009		2,563	June 19, 2010		8.00	%		8.00	%
January 25, 2010		30,000	July 24, 2010		8.00	%		8.00	%
	$	260,563

The promissory notes issued to Messrs. Stein, Spiegel, Schacter and Others from December 11, 2007 through July 1, 2009 for an aggregate of $3.1 are incurring a post-maturity rate of interest of 12% compounded monthly. The promissory notes originally were issued with simple interest of 8% per year and were to be repaid in cash after 90 days for the December 11, 2007 and 180 days for the remaining promissory notes. The effective interest rate for 2009 was approximately 16%.

* The promissory note issued to JAZFund LLC on April 13, 2009 in the amount of $30,000 is incurring a post-maturity rate of 16% compounded monthly. This promissory note originally was issued with simple interest of 12% per year and was to be repaid in cash after 180 days.

The following tables represent the net payable from promissory notes and loans as of March 31, 2010.

	Officer Loans Herbert M. Stein			Shareholder Loans David Spiegel			Total

Total proceeds from Loans and Promissory Notes	$	1,244,400		$	1,234,665		$	2,479,065
Discount (Fair Market Value of Warrants)		(9,669	)		(3,913	)		(13,582	)
	$	1,234,731		$	1,230,752		$	2,465,483

	Loans Robert Schacter et al			Loans Others			Total

Total proceeds from Loans and Promissory Notes	$	585,000		$	260,563		$	845,563
Discount (Fair Market Value of Warrants)		(2,902	)		(5,895	)		(8,797	)
	$	582,098		$	254,668		$	836,766

In connection with the issuance of the promissory notes, we issued warrants to purchase our common stock. Each warrant expires three years from issue date with an exercise price of $1.00 per share. As of March 31, 2010, these warrants represent, in the aggregate, an underlying one hundred eight thousand four hundred sixty-six (108,466) shares of common stock for Mr. Spiegel, an underlying ninety-nine thousand four hundred forty (99,440) shares of common stock for Mr. Stein, an underlying one hundred thirty-two thousand seven hundred fifty (132,750) shares of common stock for Mr. Schacter, and an underlying forty-nine thousand three hundred six (49,306) shares of common stock for others. These warrants were issued as additional consideration for the notes. These warrants include customary terms and include a cashless or net exercise provision for exercise. Holders of these warrants are not entitled to receive dividends, vote, receive notice of any meetings of stockholders or otherwise have any right as stockholders with respect to their warrant shares. The values of these warrants were determined by using the Black Scholes valuation model. Warrants associated with the issuance of the promissory notes were issued at 10% to 25% of the funds received.

Index

David Spiegel
Date of Warrant	Shares		Stock Price At Date of Issuance		Term of Warrant	Strike Price		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value

February 21, 2008		10,000	$	0.65	3 Years	$	1.00		2.23		98.45824	%	$	0.3462	$	3,462.00
March 20, 2008		10,000	$	0.70	3 Years	$	1.00		1.71		99.87467	%	$	0.3867		3,867.00
April 1, 2008		5,000	$	0.85	3 Years	$	1.00		1.94		100.00925	%	$	0.5042		2,526.00
May 15, 2008		5,000	$	0.83	3 Years	$	1.00		2.70		102.78266	%	$	0.5036		2,518.00
June 16, 2008		6,500	$	0.63	3 Years	$	1.00		3.33		104.12541	%	$	0.3555		2,310.75
June 18, 2008		5,000	$	0.61	3 Years	$	1.00		3.19		104.07197	%	$	0.3397		1,698.50
July 15, 2008		5,000	$	0.87	3 Years	$	1.00		2.70		104.55357	%	$	0.5429		2,714.50
July 28, 2008		5,000	$	0.75	3 Years	$	1.00		2.90		104.54508	%	$	0.4481		2,240.50
August 12, 2008		3,500	$	0.75	3 Years	$	1.00		2.73		104.93498	%	$	0.4488		1,570.80
August 27, 2008		3,500	$	0.85	3 Years	$	1.00		2.58		106.26182	%	$	0.5331		1,865.85
September 5, 2008		3,500	$	0.86	3 Years	$	1.00		2.44		106.21122	%	$	0.5404		1,891.40
October 27, 2008		3,500	$	0.60	3 Years	$	1.00		1.83		108.82589	%	$	0.3431		1,200.85
January 6, 2009		8,000	$	0.75	3 Years	$	1.00		1.10		108.80131	%	$	0.4566		3,652.80
March 19, 2009		6,400	$	0.68	3 Years	$	1.00		1.21		109.80676	%	$	0.4057		2,596.48
May 19, 2009		3,500	$	0.70	3 Years	$	1.00		1.37		111.74849	%	$	0.4288		1,500.80
June 10, 2009		2,500	$	0.60	3 Years	$	1.00		2.00		126.10551	%	$	0.3959		989.75
July 1, 2009		3,200	$	0.87	3 Years	$	1.00		1.57		128.93341	%	$	0.6295		2,014.40
November 5, 2009		10,300	$	1.02	3 Years	$	1.00		1.44		131.45892	%	$	0.7681		7,911.43
December 21, 2009		6,800	$	1.05	3 Years	$	1.00		1.42		133.83768	%	$	0.8029		5,459.72
January 25, 2010		466	$	0.96	3 Years	$	1.00		1.40		134.80467	%	$	0.7268		338.69
April 16, 2010*		1,000	$	0.90	3 Years	$	1.00		1.56		136.43020	%	$	0.6800		680.00
June 4, 2010*		800	$	0.50	3 Years	$	1.00		1.17		153.12821	%	$	0.3740		299.20
Total		108,466													$	53,309.42

* Included fund received prior to March 31, 2010

Index

Herbert M. Stein
Date of Warrant	Number of Shares		Stock Price At Date of Issuance		Term of Warrant	Strike Price		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value

February 21, 2008		10,000	$	0.65	3 Years	$	1.00		2.23		98.45824	%	$	0.3462	$	3,462.00
March 20, 2008		5,000	$	0.70	3 Years	$	1.00		1.71		99.87467	%	$	0.3867		1,933.50
April 1, 2008		5,000	$	0.85	3 Years	$	1.00		1.94		100.00925	%	$	0.5042		2,526.00
May 15, 2008		5,000	$	0.83	3 Years	$	1.00		2.70		102.78266	%	$	0.5036		2,518.00
June 16, 2008		3,500	$	0.63	3 Years	$	1.00		3.33		104.12541	%	$	0.3555		1,244.25
June 18, 2008		4,000	$	0.61	3 Years	$	1.00		3.19		104.07197	%	$	0.3397		1,358.80
July 15, 2008		3,000	$	0.87	3 Years	$	1.00		2.70		104.55357	%	$	0.5429		1,628.70
July 28, 2008		5,000	$	0.75	3 Years	$	1.00		2.90		104.545 08	%	$	0.4481		2,240.50

August 12, 2008	3,500	$	0.75	3 Years	$	1.00	2.73	104.93498	%	$	0.4488		1,570.80
August 27, 2008	3,500	$	0.85	3 Years	$	1.00	2.58	106.26182	%	$	0.5331		1,865.85
September 5, 2008	3,500	$	0.86	3 Years	$	1.00	2.44	106.21122	%	$	0.5404		1,891.40
October 27, 2008	2,500	$	0.60	3 Years	$	1.00	1.83	108.82589	%	$	0.3431		857.75
February 2, 2009	3,000	$	0.70	3 Years	$	1.00	1.27	109.04276	%	$	0.4188		1,256.40
February 17, 2009	1,000	$	0.83	3 Years	$	1.00	1.22	109.04322	%	$	0.5219		521.90
March 19, 2009	2,590	$	0.68	3 Years	$	1.00	1.21	109.80676	%	$	0.4057		1,050.76
April 13, 2009	3,300	$	0.60	3 Years	$	1.00	1.27	110.59204	%	$	0.3469		1,144.77
May 18, 2009	1,200		0.70	3 Years	$	1.00	1.36	111.77410	%	$	0.4288		514.56
July 1, 2009	2,000	$	0.87	3 Years	$	1.00	1.57	128.93341	%	$	0.6295		1,259.20
November 5, 2009	4,250	$	1.02	3 Years	$	1.00	1.44	131.45892	%	$	0.7681		3,264.43
December 21, 2009	8,350	$	1.05	3 Years	$	1.00	1.42	133.83768	%	$	0.8029		6,704.22
January 25, 2010	7,900	$	0.96	3 Years	$	1.00	1.40	134.80467	%	$	0.7268		5,741.72
February 22, 2010	6,600	$	0.70	3 Years	$	1.00	1.48	134.43818	%	$	0.5011		3,307.26
April 16, 2010*	3,050	$	0.96	3 Years	$	1.00	1.40	134.80467	%	$	0.7268		2,074.00
June 4, 2010*	2,700	$	0.96	3 Years	$	1.00	1.40	134.80467	%	$	0.7268		1,009.80
Total	99,440											$	50,946.57

* Includes funds received prior to March 31, 2010

Robert Schacter et al*



Date of Warrant	Number of Shares		Stock Price At Date of Issuance		Term of Warrant	Strike Price		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value

September 5, 2008		14,000	$	0.86	3 Years	$	1.00		2.44		106.21122	%	$	0.5404	$	7,565.60
October 27, 2008		25,000	$	0.60	3 Years	$	1.00		1.83		108.82589	%	$	0.3431		8,577.50
January 8, 2009		25,000	$	0.90	3 Years	$	1.00		1.16		108.85621	%	$	0.5777		14,442.50
February 2, 2009		12,500	$	0.70	3 Years	$	1.00		1.27		109.04276	%	$	0.4188		5,235.00
February 17, 2009		12,500	$	0.83	3 Years	$	1.00		1.22		109.04322	%	$	0.5219		6,523.75
March 19, 2009		12,500	$	0.68	3 Years	$	1.00		1.21		109.80676	%	$	0.4057		5,071.25
April 13, 2009		5,000	$	0.60	3 Years	$	1.00		1.27		110.59204	%	$	0.3469		1,734.50
June 10, 2009		6,250	$	0.60.	3 Years	$	1.00		2.00		126.10551	%	$	0.3959		2,474.38
November 5, 2009		20,000	$	1.02	3 Years	$	1.00		1.44		131.45892	%	$	0.7681		15,362.00
Total		132,750													$	66,986.48

*128,750 warrants issued in the name of TYJO Corporation Money Purchase Pension Plan, 2,000 warrants issued in the name of Mr. Robert Schacter, as Custodian for Tyler Schacter UTMA/CA and 2,000 warrants issued in the name of Mr. Robert Schacter, as Custodian for Joseph Schacter UTMA/CA.

Index

Others
Date of Warrant	Number of Shares		Stock Price At Date of Issuance		Term of Warrant	Strike Price		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value
July 28, 2008		2,000	$	0.75	3 Years	$	1.00		2.90		104.545 08	%	$	0.4460	$	892.00
October 27, 2008		600	$	0.60	3 Years	$	1.00		1.83		108.82589	%	$	0.3431		205.86
January 6, 2009		50	$	0.75	3 Years	$	1.00		1.10		108.80131	%	$	0.4566		22.83
February 17, 2009		8,950	$	0.83	3 Years	$	1.00		1.22		109.04322	%	$	0.5219		4,671.01

March 19, 2009	50	$	0.68	3 Years	$	1.00	1.21	109.80676	%	$	0.4057		20.29
April 13, 2009	10,650	$	0.60	3 Years	$	1.00	1.27	110.59204	%	$	0.3469		3,694.49
May 18, 2009	3,200		0.70	3 Years	$	1.00	1.36	111.77410	%	$	0.4288		1,372.15
May 19 2009	50	$	0.70	3 Years	$	1.00	1.37	111.74849	%	$	0.4288		21.44
November 5, 2009	16,000	$	1.02	3 Years	$	1.00	1.44	131.45892	%	$	0.7681		12,289.60
December 21, 2009	256	$	1.05	3 Years	$	1.00	1.42	133.83768	%	$	0.8029		205.54
January 25, 2010	7,500	$	0.96	3 Years	$	1.00	1.40	134.80467	%	$	0.7268		5,451.00
Total	49,306											$	28,486.21

The carrying value of the notes and loans payable approximate fair value due to their short-term maturity.

7.	Stockholders’ Deficiency

Stock Options

During the three months ended March 31, 2010 and 2009, no stock options were awarded.

8.	Related Party Transactions

Apogee rents its facility from an entity controlled by a stockholder for $4,400 per month pursuant to a lease that expired December 31, 2005. Currently, we are renting the facility on a month-to-month basis. Rent expense was $52,800 for the fiscal year ended December 31, 2009 and $13,200 as of March 31, 2010. Rent has been accrued and remains unpaid since September 2008 totaling $83,600 through March 31, 2010. See also Note 6 – Promissory Notes, Loans and Warrants from Officers and Significant Stockholders.

9.	Legal and Related Indemnification Arrangements with our Executives and Others

Apogee has assumed and will continue to assume the final legal costs and related expenses of Herbert M. Stein, in connection with the civil action styled Joseph Shamy vs. Herbert M. Stein, Case No.: 50 2005 CA 007719 XXXXMB. In this action instituted in the 15th Judicial Circuit in and for Palm Beach County, Florida (the "Court), Joseph Shamy sued Herbert M. Stein, President, Chief Executive Officer and Chairman of the Board of Apogee in connection with Shamy’s purchase of Apogee shares in 2003 and 2004. In February 2009, in connection with a settlement, the Court entered a Final Judgment against Mr. Stein. In early January 2010, a filing was made with the Court to memorialize the Total and Complete Satisfaction of Judgment, which states that all sums due under the civil action were fully paid and that the Final Judgment was satisfied and canceled. Further, the Clerk of the Court was directed to note satisfaction of the Final Judgment and cancellation of all judgments of record in this action. Apogee was not a party to the aforementioned settlement or the satisfaction of the Final Judgment. Through March 31, 2010, we have incurred approximately $911,000 toward this indemnification. For the three months ended March 31, 2010, we did not incur any expenses toward this indemnification. This compares to approximately $42,000 for the three months ended March 31, 2009.

The Company first became aware of an investigation by the SEC in May 2005. The subject matter of this investigation was the Company's prior revenue recognition practices that were addressed in the Company's restatement of its financial statements for the fiscal year ended December 31, 2004. As previously disclosed in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, as amended, Apogee’s Audit Committee, with the assistance of independent counsel, conducted an investigation into Apogee’s historical accounting practices that resulted in the implementation of remedial actions. See our Annual Report on Form 10-KSB for the year ended December 31, 2004, as amended, for detail regarding the restatement.

In July 2008, Apogee, it’s Chief Executive Officer and other employees received notifications from the Staff of the SEC relating to the Staff's 2005 investigation. These notifications, known as “Wells Notices,” stated that the Staff is considering recommending that the Commission bring enforcement actions against the Company and certain employees, based on alleged violations of certain provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933, as amended, Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1 and 13a-13 thereunder. The Wells Notice sent to the Company indicates that in any action actually brought against the Company, the Staff would seek an injunction against future violations of the federal securities laws as relief.

Index

On May 19, 2009, the Securities and Exchange Commission (“commission”) filed a settled enforcement action against the Company, one employee, and one former employee (“Others”) in connection with Apogee’s prior revenue recognition practices. Each of the defendants has agreed to settle this matter, without admitting or denying the allegations of the Commission’s complaint. Apogee and others agreed to the entry of a final judgment permanently enjoining them from variously violating or aiding and abetting violations of Sections of the Securities Act of 1933, and Sections of the Securities Exchange Act of 1934, and various Rules. The others also agreed to financial and other sanctions. Through March 31, 2010, we have incurred approximately $554,000 toward this indemnification. For the three months ended March 31, 2010 we did not incur any legal expenses associated with this indemnification. This compares to approximately $1,000 for the three months ended March 31 2009.

As of March 31, 2009, Apogee’s Directors and Officers Liability Insurance was cancelled due to non-payment. Apogee may be required to pay any uninsured claims and related costs.

In June 2010 the SEC and the Company entered into a Settlement agreement without the above mentioned Hearing, under which the Company would file all its delinquent filings with out a material deficiency by a mutually agreed date. Failure to do so would activate an Order to revoke the ability for the Company’s securities to trade on an exchange.

10.	Tax Loss Carryforwards

The following approximates the net loss carryforwards we have available in the future for federal and state tax purposes as of December 31, 2009:

	December 31,		December 31,
	2009		2008
Net operating loss carryforwards
Federal	$	21,000,000	$	19,000,000
State	$	14,000,000	$	12,000,000

	December 31,		December 31,
	2009		2008
Business credits available in the future
Federal	$	960,000	$	940,000
State	$	40,000	$	330,000

The Company does not record a net tax benefit asset due to the uncertainty of its realization.

The net operating loss carryforwards will begin to expire in 2012 for federal tax purposes and in 2010 for state tax purposes. The federal and state credits will begin to expire in 2017.

Significant changes in our ownership, future changes in tax laws and regulations and the alternative minimum tax, may substantially reduce the available carryforwards and related tax benefits.

11.	Supplemental Cash Flow Information

As of March 31, 2010, we recorded cumulatively approximately $690,000 in interest expense of which approximately $7,700 was paid. We recorded interest expense of approximately $128,000 and $85,000 for the three month ended March 31, 2010 and 2009, respectively.

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12.	Subsequent Events

Additional Financings

The following table details all financings subsequent to March 31, 2010:

Date of Loan or Promissory Note and Warrant	Amount of Loan or Note		Maturity Date	Interest			Number of Warrants		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value of Warrants
David Spiegel
April 16, 2010*	$	6,000	October 13, 2010		8.00	%		600		1.56		136.4302	%	$	0.680	$	408.00
June 4, 2010*		6,000	December 1, 2010		8.00	%		600		1.17		153.1282	%	$	0.374		224.40
August 11, 2010		100,000	February 7, 2011		8.00	%		10,000		0.81		157.1615	%	$	0.2115		2,115.00
	$	112,000						11,200								$	2,747.40

* Excludes funds received prior to March 31, 2010.

Date of Loan or Promissory Note and Warrant	Amount of Loan or Note		Maturity Date	Interest			Number of Warrants		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value of Warrants
Herbert M. Stein
April 16, 2010*	$	56,000	October 13, 2010		8.00	%		5,600		1.56		136.4302	%	$	0.680	$	3,808.00
June 4, 2010*		89,000	December 1, 2010		8.00	%		8,900		1.17		153.1282	%	$	0.374		3,328.60
August 11, 2010		45,700	February 7, 2011		8.00	%		4,570		0.81		157.1615	%	$	0.2115		1,002.51
	$	190,700						19,070								$	8,139.11

* Excludes funds received prior to March 31, 2010.

Date of

Loan or Promissory

Note and Warrant

Amount

Loan or

Note

Maturity

Date

Interest

Number

Warrants

Risk

Free

Interest

Rate

Volatility

Value

Per

Warrant

Total

Value

Warrants

Robert Schacter (TYJO Corp. Money Purchase Pension Plan)*

July 9, 2010*

25,000

* It has not yet been determined whether these funds are to be considered a loan or equity.

Date of Loan or Promissory Note and Warrant	Amount of Loan or Note		Maturity Date	Interest			Number of Warrants		Risk Free Interest Rate		Volatility			Value Per Warrant		Total Value of Warrants
Others
June 4, 2010	$	20,000	December 1, 2010		12.00	%		27,500		1.71		153.1282	%	$	0.374	$	10,285.00

In addition, as part of an on-going private placement, $45,000 was received. See below for details.

Total funds received since March 31, 2010 were approximately $468,000 consisting of: $112,000 from Mr. Spiegel, $191,000 from Mr. Stein, $100,000 from Mr. Schacter, $65,000 from others.

Index

All warrants have been issued at an exercise price of $1.00, had a three-year term and were issued as additional consideration for the promissory notes. Upon reaching maturity, interest on these loans is compounded monthly and increased by 4 percentage points. See below for details related to the conversion of accrued interest by two note holders in June 2010.

Sale of Common Stock

On May 24, 2010 and June 4, 2010 Apogee received $50,000 and $25,000, respectively, from TYJO Corporation Money Purchase Pension Plan for the purchase of 75,000 shares of Apogee common stock and warrants to purchase 37,500 shares of Apogee common stock. These warrants are exercisable immediately upon issuance, for a term of three years at an exercise price of $1.00 per share.

Interest Conversion

On June 26, 2010 the Company completed an offer to its Note holders whereby Note holders could convert all interest amounts accrued and unpaid as of April 15, 2010 into the Company’s Common Stock at a price of $1 per share. Two Note holders accepted this offer:

	Interest
Note Holder	Converted
Herbert M. Stein	$	204,098
Robert Schacter, et al		82,024
Total interest converted	$	286,122

This transaction resulted in a gain on extinguishment of debt of $32,810 as a result of the interest conversion by Mr. Schacter. This transaction was recorded as of June 30, 2010. The interest conversion by Mr. Stein was recorded as a capital transaction and recorded in Additional Paid-In Capital.

Promissory Notes Conversion

Mr. Robert Schacter requested that the $545,000 in Promissory Notes outstanding at December 31, 2009 in the name of Robert Schacter (TYJO Corp. Money Purchase Pension Plan), and $20,000 each issued in the names of Mr. Robert Schacter, as Custodian for Tyler Schacter UTMA/CA and Mr. Robert Schacter, as Custodian for Joseph Schacter UTMA/CA be converted to shares of Apogee Common Stock. On June 4, 2010 the Board of Directors approved this transaction and authorized the issuance of 585,000 shares of Apogee Technology, Inc. Common Stock price of $1.00 per share. The closing price on June 4, 2010 was $0.50; accordingly, the Company recorded a $292,500 gain on extinguishment of this debt at June 30, 2010.

Additional Warrants

In consideration of his continued financial support, the Board of Directors, on June 4, 2010, approved the issuance of warrants to purchase 151,750 shares of Apogee common stock to Mr. Robert Schacter et al. The Company used the Black Scholes method to value these warrants. As a result of this transaction, the Company recorded a $56,754 expense during the second quarter ended June 30, 2010. These warrants are exercisable immediately upon issuance, for a term of three years at an exercise price of $1.00 per share.

Private Placement

Apogee has received $45,000 as part of an on-going Private Placement for 45,000 shares of Apogee common stock and warrants to purchase 22,500 shares of Apogee common stock. Proceeds as of July 28, 2010 were $41,850 net of $3,150 in expenses. These warrants are exercisable immediately upon issuance, for a term of three years at an exercise price of $1.00 per share.

Total Warrants issued through August 11, 2010 is 659,482 as detailed below:

	Number of Interest
Stock/Note Holder	Warrants Issued
Herbert M. Stein		118,510
David Spiegel		119,666
Robert Schacter et al		322,000
Others		99,306
Total Warrants issued through August 11, 2010		659,482

Index

SEC Administrative Proceedings

Due to its financial condition, the Company had been unable to fund payments to its auditors. Accordingly, the Company did not timely file its 2008 Annual Report on 10-K, as well as quarterly reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009, and September 30, 2009. Additionally, it had not timely filed Form 8-K and related Form 4s.

In connection with the contemplated proceedings, the staff may seek a suspension or revocation of each class of the Company’s registered securities. Also, the staff may consider whether contempt proceedings in a federal district court are appropriate. The Company submitted a response to this letter as of November 16, 2009. Suspension or revocation may substantially impact the Company’s ability to obtain funding.

Subsequently, on December 18, 2009 we filed our 2008 Annual Report on Form 10-K and filed our 2009 Quarterly Reports on Form 10-Q for the periods ended June 30, 2009 and September 30, 2009 in January 2010.

As noted above, the Company, on December 18, 2009, filed its delinquent financial report on Form 10-K for the year ended December 31, 2008. This report contained a Disclaimer of Opinion by its Independent Accountants due to significant uncertainty as to the Company’s ability to be a going concern. On April 16, 2010 the SEC issued an Order for an Administrative Hearing based on a claim that the filing as well as Form 10-Q’s for the first three quarters of 2009, which had been filed on January 15, 2010, were materially deficient due to the Disclaimer of Opinion and thus the filings remained delinquent. The Disclaimer of Opinion was removed on a subsequent filing. The Company was also delinquent on its Form 10-K for the Year ended December 31, 2009. An Order of Suspension of trading in the Company’s securities was enacted at that time. The Company also did not file its Form 10-Q for the quarter ended March 31, 2010.

In June 2010 the SEC and the Company entered into a Settlement agreement without the above mentioned Hearing, under which the Company would file all its delinquent filings without a material deficiency by a mutually agreed date. Failure to do so would activate an Order to revoke the ability for the Company’s securities to trade on an exchange.

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ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following Management’s Discussion and Analysis of the Company’s Financial Condition and Results of Operations for the three-month periods ended March 31, 2010 and March 31, 2009, should be read in conjunction with the Company’s Financial Statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains, in addition to historical statements, forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include the factors discussed in the section titled ITEM 1A – RISK FACTORS, as well as other factors described in our Annual Report on Form 10-K for the year ended December 31, 2009.

OVERVIEW

Our Life Science Group is developing PyraDerm, an advanced intradermal drug delivery system, to meet the needs of patients, health insurers, companies developing pharmaceuticals, as well as, governments and international health organizations. PyraDerm is designed to be a low-cost, effective, painless delivery system that can be self administered and easily stored while potentially providing pharmaceutical companies an extended patent position for their current drug formulations. We had previously demonstrated that PyraDerm system containing adjuvanted vaccine formulations is capable of improving the efficiency of immunization and providing a significant dose sparing effect in a relevant animal model. Technologies that reduce the required vaccine dose would allow faster and more efficient production of vaccines, which is especially important in case of vaccine shortages during epidemic emergencies, such as pandemic influenza. The results of these studies were published in 2009 in the Proceedings of the National Academy of Sciences of the USA serving as an important validation of our approach to intradermal vaccination. In 2009 we had to scale down research and development efforts due to financial constraints focusing on the proof-of-concept thermal stability studies of PyraDerm system and relevant formulations and certain efforts on the development of the production process. In these studies Apogee has been able to demonstrate the advantages of some of its systems compared to commonly used solution formulations. We believe that these findings on improved thermal stability are important for future development of PyraDerm as better shelf-life and lower dependence on temperature controlled distribution chains can be one of the critical advantages of our technology. The Company also continued to pursue patent applications related to its technology. Upon completion of our studies, if successful, we intend to pursue licensing and partnership agreements for multiple product applications with pharmaceutical, and medical device companies, and government and world health organizations interested in drug delivery systems and technologies.

In 2009, we closed down the operations of the Health Monitoring Product Group. Costs associated with this cessation of operations and terminations of related employees were not material.

At March 31, 2010, we had an accumulated deficit of approximately $25.5 million, as compared to a deficit of approximately $25.1 million as of December 31, 2009. Since re-entering development stage on October 1, 2008, we have an accumulated deficit of approximately $3.6 million, as compared to a deficit of approximately $1.7 million as of December 31, 2009. Our historical net losses and accumulated deficit (since 1995) result primarily from the costs associated with our efforts to design, develop and market our DDX technology as well as costs associated with our efforts to develop PyraDerm™.

Through March 31, 2010, we have received approximately $3.3 million in loans. Since March 31, 2010, we have received approximately $500,000 in funding, which have been inadequate to meet the current needs of the Company resulting in non-payment of loan principal and interest and vendors. See Note 12 - Subsequent Events – Additional Financings.

As of March 31, 2010, we had 7 employees, compared to 13 employees at March 31, 2009. Effective as of June 9, 2008 through October 31, 2009, 5 of the remaining employees transitioned to part-time status in an effort to reduce human resource costs. As of November 1, 2009 a majority of employees have returned to full time.

Subject to additional funding, Apogee’s sole focus will remain on developing and growing the Life Science Group.

Index

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data for the three-month periods ended March 31, 2010 and 2009 have been derived from our unaudited financial statements. Any trends reflected by the following table may not be indicative of future results.

	For the Three-Month Period Ended March 31,						Cumulative from Re-entering Development Stage on October 1, 2008 to March 31,
	2010			2009			2010

Statement of Operations Data:
Revenue	$	—		$	—		$	—
Costs and expenses		(328,830	)		(606,284	)		(3,061,360	)
Other Income (expenses)		(127,311	)		(84,511	)		(583,507	)
Net Loss	$	(456,141	)	$	(690,795	)	$	(3,644,867	)

Shares Outstanding		12,132,332			12,132,332			12,132,332


Total Assets	$	229,524		$	249,913		$	229,524
Stockholders’ deficiency	$	(6,473,529	)	$	(4,595,945	)	$	(3,644,867	)
Loss per share (basic and diluted)	$	(0.04	)	$	(0.06	)	$	(0.30	)

RESULTS OF OPERATIONS OF THE COMPANY

Development Stage Company

Apogee is considered to be in the development stage as defined in Accounting Standards Codification (“ASC”) ASC915 “Accounting and Reporting by Development Stage Enterprises”. Since October 1, 2008, we have devoted substantially all of our efforts to business planning, raising capital and research and development.

Revenue Recognition

Consulting and licensing revenue will be recorded as services are performed.

Royalty revenue will be recognized when earned in accordance with the underlying agreements. Royalty revenue from our prior (DDX) products ceased as of January 1, 2006.

Operating Expenses

Research and Development Costs

Our research and development, or R&D, expenses consist primarily of salaries, development material costs, and external consulting and service costs related to the development and design of new products. Research and development expenses were approximately $123,000 for the three months ended March 31, 2010, compared to approximately $275,000 for the three months ended March 31, 2009. This decrease of approximately $152,000 or 55% was the result of a reduction in expenses for our Life Science Group as well as the discontinuation of activities related to both our sensor products and our Health Monitoring Group.

For the three months ended March 31, 2010, human resource costs decreased by approximately $118,000, or 54%, to approximately $103,000, compared to approximately $221,000 for the three months ended March 31, 2009. Effective as of June 9, 2008, human resource expense was reduced by 20% for most R&D employees as a result of transitioning from full time to part time in order to reduce expenses. In addition to the transition to part-time status of some of our employees, we discontinued operations of our Health Monitoring Group effective as of March 31, 2009, thereby reducing our overall headcount by three employees. Expenses related to the Health Monitoring Group were insignificant.

Index

At March 31, 2009, we recorded a patent impairment charge of approximately $17,000 to reflect the write-off of patent costs associated with the discontinuation of our Health Monitoring Group. After management review and analysis, it was determined that no additional patent impairment charges were warranted for the three months ended March 31, 2010.

For the three months ended March 31, 2010, depreciation and amortization expense decrease by approximately $9,000, or 37%, to approximately $16,000, compared to approximately $25,000 for the three months ended March 31, 2009.

For the three months ended March 31, 2010, we maintained a minimal level of R&D spending required for preservation of our intellectual property, maintenance of our technical capabilities and know-how, and support of our technology development in accordance with our licensing agreement. If we are able to secure additional financing, we anticipate that we will continue to commit resources to research and development activities as our financial position allows, and as a result, R&D costs are expected to increase substantially in the future.

Selling, General and Administrative Costs

General and Administrative costs consist primarily of executive and administrative salaries, professional fees and other associated corporate expenses. Selling, General and Administrative, or SG&A, expenses were approximately $206,000 for the three months ended March 31, 2010, compared to approximately $332,000 for the three months ended March 31, 2009. The decrease of approximately $125,000, or 38%, was primarily attributed to a reduction in professional fees, stock compensation expenses, and an overall reduction in operating expenses. Legal fees were reduced with the settlement of the SEC investigation on May 19, 2009 as well as the settlement of the civil action by Joseph Shamy (as described below).

For the three months ended March 31, 2010 human resource costs decreased by approximately $50,000 or 31%, to approximately $110,000, compared to approximately $160,000 for the three months ended March 31, 2009. This decrease is the result of a $67,000 reduction in stock compensation expense. For the three months ended March 31, 2010 the stock compensation expense was approximately $9,000, compared to approximately $17,000 for the three months ended March 31, 2009. In addition during the first quarter ended March 31, 2010 we recorded a “true-up” adjustment to the stock compensation expense of approximately ($58,000). This “true-up” reduction in this expense was the result a higher realized forfeiture rate applied to existing options. This decrease was partially offset by an increase in salaries as a majority of employees returned to full-time status. For the three months ended March 31, 2010 human resource costs, excluding stock compensation, expense increased by approximately $17,000 or 12% to approximately $159,000 for the three months ended March 31, 2010, compared to approximately $142,000 for the three months ended March 31, 2009. Mr. Herbert M. Stein has not drawn cash compensation from Apogee since June 30, 2009 nor has the Board of Directors received cash compensation since early 2008. We have accrued Mr. Stein’s salary and related taxes, as well as the Board of Directors’ compensation totaling approximately $225,000 and $82,000, respectively, through March 31, 2010.

Professional expenses decreased by approximately $52,000, or 52%, to approximately $48,000 for the three months ended March 31, 2010, compared to approximately $100,000 for the three months ended March 31, 2009. For the three months ended March 31, 2010, legal expenses decreased by $43,000, or 68%, to approximately $20,000, compared to approximately $63,000 for the three months ended March 31, 2009. Legal fees decreased as a result of the settlement of the SEC investigation as well as the settlement of the civil action by Joseph Shamy (as described below).

An investigation by the SEC settled on May 19, 2009, which the Company first became aware of in May 2005, was ongoing through early 2009. The subject matter of this investigation was the Company's prior revenue recognition practices that were addressed in the Company's restatement of its financial statements for the fiscal year ended December 31, 2004. As previously disclosed in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, as amended, Apogee’s Audit Committee, with the assistance of independent counsel, conducted an investigation into Apogee’s historical accounting practices that resulted in the implementation of remedial actions. See our Annual Report on Form 10-KSB for the year ended December 31, 2004, as amended, for detail regarding the restatement. In July 2008, Apogee, it’s Chief Executive Officer and other employees received notifications from the Staff of the SEC relating to the Staff's 2005 investigation. These notifications, known as “Wells Notices,” stated that the Staff considered recommending that the Commission bring enforcement actions against the Company and certain employees, based on alleged violations of certain provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933, as amended, Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1 and 13a-13 thereunder. The Wells Notice sent to the Company indicated that in any action actually brought against the Company, the Staff would seek an injunction against future violations of the federal securities laws as relief.

Index

On May 19, 2009, the Securities and Exchange Commission (“commission”) settled this enforcement action. See Note 9 to the consolidated financial statements - Legal and Related Indemnification Arrangements with our Executives and Others.

We had agreed to indemnify certain employees, directors and a former employee in connection with the SEC investigation. As of March 31, 2010, we have incurred approximately $554,000 to date in legal expenses to indemnify these individuals in association with this matter. During the three months ended March 31, 2010 we did not incur any legal expenses associated with this indemnification, compared to approximately $1,000, for the three months ended March 31, 2009. In light of the settlement we do not anticipate any additional legal fees associated with this matter.

In addition, we had incurred legal fees associated with the indemnification costs in connection with the civil action styled Joseph Shamy vs. Herbert M. Stein Case No.: 50 2005 CA 007719 XXXXMB. In this action instituted in the 15th Judicial Circuit in and for Palm Beach County, Florida (the "Court), Joseph Shamy sued Herbert M. Stein, President, Chief Executive Officer and Chairman of the Board of Apogee in connection with Shamy’s purchase of Apogee shares in 2003 and 2004. In February 2009, in connection with a settlement, the Court entered a Final Judgment against Mr. Stein. In early January 2010, a filing was made with the Court to memorialize the Total and Complete Satisfaction of Judgment, which states that all sums due under the civil action were fully paid and that the Final Judgment was satisfied and canceled. Further, the Clerk of the Court was directed to note satisfaction of the Final Judgment and cancellation of all judgments of record in this action. Apogee was not a party to the aforementioned settlement or the satisfaction of the Final Judgment. Through March 31, 2010, we have incurred approximately $911,000 toward this indemnification. For the three months ended March 31, 2010, we did not incur any expenses toward this indemnification, compared to approximately $42,000 for the three months ended March 31, 2009. See Note 9 to the consolidated financial statements - Legal and Related Indemnification Arrangements with our Executives.

On October 28, 2009, the Company received a “Wells Notice” from the staff of the Commission related to Apogee’s failure to timely file its reports under the Exchange Act in 2009. See Note 9 to the consolidated financial statements - Legal and Related Indemnification Arrangements with our Executives.

We were not receiving reimbursement under our Director and Officer insurance policy for either the indemnification of Mr. Stein or the ongoing investigation by the SEC. As of March 31, 2009, Apogee’s Directors and Officers Liability Insurance was cancelled due to non-payment.

Corporate insurance decreased by approximately $23,000, or 99%, to approximately $225 for the three months ended March 31, 2010, compared to approximately $23,000 for the three months ended March 31, 2009. This decrease was the result of the Directors and Officers Liability Insurance being cancelled effective as of March 31, 2009 and Commercial and Product Liability Insurance being cancelled effective as of October 13, 2009 due to non-payment. In addition, we had reductions to various other overhead expenses, including: communication, marketing and maintenance. Operating expenses are expected to increase when our financial position allows.

Interest Income (Expense)

Interest income includes income from Apogee’s cash and from investments and expenses related to its financing activities. During the three months ended March 31, 2010 and 2009, we did not generate interest income.

Interest expense resulting from the issuance of promissory notes and related warrants to Mr. Herbert M. Stein, Mr. David Spiegel, Mr. Robert Schacter et al and others was approximately $128,000 for the three months ended March 31, 2010, compared to approximately $85,000 for the three months ended March 31, 2009. See below for a detail of these expenses.

	Interest Incurred for the Three Months Ended March 31,
	2010		2009
David Spiegel	$	45,758	$	30,070
Herbert M. Stein		42,297		26,379
Robert Schacter et al		26,166		25,637
Others		13,590		2,531
Total	$	127,811	$	84,617

Index

Net Loss

Apogee’s net loss for the three months ended March 31, 2010 was approximately $456,000, or $0.04 per basic and diluted common share, compared to a net loss of approximately $691,000, or $0.06 per basic and diluted common share, for the three months ended March 31, 2009. This decrease in our net loss was the result of a decrease in legal fees and a reduction in human resource expenses as well as an overall decrease in operating expenditures due to our current cash restraints.

LIQUIDITY AND CAPITAL RESOURCES

The tables below summarize our outstanding unsecured interest-bearing promissory notes and common stock purchases (including amounts subsequent to March 31, 2010) totaling approximately $3.8 million:

Herbert M. Stein

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

December 11, 2007	$	250,000	March 10, 2008		8.00	%		12.00	%
February 21, 2008		100,000	August 19, 2008		8.00	%		12.00	%
March 20, 2008		50,000	September 16, 2008		8.00	%		12.00	%
April 1, 2008		50,000	September 28, 2008		8.00	%		12.00	%
May 15, 2008		50,000	November 11, 2008		8.00	%		12.00	%
June 16, 2008		35,000	December 13, 2008		8.00	%		12.00	%
June 18, 2008		40,000	December 15, 2008		8.00	%		12.00	%
July 15, 2008		30,000	January 11, 2009		8.00	%		12.00	%
July 28, 2008		50,000	January 24, 2009		8.00	%		12.00	%
August 12, 2008		35,000	February 8, 2009		8.00	%		12.00	%
August 27, 2008		35,000	February 23, 3009		8.00	%		12.00	%
September 5, 2008		35,000	March 4, 2009		8.00	%		12.00	%
October 27, 2008		25,000	April 25, 2009		8.00	%		12.00	%
February 2, 2009		30,000	August 1, 2009		8.00	%		12.00	%
February 17, 2009		10,000	August 16 2009		8.00	%		12.00	%
March 19, 2009		25,900	September 15, 2009		8.00	%		12.00	%
April 13, 2009		33,000	October 10, 2009		8.00	%		12.00	%
May 18, 2009		12,000	November 14, 2009		8.00	%		12.00	%
July 1, 2009		20,000	December 28, 2009		8.00	%		12.00	%
November 5, 2009		42,500	May 4, 2010		8.00	%		12.00	%
December 21, 2009		83,500	June 19, 2010		8.00	%		12.00	%
December 30, 2009		27,000	January 25, 2010		8.00	%		12.00	%
January 7, 2010		15,000	January 25, 2010		8.00	%		12.00	%
January 8, 2010		10,000	January 25, 2010		8.00	%		12.00	%
January 14, 2010		27,000	January 25, 2010		8.00	%		12.00	%
February 12, 2010		66,000	August 21, 2010		8.00	%		8.00	%
April 16, 2010		86,500	October 13, 2010		8.00	%		8.00	%
June 4, 2010		116,000	December 1, 2010		8.00	%		8.00	%
August 11, 2010		45,700	February 7, 2011		8.00	%		8.00	%
	$	1,435,100

Index

David Spiegel

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

December 11, 2007	$	150,000	March 10, 2008		8.00	%		12.00	%
February 21, 2008		100,000	August 19, 2008		8.00	%		12.00	%
March 20, 2008		100,000	September 16, 2008		8.00	%		12.00	%
April 1, 2008		50,000	September 28, 2008		8.00	%		12.00	%
May 15, 2008		50,000	November 11, 2008		8.00	%		12.00	%
June 16, 2008		65,000	December 13, 2008		8.00	%		12.00	%
June 18, 2008		50,000	December 15, 2008		8.00	%		12.00	%
July 15, 2008		50,000	January 11, 2009		8.00	%		12.00	%
July 28, 2008		50,000	January 24, 2009		8.00	%		12.00	%
August 12, 2008		35,000	February 8, 2009		8.00	%		12.00	%
August 27, 2008		35,000	February 23, 3009		8.00	%		12.00	%
September 5, 2008		35,000	March 4, 2009		8.00	%		12.00	%
October 27, 2008		35,000	April 25, 2009		8.00	%		12.00	%
January 6, 2009		80,000	July 5, 2009		8.00	%		12.00	%
March 19, 2009		64,000	September 15, 2009		8.00	%		12.00	%
May 19, 2009		35,000	November 15, 2009		8.00	%		12.00	%
June 10, 2009		25,000	December 7, 2009		8.00	%		12.00	%
July 1, 2009		32,000	December 28, 2009		8.00	%		12.00	%
November 5, 2009		103,000	May 4, 2010		8.00	%		12.00	%
December 21, 2009		68,000	June 19, 2010		8.00	%		12.00	%
January 25, 2010		4,665	July 24, 2010		8.00	%		12.00	%
April 16, 2010		16,000	October 13, 2010		8.00	%		8.00	%
June 4, 2010		14,000	December 1, 2010		8.00	%		8.00	%
August 11, 2010		100,000	February 7, 2011		8.00	%		8.00	%
	$	1,346,665

Robert Schacter et al


Date of Promissory Notes	Name on Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

September 5, 2008	TYJO Corporation Money Purchase Pension Plan	$	100,000	March 4, 2009		8.00	%		12.00	%
September 5 2008	Mr. Robert Schacter, as Custodian for Tyler Schacter UTMA/CA		20,000	March 4, 2009		8.00	%		12.00	%
September 5 2008	Mr. Robert Schacter, as Custodian for Joseph Schacter UTMA/CA		20,000	March 4, 2009		8.00	%		12.00	%
October 27, 2008	TYJO Corporation Money Purchase Pension Plan		100,000	April 25, 2009		8.00	%		12.00	%
January 8, 2009	TYJO Corporation Money Purchase Pension Plan		100,000	July 7, 2009		8.00	%		12.00	%
February 2, 2009	TYJO Corporation Money Purchase Pension Plan		50,000	August 1, 2009		8.00	%		12.00	%
February 17, 2009	TYJO Corporation Money Purchase Pension Plan		50,000	August 16 ,2009		8.00	%		12.00	%
March 19, 2009	TYJO Corporation Money Purchase Pension Plan		50,000	September 15, 2009		8.00	%		12.00	%
April 13, 2009	TYJO Corporation Money Purchase Pension Plan		20,000	October 10, 2009		8.00	%		12.00	%

June 10, 2009	TYJO Corporation Money Purchase Pension Plan		25,000	December 7, 2009	8.00	%	12.00	%
November 5, 2009	TYJO Corporation Money Purchase Pension Plan		50,000	May 10, 2010	8.00	%	12.00	%
May 24, 2010*	TYJO Corporation Money Purchase Pension Plan		50,000
June 4, 2010*	TYJO Corporation Money Purchase Pension Plan		25,000
July 9, 2010**	TYJO Corporation Money Purchase Pension Plan		25,000
		$	685,000

* Funds received were for purchase of Apogee Technology, Inc. common stock at a price of $1.00 per share.

** It has not yet been determined whether these funds are to be considered a loan or equity.

Index

Others

Date of Promissory Note	Amount		Maturity Date	Initial Interest Rate			Current Interest Rate

July 28, 2008	$	20,000	January 24, 2009		8.00	%		12.00	%
October 27, 2008		6,000	April 25, 2009		8.00	%		12.00	%
January 6, 2009		500	July 6, 2009		8.00	%		12.00	%
February 17, 2009		37,000	August 16, 2009		8.00	%		12.00	%
March 19, 2009		500	September 15, 2009		8.00	%		12.00	%
April 13, 2009		31,500	October 10, 2009		8.00	%		12.00	%
April 13, 2009		30,000	October 10, 2009		12.00	%		16.00	%
April 16, 2010		20,000	October 13, 2010		12.00	%		12.00	%
May 18, 2009		32,000	November 14, 2009		8.00	%		12.00	%
May 19, 2009		500	November 15, 2009		8.00	%		12.00	%
November 5, 2009		70,000	May 4, 2010		8.00	%		12.00	%
December 21, 2009		2,563	June 19, 2010		8.00	%		12.00	%
January 25, 2010		30,000	July 24, 2010		8.00	%		12.00	%
July 13, 2010*		20,000
July 16, 2010*		25,000
	$	325,563

* Funds received were for purchase of Apogee Technology, Inc. common stock at a price of $1.00 share.

Index

As of March 31, 2010, we had cash of approximately $4,000 and a working capital deficit of approximately $6.7 million. This compares to cash of approximately $4,700 as of December 31, 2009 and a working capital deficit of approximately $6.1 million. During the three months ended March 31, 2010, we received proceeds from loans and unsecured interest-bearing promissory notes totaling $233,500, compared to approximately $530,400 for the same period in 2009, detailed as follows:

Name on	Combined Amounts Loaned 3 Months ended March 31,
Promissory Note	2010		2009

David Spiegel	$	18,000	$	64,000
Herbert M. Stein		175,500		98,900
Robert Schacter et al		—		270,000
Others		30,000		97,500
	$	223,500	$	530,400

These promissory notes are payable upon demand and were not subject to any premium or penalty for prepayment. The loan interest rate is 8% per annum, except for 12% loan interest rate for JAZFund, payable monthly in arrears on the outstanding balance. An additional 4% interest is charged on any notes exceeding maturity. In addition, post maturity notes are compounded monthly.

Net cash used in operating activities for the three-month period ended March 31, 2010 decreased to approximately $146,000 compared to approximately $473,000 in the three-month period ended March 31, 2009. As of March 31, 2010, our accounts payable and accrued expenses were approximately $3.4 million, of which a majority is composed of professional fees. We are currently in arrears with loan and interest payments as well as with a majority of our vendors. Mr. Stein has not drawn cash compensation from Apogee since June 30, 2009, nor has the Board of Directors received cash compensation since early 2008. We have accrued Mr. Stein’s salary and the Board of Directors’ compensation.

Net cash used in investing activities for the three months ended March 31, 2010 was approximately $78,000, compared to approximately $6,000 for the three months ended March 31, 2009. This amount is exclusively related to our continued support of existing patent applications related to our Life Science Group.

Net cash provided by financing activities was approximately $223,000 for the three months ended March 31, 2010. This compares to approximately $481,000 for the three months ended March 31, 2009 and approximately $1.1 million for the twelve months ended December 31, 2009. During the three month period ended March 31, 2010, we received the proceeds from unsecured interest bearing promissory notes totaling $223,500 as described above. These loans are payable upon demand and are not subject to any premium or penalty for prepayment. The loan interest rate is 8% per annum, except for 12% per annum for JAZFund LLC, payable monthly in arrears on the outstanding balance. An additional 4% interest will be charged on any notes exceeding maturity. In addition, post maturity notes are compounded monthly. See Footnote 6 of the consolidated financials statements - Promissory Notes, Loans and Warrants. We are currently in default on substantially all of the promissory notes. We must raise additional capital to continue operations.

Apogee is in the process of attempting to secure sufficient financing, to pay its indebtedness and to continue operations. We have been working to obtain financing from outside investors for more than 24 months, but have not yet been successful. As of June 30, 2010, subsequent to the conversion of $585,000 in promissory notes by Mr. Robert Schacter et al, approximately $2.5 million in promissory notes are in default. In the interim, short-term debt financing provided primarily by two of Apogee’s significant shareholders, including our President, Chief Executive Officer and Chairman of the Board of Directors and Mr. David Spiegel, as well as Mr. Robert Schacter, et al and others, is being utilized to preserve our intellectual property, maintain our technical capabilities and know-how, and support our technology development in accordance with our licensing agreement. Due to the early stages of development of our products technology, we cannot estimate at this time the amounts of cash and length of time that will be required to bring our products under development to market. It is expected that such costs will be funded not only by external financing, but also through partnership activities. Additionally, discontinuations of sensor development, deferral of capital expenditures, and reduced general spending have been instituted until such time as financing is secured. We do not expect any significant changes in the number of employees until funding has been secured, if ever. If we are unable to generate or obtain financing, we will be required to further curtail our operations, including a reduction in the number of employees, or cease conducting business.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Apogee prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates, judgments and assumptions that we believe are reasonable based upon the information currently available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Any future changes to these estimates and assumptions could have a significant impact on the reported amounts of revenue, expenses, assets and liabilities in our financial statements. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Development Stage Company

Revenue Recognition

Consulting and licensing revenue will be recognized as services are performed.

Royalty revenue will be recognized when earned in accordance with the underlying agreements.

Valuation/Impairment of Long-Lived Assets

Property, plant and equipment, patents and trademarks are amortized over their estimated useful lives. Useful lives are based on management’s estimates over the period that such assets will potentially generate. In accordance with ASC Topic 360, "Property, Plant and Equipment," long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The conditions considered include whether or not the asset is in service, has become obsolete, or whether external market circumstances indicate that the carrying amount may not be recoverable. We recognize a loss for the difference between the estimated fair value of the asset and the carrying amount. The fair value of the asset is measured using either available market prices or estimated discounted cash flows. Future adverse changes in market conditions or poor operating results of underlying capital investments or certain assets could result in losses or an inability to recover the carrying value of such assets, thereby possibly requiring an impairment charge in the future. Based on our analysis, no asset impairment charges were considered necessary for the three months ended March 31, 2010. At March 31, 2009, we recorded a patent impairment charge of approximately $17,000 to reflect the write-off of patent costs associated with the discontinuation of our Health Monitoring Group. Additionally, we amortize the balance of our patent applications over five years, which resulted in charges of $12,000 and $10,000 for the three months ended March 31, 2010, and March 31, 2009, respectively.

Stock-Based Compensation

Index

Legal Fees

We record legal costs (such as fees and expenses of outside legal counsel and other service providers) when incurred or when it is probable that a liability has been incurred on or before the balance sheet date and the amount can be reasonably estimated if invoices have not been received. Significantly lower legal fees were incurred three months ended March 31, 2010, compared to 2009 as a result of a decrease in legal fees in connection with the SEC investigation as well as decreased legal fees associated with the indemnification of our President, Chief Executive Officer and Chairman of the Board of Directors for the Shamy matter.

Contingencies

Apogee is involved in and/or indemnifies others in various legal proceedings. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. See Note 9 to the consolidated financial statements - Legal and Related Indemnification Arrangements with our Executives and Others.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements nor do we have any special purpose entities.

ITEM 3 – QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Apogee’s financial instruments include: cash, loans and accounts payable. At March 31, 2010, the carrying value of our cash, loans and accounts payable approximate fair values given the short maturity of these instruments.

We believe that our financial instruments do not carry a material foreign currency exchange rate risk since any international sales will be paid in U.S. dollars and material purchases from foreign suppliers are typically also denominated in U.S. dollars.

It is our policy not to enter into derivative financial instruments for speculative purposes.

ITEM 4T – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the design and operation of Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, the disclosure controls and procedures were effective to ensure that the information required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

(b) Changes in Internal Controls. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of such internal control that occurred during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Index

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

From time to time, we may be a party to various legal proceedings arising in the ordinary course of our business. If and when these proceedings arise, we are committed to vigorously defending ourselves in any such legal actions.

An investigation by the Security and Exchange Commission (“SEC”), which the Company first became aware of in May 2005, was ongoing in 2008. The subject matter of this investigation is the Company's prior revenue recognition practices that were addressed in the Company's restatement of its financial statements for the fiscal year ended December 31, 2004. As previously disclosed in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, as amended, Apogee’s Audit Committee, with the assistance of independent counsel, conducted an investigation into Apogee’s historical accounting practices that resulted in the implementation of remedial actions. See our Annual Report on Form 10-KSB for the year ended December 31, 2004, as amended, for detail regarding the restatement.

In July 2008, Apogee, it’s Chief Executive Officer and other employees received notifications from the Staff of the SEC relating to the Staff's 2005 investigation. These notifications, known as “Wells Notices,” stated that the Staff is considering recommending that the Commission bring enforcement actions against the Company and certain employees, based on alleged violations of certain provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933, as amended, Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1 and 13a-13 thereunder. The Wells Notice sent to the Company indicated that in any action actually brought against the Company, the Staff would seek an injunction against future violations of the federal securities laws as relief.

On May 19, 2009, the SEC settled the enforcement action with the Company, one employee, and one former employee (“Others”). Each of the Defendants has agreed to settle this matter, without admitting or denying the allegations of the SEC’s complaint. Apogee and Others agreed to the entry of a final judgment permanently enjoining them from violating or aiding and abetting violations of Sections of the Securities Act of 1933, as amended, and Sections of the Securities Exchange Act of 1934, as amended, and various Rules thereunder. Others also agreed to financial and other sanctions.

In addition, we incurred legal fees associated with the indemnification costs in connection with the civil action styled Joseph Shamy vs. Herbert M. Stein Case No.: 50 2005 CA 007719 XXXXMB. In this action instituted in the 15th Judicial Circuit in and for Palm Beach County, Florida (the "Court), Joseph Shamy sued Herbert M. Stein, President, Chief Executive Officer and Chairman of the Board of Apogee in connection with Shamy’s purchase of Apogee shares in 2003 and 2004. In February 2009, in connection with a settlement, the Court entered a Final Judgment against Mr. Stein. In early January 2010, a filing was made with the Court to memorialize the Total and Complete Satisfaction of Judgment, which states that all sums due under the civil action were fully paid and that the Final Judgment was satisfied and canceled. Further, the Clerk of the Court was directed to note satisfaction of the Final Judgment and cancellation of all judgments of record in this action. Apogee was not a party to the aforementioned settlement or the satisfaction of the Final Judgment. See Note 9 to the consolidated financial – Subsequent Events – Legal and Related Indemnification Arrangements with our Executive and Others.

Due to its financial condition, the Company had been unable to fund payments to its independent auditors as well as its financial printer. Accordingly, it did not timely file its 2008 Annual Report on Form 10-K, as well as quarterly reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009, and September 30, 2009. Additionally, we did not file timely Current Reports on a Form 8-K and reports under Section 16 of the Securities Exchange Act of 1934, as amended. Subsequently, during the fourth quarter of 2009, we paid the outstanding balance to our auditors and filed our Annual Report on 10-K for the fiscal year ended December 31, 2008 on December 18, 2009.

On October 28, 2009, the Company received a “Wells Notice” from the Staff of the SEC, which stated the Staff’s intent to recommend that the SEC institute a public administrative proceeding against the Company, alleging that it violated Section 13(a) of the Securities Exchange Act of 1934, as amended for failing to file its 2008 Form 10-K and other periodic reports.

In connection with the contemplated proceedings, the Staff may seek a suspension or revocation of each class of the Company’s registered securities. Also, the Staff may consider whether contempt proceedings in a federal district court are appropriate. The Company submitted a response to this letter on November 16, 2009. Should suspension or revocation of registration of our stock occur, the Company’s ability to raise additional funding may be severely impacted. On December 18, 2009 we filed our 2008 Annual Report on Form 10-K and our 2009 Quarterly Reports on Form 10-Q for the periods ended March 31, 2009,June 30, 2009, and September 30, 2009 in January 2010.

Index

ITEM 1A – RISK FACTORS

There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

Aside from those risks discussed below, there have been no material changes to the risk factors included in our Annual Report on Form-10K for the fiscal year ended December 31, 2009.

RISKS RELATED TO OUR BUSINESS

WE REQUIRE ADDITONAL CAPITAL TO CONTINUE OPERATIONS AND HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES.

As of March 31, 2010, we had approximately $4,000 in cash, a stockholders’ deficiency of approximately $6.4 million, an accumulated deficit of approximately $35.5 million and a working capital deficit of approximately $6.7 million. We had a net loss of approximately $456,000 for the three months ended March 31, 2010, compared to a net loss of approximately $691,000 for the three months ended March 31, 2009. In the fiscal year ended December 31, 2009, we recorded a net loss of approximately $2.2 million.

We have substantial debt and interest obligations and expect to incur additional debt to the extent available, to maintain our operations. As of July 28, 2010 and subsequent to the conversion of $585,000 of promissory notes into 585,000 shares of Apogee Common Stock at $1.00 per share, we had approximately $2.9 million in promissory notes and loans outstanding to a significant shareholder, our President, Chief Executive Officer and Chairman of the Board of Directors, individual investors and others. These promissory notes are payable upon demand, not subject to any premium or penalty for prepayment, bear simple interest of 8% or for JAZFund LLC 12% per annum until maturity,. An additional 4% interest compounded monthly is charged on all post-maturity notes. We are currently in default on substantially all of the promissory notes.

We have large unpaid balances with professional. We are currently in arrears with loan and interest payments and a majority of our vendors.

As of March 31, 2009 and October 13, 2009, respectively, Apogee’s Directors and Officers Liability Insurance and other business insurance were cancelled due to non-payment and the Company maybe required to pay uninsured losses and/or cease operations due to these potential uninsured losses.

In connection with the contemplated proceedings, the staff may seek a suspension or revocation of each class of the Company’s registered securities. Also, the staff may consider whether contempt proceedings in a federal district court are appropriate. The Company submitted a response to this letter on November 16, 2009. On December 18, 2009 we filed our 2008 Annual Report on Form 10-K and our 2009 Quarterly Reports on Form 10-Q for the periods ended March 31, 2009, June 30, 2009 and September 30, 2010 in January 2010.

Index

The SEC and the Company subsequently entered into a Settlement agreement without the above mentioned Hearing, under which the Company would file all its delinquent filings without a material deficiency by a mutually agreed date. Failure to do so would activate an Order to revoke the ability for the Company’s securities to trade on an exchange.

Even if we are able to secure additional financing to support our operations and repay our existing indebtness, our ability to generate future revenue and achieve profitability depends on a number of factors, many of which are described in the Risk Factors Section of Annual Report on Form 10-K for the fiscal year ended December 31, 2009, including our ability to develop and generate revenues from our medical device products, which are at a very early stage of development. We cannot assure you when, if ever, we will generate meaningful revenues from the sales of these products under development.

IF OUR ATTEMPTS TO SECURE ADDITIONAL FINANCING ARE NOT SUCCESSFUL, WE WILL BE REQUIRED TO CEASE OR CURTAIL OUR OPERATIONS, OR OBTAIN FUNDS ON UNFAVORABLE TERMS. THESE FACTORS CREATE A SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Our available resources are not sufficient to fund our operations, without additional sources of financing we would not be able to continue our business, and we expect to incur operating losses for the foreseeable future. Consequently, in order to maintain our operations, which we have already curtailed substantially, we will need to access additional equity or debt capital. Securing financing is proving even more difficult than anticipated in light of the current global economic crisis and the turmoil impacting global financial markets. These factors create a substantial doubt about our ability to continue as a going concern. In light of our negative stockholders’ equity, there can be no assurance that we will be able to obtain the necessary additional capital on a timely basis or on acceptable terms, if at all, to continue our operations and, to the extent available, to fund the development of our business. In any of such events, the continuation of our operations would be materially and adversely affected and we may have to cease conducting business.

As noted above, Apogee is in the process of attempting to secure sufficient financing to continue operations. We have been working to obtain financing from outside investors for more than 24 months, but have not yet been successful. In the interim, short-term debt financing provided primarily by two of Apogee’s significant shareholders, including our President, Chief Executive Officer and Chairman of the Board of Directors and Mr. David Spiegel, as well as Mr. Robert Schacter, et al and others, is being utilized to preserve our intellectual property, maintain our technical capabilities and know-how, and support our technology development in accordance with our licensing agreement. Additionally, cost cutting measures, including deferral of capital expenditures, non-payment of professional and other service providers and reduced general spending have been instituted until such time as financing is secured, if ever. If we are unable to obtain financing, we will be required to further curtail our operations or cease conducting business. Given our current level of debt, we do not expect that our stockholders would receive any proceeds if we declare bankruptcy or seek to liquidate the Company. As of March 31, 2009, we closed down operations of the Health Monitoring Product Group. Costs associated with this cessation of operations as well as the termination of employees associated with this Group were not material.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document and the documents incorporated by reference herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Also, Apogee’s management may make forward-looking statements orally or in writing to investors, analysts, the media and others. Forward-looking statements express our expectations or predictions of future events or results. They are not guarantees and are subject to many risks and uncertainties. There are a number of factors that could cause actual events or results to be significantly different from those described in the forward-looking statements. Forward-looking statements might include statements regarding one or more of the following:

anticipated financing activities;

anticipated strategic alliances or arrangements with development or marketing partners;

anticipated research and product development results;

Index

projected development and commercialization timelines;

descriptions of plans or objectives of management for future operations, products or services;

forecasts of future economic performance; and

descriptions or assumptions underlying or relating to any of the above items.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts or events. They use words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “opportunity”, “plan”, “potential”, “believe” or words of similar meaning. They may also use words such as “will”, “would”, “should”, “could” or “may”.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such statements. We do not intend to update any of the forward-looking statements after the date of this report to conform such statements to actual results except as required by law. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. You should carefully consider that information before you make an investment decision. You should review carefully the risks and uncertainties identified in this report and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period ended March 31, 2010, our unregistered sales of equity securities were reported on Current Reports on Form 8-K.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

As of March 31, 2010, $2,649,900 was in default and accruing post-maturity interest. The promissory notes listed below now bear interest at 12% with the exception of one promissory note which now bears interest at 16%, the interest after maturity, are payable on demand, and are compounded monthly as a result of non-payment at maturity date.

David Spiegel
Date of Promissory Note	Maturity Date	Amount Accruing Post Maturity Interest Interest at 12%

December 12, 2007	March 10, 2008	$	150,000
February 21, 2008	August 19, 2008		100,000
March 20, 2008	September 16, 2008		100,000
April 1, 2008	September 28, 2008		50,000
May 15, 2008	November 11, 2008		50,000
June 16, 2008	December 13, 2008		65,000
June 18, 2008	December 15, 2008		50,000
July 15, 2008	January 11, 2009		50,000
July 28, 2008	January 24, 2009		50,000
August 12, 2008	February 8, 2009		35,000
August 27, 2008	February 23, 2009		35,000
September 5, 2008	March 4, 2009		35,000
October 27,2008	April 25 ,2009		35,000
January 9, 2009	July 5, 2009		80,000
March 19, 2009	September 15, 2009		64,000
May 19, 2009	November 15, 2009		35,000
June 10, 2009	December 7, 2009		25,000
July 1, 2009	December 28, 2009		32,000
Total		$	1,041,000

Index

Herbert M. Stein
Date of Promissory Note	Maturity Date	Amount Accruing Post Maturity Interest Interest at 12%

December 12, 2007	March 10, 2008	$	250,000
February 21, 2008	August 19, 2008		100,000
March 20, 2008	September 16, 2008		50,000
April 1, 2008	September 28, 2008		50,000
May 15, 2008	November 11, 2008		50,000
June 16, 2008	December 13, 2008		35,000
June 18, 2008	December 15, 2008		40,000
July 15, 2008	January 11, 2009		30,000
July 28, 2008	January 24, 2009		50,000
August 12, 2008	February 8, 2009		35,000
August 27, 2008	February 23, 2009		35,000
September 5, 2008	March 4, 2009		35,000
October 27, 2008	April 25, 2009		25,000
February 2, 2009	August 1, 2009		30,000
February 17, 2009	August 16, 2009		10,000
March 19, 2009	September 15, 2009		25,900
April 13, 2009	October 10, 2009		33,000
May 18, 2009	November 14, 2009		12,000
July 1, 2009	December 28, 2009		20,000
Total		$	915,900

Robert Schacter et al
Date of Promissory Note	Maturity Date	Amount Accruing Post Maturity Interest Interest at 12%

September 5, 2008	March 4, 2009	$	140,000
October 27, 2008	April 25, 2009		100,000
January 8, 2009	July 7, 2009		100,000
February 2, 2009	August 1, 2009		50,000
February 17, 2009	August 16, 2009		50,000
March 19, 2009	September 15, 2009		50,000
April 13, 2009	October 10, 2009		20,000
June 10, 2009	December 7, 2009		25,000
Total		$	535,000

Index

Others
Date of Promissory Note	Maturity Date	Amount Accruing Post Maturity Interest Interest at 12%

July 28, 2008	January 24, 2009	$	20,000
October 27, 2008	April 25, 2009		6,000
January 6, 2009	July 5, 2009		500
February 17, 2009	August 16, 2009		37,000
March 19, 2009	September 15, 2009		500
April 13, 2009	October 10, 2009		31,500
April 13, 2009*	October 10, 2009		30,000
May 18, 2009	November 14, 2009		32,000
May 19, 2009	November 15, 2009		500
		$	158,000

* Post maturity interest at 16% for JAZFund LLC

ITEM 4T – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5 – OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

(a) Exhibits:

Exhibit
Number		Description
10.1+		Promissory Note dated as of January 25, 2010 by and between Apogee Technology, Inc. and David Spiegel. (Previously filed on a Current Report on Form 8-K, January 27, 2010.)
10.2+		Promissory Note dated as of January 25, 2010 by and between Apogee Technology, Inc. and Herbert M. Stein. (Previously filed on a Current Report on Form 8-K, January 27, 2010.)
10.3+		Promissory Note dated as of January 25, 2009 by and between Apogee Technology, Inc. and Friedrich Reiner. (Previously filed on a Current Report on Form 8-K, January 27, 2010.)
10.4+		Form of Warrant. (Previously filed on a Current Report on Form 8-K, January 27, 2010.)
10.5+		Promissory Note dated as of February 22, 2010 by and between Apogee Technology, Inc. and Herbert M. Stein. (Previously filed on a Current Report on Form 8-K, February 24, 2010.)
10.6+		Form of Warrant. (Previously filed on a Current Report on Form 8-K, February 24, 2010.)

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer and Chief Financial Officer.

+ Previously filed as indicated.

Index

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	APOGEE TECHNOLOGY, INC.

Date: August 13, 2010	By:	/s/	Herbert M. Stein
	Name: Herbert M. Stein
	Title: Chairman of the Board,
	President, Chief Executive Officer
	(principal executive officer)


	APOGEE TECHNOLOGY, INC.

Date: August 13, 2010	By:	/s/	Paul J. Murphy
	Name: Paul J. Murphy
	Title: Chief Financial Officer and Vice President of Finance
	(principal financial officer and principal accounting officer)