AS FILED WITH THE |
effective. o x o o AMERICAN TECHNOLOGY CORPORATION Distribution” on page . We have over 45 patents issued in the United States and more than 55 patents issued internationally. heading “Issuance of Securities to Selling Stockholders”, commencing on page of this prospectus. An investment in our company involves a high degree of risk. In addition to the other information included in this prospectus, you should carefully consider the following risk factors in determining whether or not to purchase the shares of common stock offered under this prospectus. You should consider these matters in conjunction with the other information included or incorporated by reference in this prospectus. Our results of operations or financial condition could be seriously harmed, and the trading price of our common stock may decline due to any of these or other risks. below. The growth of our Government Group revenues is materially dependent on acceptance of our LRAD and MRAD products by government, military and developing force protection and emergency response agencies, and if these agencies do not purchase our products, our revenues will be adversely affected. Our products have never been produced in quantity, and we may incur significant and unpredictable warranty costs as these products are mass produced. sell the products in our inventory. Therefore, periodically, it may be necessary to write off inventory as excess or obsolete. Sound reproduction markets are subject to rapid technological change, so our success will depend on our ability to develop and introduce new technologies. Our competitive position will be seriously damaged if our products are found to infringe on the intellectual property rights of others. We may not be successful in obtaining the necessary licenses required for us to sell some of our products abroad. We derive revenue from government contracts and subcontracts, which are often non-standard, may involve competitive bidding, may be subject to cancellation with or without penalty and may produce volatility in earnings and revenue. control over financial reporting. Our stock price is volatile and may continue to be volatile in the future. least $10 million. other successors. Any Securities Act. The PART II Delaware General Corporation Law. If any amendment to the Delaware General Corporation Law authorizes the further elimination of liability of our directors, then the liability of our directors will be limited to the fullest extent permitted by the Delaware General Corporation Law as so amended. ITEM 16. INDEX TO EXHIBITS. ITEM 17. UNDERTAKINGS. Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of San Diego, State of California, on this EXHIBIT INDEXUNITED STATES
SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 2005
Number, Including Area Code, of
Registrant’s Principal Executive Offices)Kalani JonesPresident and Chief Operating OfficerSteffani M. Stevens,APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:effective[_][X][_][_][_]oTitle of Each Class of
Securities to be RegisteredAmount to be
Registered (1)Proposed Maximum
Offering Price Per UnitProposed Maximum
Aggregate Offering PriceAmount of
Registration FeeCommon Stock, par value $0.00001 3,959,782 shares $9.425 per share(2) $37,320,945.35 $4,393 (1) In the event of a stock split, stock dividend or similar transaction involving the common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act of 1933. (2) Estimated solely for the purpose of computing the registration fee required by Section 6(b) of the Securities Act of 1933 and computed pursuant to Rule 457(c) under the Securities Act of 1933 based upon a per share price of $9.425,$5.305, the averagearithmetic mean of the high ($9.60)5.40) and low ($9.25)5.21) prices of the common stock on January 21,August 10, 2005, as quoted on the NASDAQ SmallCap Market. It is not known how many shares will be purchased under this registration statement or at what priceprices shares will be purchased.THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGIS-TRA-TION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECU-RITIES AND THE SELLING STOCKHOLDERS ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDER MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND THE SELLING STOCKHOLDER IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.JANUARY 24,AUGUST 15, 2005PROSPECTUS3,959,7824,603,270 SHARESresalesale or other disposition of up to 3,959,7824,603,270 shares of common stock or interests therein by Kingsbridge Capital Limited. Kingsbridge is sometimes referred tothe selling stockholders identified in this prospectus as theprospectus. The selling stockholder. Kingsbridge may acquire these shares from us pursuant to a Committed Equity Financing Facility and/or a warrant that we issued to Kingsbridge in connection with the Committed Equity Financing Facility. Kingsbridgestockholders will receive all of the proceeds from the sale or other disposition of the shares of common stock hereunder and weor interests therein under this prospectus. We will, pay all underwriting discounts and selling commissions, if any, applicable tohowever, receive the proceeds from the sale of such shares.shares of our common stock to certain selling stockholders to the extent they exercise for cash their warrants identified in this prospectus. We will pay the expenses incurred in registering the shares, including legal and accounting fees. However, we will receive proceeds from the sale of shares of common stock described in this prospectus or interests therein in public or private transactions, on or off the NASDAQ SmallCap Market, at prevailing market prices, or at privately negotiated prices. The selling stockholders may sell shares directly to Kingsbridge underpurchasers or through brokers or dealers. Brokers or dealers may receive compensation in the Committed Equity Financing Facility (which provides forform of discounts, concessions or commissions from the saleselling stockholders. See the “Plan of up to $25 million of shares of our common stock) or upon the exercise of the warrant. Kingsbridge is an “underwriter” within the meaning of the Securities Act of 1933 with respect to this offering.January 21,August 10, 2005, the last reported sale price for our common stock on the NASDAQ SmallCap Market was $9.34$5.32 per share.The securities offered involveAn investment in our common stock involves a high degree of risk. See the heading “Risk Factors” commencing on page 3 of this prospectus for a discussion of these risks.________________,is August ___, 2005The Company 1 The OfferingRisk Factors2 3 Risk Factors3 Special Note Regarding Forward Looking Statements 17 16 Use of Proceeds 17 16 The Committed Equity Financing FacilityIssuance of Securities to Selling Stockholders17 16 Selling StockholderStockholders21 18 Plan of Distribution 22 Legal Matters 24 23 Experts 24 Where You Can Find More Information 24 Information Incorporated by Reference 25 24 stockholderstockholders have authorized anyone to provide you with additional or different information. The selling stockholder isstockholders are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference. innovative proprietary sound technologies provide us a significant competitive advantage in our principal markets. We believe we are the leader in developing and commercializing parametric loudspeakers, branded as HyperSonic® sound or HSS®. We believe we are also the leader in developing and commercializing high intensity directed acoustical devices, branded as our Long Range Acoustic Device or LRAD™ and Medium Range Acoustic Device or MRAD™. We have filed over 70150 patent applications in the United States, and we have filed over 90300 patent applications internationally covering our various sound technologies and products.are expandinghave recently expanded our LRADacoustic device product family by (a) introducing a new force protection product, the MRAD, a smaller and more portable product that complements our existing LRAD device; (b) introducing and signing the first license agreement for our new SoundVector scaleable, directional sound product; and (c) introducing a new NeoPlanar product line for emergency notification and general announcing markets whichthat require high intelligibility, andintelligibility. In our fiscal quarter ending September 30, 2005, we expect to begin deliveries of the H450, our latest generation HSS product model employing a new plastic emitter. The H450 provides improved performance over our previous models at approximately half the cost. We are utilizing our technologies and products to provide solutions for difficult acoustic challenges. We offer our products for sale worldwide, but expect the largest markets to be the United States, Europe and Asia. Ourbelow.below:Our HyperSonic sound, or HSS, technology is a new parametric speaker technology that creates sound “in the air.” Sound is generated along an air column using ultrasonic frequencies, which are those above the normal range of hearing. The HSS sound beam is highly directional and maintains sound volume over longer distances than traditional loudspeakers. We believe our substantial intellectual property portfolio and pioneering HSS products support our leadership position in the field of parametric non-linear acoustics for sound reproduction. In October 2004, we released our HSS Generation III (T120 and T220) product family, which has higher reliability, lower distortion and higher output levels than previous models of our HSS products.Our Long Range Acoustic Device, or LRAD technology produces variable intensity acoustical sound intended for use in long-range delivery of directional sound information, which is effectively a supercharged megaphone. LRAD products are designed and used as directed long-range hailing and warning systems by both government and commercial customers. We believe our LRAD product innovation, our growing engineering capabilities, and our manufacturing and marketing competencies have established us as the leader in this new marketplace. We are marketing LRAD throughout the U.S. Department of Defense as “The Sound of Force Protection™”, and our markets are expanding to include law enforcement and commercial customers with significant security concerns. In fiscal 2004, we developed a remote controlled pan/tilt version of LRAD for critical infrastructure force protection applications, and we demonstrated our competency to engineer additional new sound solutions for the U.S. Department of Defense.Our NeoPlanar® technology is a thin film magnetic speaker that produces sound of high quality, low distortion and high volume. NeoPlanar applications include high-end sound, emergency notification and public address systems. In fiscal 2004, we began marketing NeoPlanar for use in large indoor spaces and in outdoor environments for emergency notification. NeoPlanar offers customers a new capability by delivering remarkably intelligible communications in difficult spaces such as aircraft hangar bays and at distances up to one-half mile.· OurHyperSonic sound, or HSS, technology is a new parametric speaker technology that creates sound “in the air.” Sound is generated along an air column using ultrasonic frequencies, which are those above the normal range of hearing. The HSS sound beam is highly directional and maintains sound volume over longer distances than traditional loudspeakers. We believe our substantial intellectual property portfolio and pioneering HSS products support our leadership position in the field of parametric non-linear acoustics for sound reproduction, as we continue to improve and release higher reliability, lower distortion and higher output level models of our HSS products. Our SoundCluster™ technology is a new multi-element speaker cluster optimized for even sound coverage over large areas. Our SoundCluster product offers an improved level of intelligibility and clarity in high ambient noise environments. The SoundCluster satisfies flight deck safety and large area emergency notification requirements. The flexible and ruggedized SoundCluster design lends itself to installation in harsh environments, where conventional speakers may fail. During fiscal 2004, we deployed the first SoundCluster for use on a U.S. naval warship.· Our LRAD and MRAD products incorporate technology which produces variable intensity acoustical sound intended for use in long-range and medium-range delivery of directional sound information, effectively a supercharged megaphone. Both LRAD and MRAD products are designed and used as directed hailing and warning systems by both government and commercial customers. We believe our LRAD and MRAD product innovation, our growing engineering capabilities, and our manufacturing and marketing competencies have established us as the leader in this new marketplace. We are marketing these products throughout the U.S. Department of Defense as “The Sound of Force Protection™”, and expanding target markets to include law enforcement and commercial customers with significant security concerns. In fiscal 2004, we developed a remote controlled pan/tilt version of LRAD for critical infrastructure force protection applications, and we demonstrated our competency to engineer additional new sound solutions for the U.S. Department of Defense. In 2005, we introduced the MRAD. MRAD is about half the size and weight of LRAD, and provides effective hailing and warning at approximately half the range of LRAD. The portable MRAD is expected to be particularly effective on armored vehicles for urban warfare, shorter-range checkpoints and access denial, plus multiple applications for local, national and international law enforcement. · Our NeoPlanar® technology is a thin film magnetic speaker that produces sound of high quality, low distortion and high volume. NeoPlanar applications include high-end sound, emergency notification and public address systems. In fiscal 2004, we began marketing NeoPlanar for use in large indoor spaces and in outdoor environments for emergency notification. NeoPlanar offers customers a new capability by delivering remarkably intelligible communications in difficult spaces such as aircraft hangar bays and at distances up to one-half mile. · Our SoundCluster™ technology is a new multi-element speaker cluster optimized for even sound coverage over large areas. Our SoundCluster product offers an improved level of intelligibility and clarity in high ambient noise environments. The SoundCluster satisfies flight deck safety and large area emergency notification requirements. The flexible and ruggedized SoundCluster design lends itself to installation in harsh environments, where conventional speakers may fail. During fiscal 2004, we deployed the first SoundCluster for use on a U.S. naval warship. included inoffered by this prospectus is approximately 19.99%19.0% of our common shares outstanding on December 31, 2004. The numberAugust 2, 2005, and 17.8% of our common stock assuming the issuance of the 1,686,919 shares outstanding does not include the 3,959,782 shares included inoffered by this prospectus thatwhich may be issued pursuant to the Common Stock Purchase Agreement we entered into with Kingsbridge and upon exercise of various warrants described under the warrant we entered into with Kingsbridge.internetInternet website is located atwww.atcsd.com. http://www.atcsd.com/ The information on our website is not part of this prospectus.THE OFFERINGRISK On December 14, 2004, we entered into a Common Stock Purchase Agreement with Kingsbridge Capital Limited which established a Committed Equity Financing Facility. Under the Committed Equity Financing Facility we may, at our sole discretion, sell to Kingsbridge and Kingsbridge has committed to purchase subject to certain significant limitations and conditions precedent, up to $25,000,000 of our common stock. As part of this arrangement, we issued a warrant to Kingsbridge to purchase 275,000 shares of our common stock at a price of $8.60 per share. The warrant is exercisable beginning June 14, 2005 and until June 14, 2010. Kingsbridge is the selling stockholder under this prospectus, is offering for sale up to 3,959,782 shares of our common stock that it may acquire under the Committed Equity Financing Facility or upon exercise of the warrant. The number of shares ultimately offered for sale by Kingsbridge is dependent upon the number of shares (i) we may decide to sell to Kingsbridge under the Committed Equity Financing Facility at our sole discretion, subject to certain significant limitations and conditions precedent, and (ii) we may be required to sell to Kingsbridge upon exercise of the warrant. Kingsbridge does not have the right or the obligation to purchase our stock under the Committed Equity Financing Facility in the event that our stock is trading below $3.41 per share. We will not receive any proceeds from the sale of any of the shares offered and sold by Kingsbridge. However, we may receive up to $25 million in gross proceeds from the sale of our stock to Kingsbridge under the Committed Equity Financing Facility, and up to approximately $2.4 million upon exercise of the warrant. We are obligated to use 40% of any funds we receive from sales of shares under the Committed Equity Financing Facility, but not funds we receive upon exercise of the warrant, to prepay any outstanding interest and principal under promissory notes we sold in December 2004 with an aggregate principal amount of $2 million. We plan to use all other funds received from Kingsbridge under the Committed Equity Financing Facility and upon exercise of the warrant, for general corporate and working capital purposes.-2-Table of Contents FACTORSRISK FACTORSStatements.”Statements” on page SeptemberJune 30, 2004,2005, we had an accumulated deficit of $42,327,493. In addition, for fiscal 2004, we incurred a net loss of $5,960,436.$49,060,128. We need to generate additional revenue to be profitable in future periods. Failure to achieve profitability, or maintain profitability if achieved, may cause our stock price to decline.government spending levels;introduction of new competing technologies;· government spending levels; failure of sales from our Government and Force Protection Group, or Government Group, and our Business Products and Licensing Group to meet planned projections;product mix and effect on margins; and· introduction of new competing technologies; acceptance of our products in new markets.· failure of sales from our Government Group and Commercial Group to meet planned projections; · product mix and effect on margins; and · acceptance of our products in new markets. Table of ContentsThe Committed Equity Financing Facility may have a significant dilutive impact on our stockholders, and the potential unavailability of this facility would negatively affect our financing activities. We have entered into a Committed Equity Financing Facility with Kingsbridge Capital Limited. Under the terms of our agreement with Kingsbridge, we may, at our sole discretion, sell to Kingsbridge, and Kingsbridge would be obligated to purchase, shares of our common stock for up to $25 million in proceeds to us. The price at which we may sell shares of common stock under the agreement is based on a discount to the volume weighted average market price of the common stock for fifteen trading days following each of our elections to sell shares. For each election to sell shares, we select the lowest threshold price at which our stock may be sold, but the threshold price cannot be lower than $3.00 per share. In the event the market price of our common stock falls below $3.41 per share, which after giving affect to the discount would result in a price per share lower that the $3.00 minimum threshold price, the Committed Equity Financing Facility will not be an available source of financing. In addition, we are obligated to use 40% of the proceeds we may raise from the Committed Equity Financing Facility to prepay any outstanding interest and principal on promissory notes we sold in December 2004 with an aggregate principal amount of $2 million. Our agreement with Kingsbridge permits Kingsbridge to terminate the Committed Equity Financing Facility if Kingsbridge determines that a material and adverse event has occurred affecting the business, operations, properties or financial condition of our company, or if any situation occurs that would interfere with our ability to perform any of our obligations under the agreement. The issuance of shares under the Committed Equity Financing Facility will have a dilutive impact on other stockholders and the issuance or even potential issuance of such shares could have a negative effect on the market price of our common stock. In addition, if we draw down the Committed Equity Financing Facility, we will issue shares to Kingsbridge at a discount ranging from 8% to 12% of the daily volume weighted average prices of our common stock during the fifteen day trading period after initiation of each draw down. Issuing shares at such a discount will further dilute the interests of other stockholders. To the extent that Kingsbridge sells shares of our common stock issued under the Committed Equity Financing Facility under this prospectus, our stock price may decrease due to the additional selling pressure in the market. The perceived risk of dilution from sales of stock to or by Kingsbridge may cause holders of our common stock to sell their shares, or it may encourage short sales. This could contribute to a decline in our stock price.The Committed Equity Financing Facility imposesequity financings impose certain liquidated damages and limitations on our ability to issue future priced securities. These liquidated damages and limitationswhich may significantly impair our liquidity and ability to raise capital. The termsCommitted Equity Financing Facility require usselling stockholders, pursuant to which we agreed to prepare and file the registration statement of which this prospectus forms a part covering the resale of the shares of common stock sold in the financing as well as the shares of common stock issuable upon the exercise of the warrants sold in the financing. If, among other reasons, those selling stockholders are unable to re-sell their shares purchased in the financing or acquired upon exercise of their related warrants, we may be obligated to pay liquidated damages in the event that a registration statement is not available for the resale of securities purchased by Kingsbridge under the Committed Equity Financing Facility or by exercise of its warrant. Except for certain permitted periods of ineffectiveness described below, we are obligated to pay to Kingsbridgethose selling stockholders in an amount up to $2.5 million, equal to0.5% of the numbergross proceeds we received in that financing per month until January 14, 2006, and 1% of shares purchased underthose gross proceeds per month thereafter. Similar provisions regarding the Committed Equity Financing Facility and held by Kingsbridge at the date the registration statement becomes unavailable, multiplied by any positive difference in price between the volume weighted average price on the trading day prior to such periodpayment of unavailability and the volume weighted average price on the first trading day after the period of unavailability. We may, in lieu of paying such liquidated damages offerapply to repurchase the securities held by Kingsbridge for a price equal to the volume weighted average price on the trading day prior to such period of unavailability.-4-Table of Contents We are permitted to suspend the availability of the registration statement if there is material undisclosed information then existing or iffinancing we intend to file another registration statement. However, if we suspend theentered into in July 2003. The registration statement for more than 30 days during any calendar year or more than six times in any twelve month period, we are obligated to pay Kingsbridge liquidated damages. These liquidated damages provisions generally provide that if the registration statementfinancing has been filed and is suspended within fifteen trading days following any settlement datecurrently effective.purchasethree months ended June 30, 2005, the same two customers and their affiliates accounted for 89% of our stock underrevenues for the Committed Equity Financing, we shall pay Kingsbridge a percentage of the decline in value, if any, of shares held by Kingsbridge during the time the availability of the registration statement is suspended as follows: 75% if such notice of suspension is delivered prior to the fifth trading day after a settlement date, 50% if such notice of suspension is delivered on or after the fifth and prior to the tenth trading day after a settlement date, and 25% if such notice of suspension is delivered on or after the tenth and prior to the fifteenth trading day after a settlement date. The amount of such liquidated damages for any one period of suspension may not exceed $1.75 million. We may, in lieu of paying such liquidated damages, offer to repurchase the securities held by Kingsbridge for a price equal to the volume weighted average price on the trading day prior to such period of ineffectiveness. We may also elect to pay such liquidated damages in shares of common stock valued at the market value on the first trading day after such permitted suspension ends. The liquidated damages could severely affect our liquidity, or to the extent we are permitted to pay such damages through the issuance of common stock, cause dilution to our common stockholders. In addition, during the two-year term of the proposed Committed Equity Financing Facility, without the prior written consent of Kingsbridge, we are prohibited from issuing securities that are, or may become, convertible or exchangeable into shares of common stock where the purchase, conversion or exchange price for such common stock is determined using a floating or otherwise adjustable discount to the market price of the common stock (including pursuant to an equity line or other financing that is substantially similar to an equity line with an investor other than Kingsbridge). In the past, we met our capital needs through the sale of preferred stock and convertible notes which had floating price features. We may have difficulty raising capital if Kingsbridge does not consent to our use of such securities in the future. If we are unable to raise capital from Kingsbridge or from sources that do not demand a floating price feature, we may have to severely curtail our operations, which could cause a significant decrease in the price of our common stock.Two customers collectively accounted for more than half of our net revenues in fiscal 2004nine months ended June 30, 2005, and we continue to be dependent on a few large customers. For fiscal 2004, 47%62% of net revenues for the three months ended June 30, 2005 and a second customer and its affiliates accounted for 12% of revenues for the period. For the nine months ended June 30, 2005, ADS accounted for 79% of our revenues and General Dynamics, Armamentsa second customer and Technical Products, Inc., or GD-ATP,its affiliates accounted for 11%10% of our revenues. Both of theseThese customers distributed products they purchased from us to end users. GD-ATP is no longer a distributor for our products. ADS has havethe right to cease doing business with us at any time. If thatthis were to occur due to loss of demand for our products from their customers,and we could not replace them, our net revenues couldwould decline substantially. Any such decline could result in us incurring net losses, increasing our accumulated deficit and causing us to need to raise additional capital to fund our operations.We must expand our customer base in order to grow our business.-5-· our ability to manufacture reliable products that have the features that are required by our customers; · our ability to expand relationships with existing customers and to develop relationships with new customers that will lead to additional orders for our products; · our ability to develop and expand new markets for directed sound products; and · our ability to develop international product distribution directly or through strategic partners. Table of Contentsour ability to manufacture reliable products that have the features that are required by our customers;our ability to expand relationships with existing customers and to develop relationships with new customers that will lead to additional orders for our products;our ability to develop and expand new markets for directed sound products; andour ability to develop international product distribution directly or through strategic partners.to be usedfor use by both government and commercial customers, our LRADthe products have, to date, been predominatelypredominantly sold for government use. Within the Government Group, our largest customer is a reseller of our products to end users in various branches of the military such as the U.S. Navy, U.S. Marine Corps, U.S. Army and the Department of Homeland Security. We have only recently achieved significant sales of LRAD products and are beginning to offer MRAD products for sale in our fiscal fourth quarter, and neither of the product has not yetproducts have been widely accepted in the government market. Furthermore, the force protection and emergency response market is itself an emerging market which is changing rapidly. If our LRAD product isand MRAD products are not widely accepted by the government, military and the developing force protection and emergency response markets, we may not be able to identify other markets, and we may fail to achieve our sales projections.LRADMRAD technologies have only recently been introduced to market and are still being improved. Commercially viable sound technology systems may not be successfully and timely produced by us due to the inherent risks of technology development, new product introduction, limitations on financing, manufacturing problems, competition, obsolescence, loss of key technical personnel and other factors. Revenues from our sound products have been limited to date and we cannot guarantee significant revenues in the future. The development and introduction of our products took longer than anticipated by management and the introduction of new products could also be subject to delays. Customers may not wait for newer versions of existing products or new products and may elect to purchase products from competitors. We experienced quality control problems with some of our initial commercial HSS units, and we may not be able to resolve future similar problems in a timely and cost effective manner. Products employing our sound technology may not achieve market acceptance. Our various sound projects are high risk in nature, and unanticipated technical obstacles can arise at any time and result in lengthy and costly delays or result in a determination that further exploitation is unfeasible. If we do not successfully exploit our technology, our financial condition, and results of operations and business prospects would be adversely affected.-6-Table of Contents In fiscal 2003, due to performance failures of components in some of our first generation of HSS systems, we agreed to voluntarily replace emitters on an estimated 700 HSS Generation I units. SeptemberJune 30, 2004,2005, we had a warranty reserve of $331,917,$228,487. We recorded substantial warranty reserves in prior years for early versions of which $186,454 was reserved for this replacement program. During fiscal 2004, we incurredour HSS products and have little history to predict future warranty expense of $145,463 and we reduced our warranty reserve by $43,792 for products that were no longer under warranty. We also applied $89,254 of incurred costs against the special reserve for HSS Generation I units.costs. Future warranty costs could further adversely affect our financial position, results of operations and business prospects. The failure ratelatest HSS Generation IIIinventory may not be reducedadversely affected by changes in technology that affect our ability to acceptable levels. All of our fiscal 2004 revenues were generated fromand we expect these towill be the source of substantially all of our future revenues. Revenues from our sound proprietary reproduction technologies are expected to vary significantly due to a number of factors. Many of these factors are beyond our control. Any one or more of the factors listed below or other factors could cause us to fail to achieve our revenue expectations. These factors include:our ability to develop and supply sound reproduction components to customers, distributors or OEMs or to license our technologies;market acceptance of and changes in demand for our products or products of our customers;· our ability to develop and supply sound reproduction components to customers, distributors or OEMs or to license our technologies; gains or losses of significant customers, distributors or strategic relationships;unpredictable volume and timing of customer orders;· market acceptance of and changes in demand for our products or products of our customers; the availability, pricing and timeliness of delivery of components for our products and OEM products;fluctuations in the availability of manufacturing capacity or manufacturing yields and related manufacturing costs;· gains or losses of significant customers, distributors or strategic relationships; -7-· unpredictable volume and timing of customer orders; · the availability, pricing and timeliness of delivery of components for our products and OEM products; · fluctuations in the availability of manufacturing capacity or manufacturing yields and related manufacturing costs; the timing of new technological advances, product announcements or introductions by us, by OEMs or licensees and by our competitors;product obsolescence and the management of product transitions and inventory;· the timing of new technological advances, product announcements or introductions by us, by OEMs or licensees and by our competitors; unpredictable warranty costs associated with new product models;production delays by customers, distributors, OEMs or by us or our suppliers;· product obsolescence and the management of product transitions and inventory; seasonal fluctuations in sales;the conditions of other industries, such as military and commercial industries, into which our technologies may be licensed;· unpredictable warranty costs associated with new product models; general consumer electronics industry conditions, including changes in demand and associated effects on inventory and inventory practices;general economic conditions that could affect the timing of customer orders and capital spending and result in order cancellations or rescheduling; and· production delays by customers, distributors, OEMs or by us or our suppliers; general political conditions in this country and in various other parts of the world that could affect spending for the products that we offer.· seasonal fluctuations in sales; · the conditions of other industries, such as military and commercial industries, into which our technologies may be licensed; · general consumer electronics industry conditions, including changes in demand and associated effects on inventory and inventory practices; · general economic conditions that could affect the timing of customer orders and capital spending and result in order cancellations or rescheduling; and · general political conditions in this country and in various other parts of the world that could affect spending for the products that we offer. the timing and extent of our research and development efforts;investments and costs of maintaining or protecting our intellectual property;· the timing and extent of our research and development efforts; the extent of marketing and sales efforts to promote our products and technologies;the timing of personnel and consultant hiring;· investments and costs of maintaining or protecting our intellectual property; the cost of settling legal disagreements.· the extent of marketing and sales efforts to promote our products and technologies; and · the timing of personnel and consultant hiring. -8-Table of ContentsLRADMRAD for which there are no well established markets. As a result, our technologies, even if successful, may become obsolete before we recoup our investment.productand MRAD products is limited, and we may not be able to prevent others from introducing products with similar functionality. If this happens, any patent that we may obtain may not provide protection and our competitive position could be significantly harmed.-9-Table of Contentscease selling, incorporating or using products or services that incorporate the challenged intellectual property;obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, if at all; andredesign products or services that incorporate the disputed technology.· cease selling, incorporating or using products or services that incorporate the challenged intellectual property; · obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, if at all; and · redesign products or services that incorporate the disputed technology. -10-Table of Contentsorour products worldwide. The risks inherent in international trade may reduce our international sales and harm our business and the businesses of our customers and our suppliers. These risks include:changes in tariff regulations;political instability, war, terrorism and other political risks;· changes in tariff regulations; foreign currency exchange rate fluctuations;establishing and maintaining relationships with local distributors and dealers;· political instability, war, terrorism and other political risks; lengthy shipping times and accounts receivable payment cycles;import and export licensing requirements;· foreign currency exchange rate fluctuations; compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and regulatory requirements;greater difficulty in safeguarding intellectual property than in the U.S.;· establishing and maintaining relationships with local distributors and dealers; difficulty in staffing and managing geographically diverse operations.-11-· lengthy shipping times and accounts receivable payment cycles; · import and export licensing requirements; · compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and regulatory requirements; · greater difficulty in safeguarding intellectual property than in the U.S.; and · difficulty in staffing and managing geographically diverse operations. In addition, we establishedWe have historically used a manufacturing relationship with Pemstar, Inc. in fiscal 2004single third party contract manufacturer to manufacture our LRADother products, and HSS products. We do not havewe intend to continue to use a formal written agreement with Pemstar. Pemstar, or any othersingle manufacturer for these products in the future. A contract manufacturing partner may not be able or willing to manufacture products for us in the quantities and at the level of quality that we require. If we need to seek additional third party manufacturers for our products, we may not be able to obtain acceptable replacement manufacturing sources on a timely basis. An extended interruption in the supply of our products could result in a substantial loss of sales. In addition, any actual or perceived degradation of product quality as a result of our reliance on third party manufacturers may have an adverse effect on sales or result in increased product returns and buybacks. Failure to maintain quality contract manufacturing could reduce future revenues, adversely affecting financial condition and results of operations.-12-Table of Contentsinclude provisions that allow the government agency to terminate the contract without penalty under some circumstances;be subject to purchasing decisions of agencies that are subject to political influence; · include provisions that allow the government agency to terminate the contract without penalty under some circumstances; contain onerous procurement procedures; and be subject to cancellation if government funding becomes unavailable.· be subject to purchasing decisions of agencies that are subject to political influence; · contain onerous procurement procedures; and · be subject to cancellation if government funding becomes unavailable. problems assimilating the purchased technologies, products or business operations;-13-Table of Contentsproblems maintaining uniform standards, procedures, controls and policies; · problems assimilating the purchased technologies, products or business operations; unanticipated costs associated with the acquisition;diversion of management’s attention from our core business;· problems maintaining uniform standards, procedures, controls and policies; adverse effects on existing business relationships with suppliers and customers;risks associated with entering new markets in which we have no or limited prior experience;· unanticipated costs associated with the acquisition; potential loss of key employees of acquired businesses; andincreased legal and accounting costs as a result of the newly adopted rules and regulations related to the Sarbanes-Oxley Act of 2002.· diversion of management’s attention from our core business; · adverse effects on existing business relationships with suppliers and customers; · risks associated with entering new markets in which we have no or limited prior experience; · potential loss of key employees of acquired businesses; and · increased legal and accounting costs as a result of the newly adopted rules and regulations related to the Sarbanes-Oxley Act of 2002. SECSecurities and Exchange Commission regulations.controlscontrol over financial reporting and have our independent auditor attest to that evaluation. Compliance with these requirements is expected to be expensive and time consuming. If we fail to timely complete this evaluation, or if our independent registered public accounting firm cannot timely attest to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls.controlscontrol over financial reporting, we recognize that any internal control or procedure, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. No system of internal controlscontrol can be designed to provide absolute assurance of effectiveness and any material failure of internal controlscontrol over financial reporting could materially impact our reported financial results and the market price of our stock could significantly decline. In addition, adverse publicity related to a material failure of internal controlscontrol over financial reporting would have a negative impact on our reputation and business.fourthfirst quarter of fiscal 2006, which ends December 31, 2005. The change in accounting rules will lead to increased reported net loss or, should we become profitable, a decrease in reported earnings. This may negatively impact our future stock price. In addition, this change in accounting rules could impact our ability to utilize broad based employee stock plans to reward employees and could result in a competitive disadvantage to us in the employee marketplace.-14-TableThere are a large number of Contentsshares that we sold in our 2005 equity financing that may be resold under this prospectus, and the sale of these shares may depress the price of our common stock.We may issue additional common stock in the future, including shares under our Committed Equity Financing Facility, and this stock may reduce the value of your common stock. As a result of the Committed Equity Financing Facility or other financings, we may issue additional shares of common stock without further action by our stockholders. Moreover, although the issuance of our common stock under the Committed Equity Financing Facility will have no effect on the rights or privileges of existing holders of common stock, the economic and voting interests of each stockholder will be diluted as a result of such issuances. Although the number of shares of common stock that stockholders presently own will not decrease, such shares will represent a smaller percentage of our total shares that will be outstanding after such events. If we satisfy the conditions that allow us to draw down the entire $25 million available under the Committed Equity Financing Facility, and we choose to do so, then generally, as the market price of our common stock decreases, the number of shares we will have to issue upon each draw down on the Committed Equity Financing Facility increases, to a maximum of 3,684,782 shares we may issue without stockholder approval. Drawing down on the Committed Equity Financing Facility when the price of our common stock is decreasing will have an additional dilutive effect to your ownership percentage and may result in additional downward pressure on the price of our common stock.our anticipated or actual operating results;developments concerning our sound reproduction technologies;· our anticipated or actual operating results; technological innovations or setbacks by us or our competitors;conditions in the consumer electronics market;· developments concerning our sound reproduction technologies; announcements of merger or acquisition transactions;-15-Table of Contentschanges in personnel within our company; and· technological innovations or setbacks by us or our competitors; other events or factors and general economic and market conditions.· conditions in the consumer electronics market; · announcements of merger or acquisition transactions; · changes in personnel within our company; and · other events or factors and general economic and market conditions. -16- “anticipate,“anticipate,” “may,“may,” “will”“will” and similar expressions.offered andof common stock will be sold by Kingsbridge. However,under this prospectus, or that we maywill receive upany proceeds from the exercise of the stock purchase warrants.$25these selling stockholders as the July 2005 Financing stockholders. The July 2005 Financing stockholders paid us an aggregate of $14 million in gross proceeds from the sale of our stock to Kingsbridge under the Committed Equity Financing Facility, and up to approximately $2.4 million upon exercise of the warrant. We are obligated to use 40% of any funds we receive from sales of shares under the Committed Equity Financing Facility, but not funds we receive upon exercise of the warrant, to prepay any outstanding interest and principal under promissory notes we sold in December 2004 with an aggregate principal amount of $2 million. Such notes accrue interest at 8% per year and mature on December 31, 2006. We plan to use all other funds received from Kingsbridgeconsideration for the purchase of these securities for general corporate and working capital purposes.THE COMMITTED EQUITY FINANCING FACILITY On December 14, 2004, we entered into a Committed Equity Financing Facility with Kingsbridge Capital Limited, pursuant to which Kingsbridge committed, subject to certain significant limitations and conditions precedent, to purchase up to $25 million of our common stock. As part of this arrangement, we issued a warrant to Kingsbridge to purchase 275,0002,868,851 shares of our common stock at a price of $8.60$4.88 per share. In connection with this financing, we issued two warrants to each July 2005 Financing stockholder. The warrant is“A” Warrants are exercisable beginning June 14, 2005 and until June 14, 2010. Until December 14, 2006 we may, from time to time, at our sole discretion and subject to various limitations and conditions precedent that we must satisfy, require Kingsbridge to purchase newly-issued shares of our common stock at a price that is between 88% and 92% of the volume weighted average of the price of our common stock for each of the fifteen trading days following our election to sell, or draw down, shares. Such discount will be determined as follows:VWAP*Applicable Discount To VWAPAt or greater than $3.00 per share, but less than $5.00 per share12%At or greater than $5.00 per share but less that $10.00 per share10%At or greater than $10.00 per share8% * “VWAP” means the volume weighted average price of our common stock during a trading day as reported by Bloomberg, L.P. using the AQR function.-17-Table of Contents The maximum number of shares that we are permitted to issue pursuant to the Committed Equity Financing Facility is 8,333,333. However, without stockholder approval, the rules of the NASDAQ Stock Market prohibit us from selling more than 20% of our issued and outstanding common stock measured as of the time at which we entered into a material definitive agreement with Kingsbridge. There were 19,808,819 common shares outstanding on December 14, 2004. This 20% limit applies to any shares we may issue pursuant to the Committed Equity Financing Facility and upon the exercise of the warrant. Therefore, the maximum number of shares that we may issue to Kingsbridge is 3,959,782, of which 3,684,782 may be issued under the Committed Equity Financing Facility and 275,000 may be issued upon exercise of the warrant. We will exercise our right to draw down the Committed Equity Financing Facility, if and to the extent available, at such times as we deem appropriate. We are obligated to use 40% of the proceeds we may receive from the Committed Equity Financing Facility to prepay any outstanding interest and principal on the promissory notes we sold in December 2004 with an aggregate principal amount of $2 million. We can elect to sell shares in amounts up to a maximum of 3% of our market capitalization at the time of the election, provided that in no event can a single election exceed $10 million. For each election to sell shares to Kingsbridge, we select the lowest threshold price at which our stock may be sold, but the threshold price cannot be lower than $3.00 per share. The following table sets forth the amount of proceeds we would receive from Kingsbridge from the sale of shares of our common stock offered by this prospectus at varying purchase prices:Assumed Average Purchase Price Number of Shares to
be Issued if Full
Purchase (1)Percentage Outstanding
After Giving Effect to the
Issuance to Kingsbridge (2)Proceeds from the Sale of
Shares to Kingsbridge $3.00 3,684,782 15.7 % $11,054,346 $5.00 3,684,782 15.7 % $18,423,910 $9.80 (3) 2,551,020 11.4 % $25,000,000 $10.00 2,500,000 11.2 % $25,000,000 $15.00 1,666,666 7.8 % $25,000,000 $20.00 1,250,000 5.9 % $25,000,000 $40.00 625,000 3.1 % $25,000,000 (1) Based upon a maximum of 3,684,782 shares for purchase by Kingsbridge registered in the registration statement which includes this prospectus. Does not include the 275,000 shares that may be issued upon exercise of the warrant. (2) Based upon 19,808,819 shares outstanding as of December 31, 2004. (3) Closing sale price reported on the NASDAQ SmallCap Market on January 7, 2005. Flagstone Securities, LLC served as a consultant for the Committed Equity Financing Facility. As compensation for its services, we have agreed to pay to Flagstone cash payments equal to 4% of the first $5,000,000 raised under the Committed Equity Financing Facility; 3% for the second $5,000,000 raised under the Committed Equity Financing Facility; 2% for the third $5,000,000 raised under the Committed Equity Financing Facility; and 1.5% for any additional amounts raised under the Committed Equity Financing Facility. Proceeds obtainable upon the exercise of the warrant are not included in the foregoing amounts.-18-Table of Contents The issuance of our common stock under the Committed Equity Financing Facility will have no effect on the rights or privileges of existing holders of common stock except that the economic and voting interests of each stockholder will be diluted as a result of such issuance. Although the number of717,213 shares of common stock that stockholders presently own will not decrease, such shares will represent a smaller percentage of our total shares that will be outstanding after such events. If we satisfy the conditions that allow us to draw down the entire $25 million available under the Committed Equity Financing Facility, and we choose to do so, then generally, as the marketat an exercise price of our$6.36 per share. These warrants are exercisable from January 18, 2006 until July 18, 2009. The “B” Warrants are exercisable for an aggregate of 864,706 shares of common stock decreases, the number of shares we will have to issue upon each draw down on the Committed Equity Financing Facility increases, to a maximum of 3,684,782 shares without stockholder approval. Drawing down upon the Committed Equity Financing Facility when theat an exercise price of our common stock is decreasing will have an additional dilutive effect to the ownership percentage of current stockholders and may result in additional downward pressure on the price of our common stock. The following is a summary of some of the material conditions that must be met before Kingsbridge is obligated to buy any shares of our common stock pursuant to a draw down, none of which$7.23 per share. These warrants are within the control of Kingsbridge:Each of the representations and warranties we made in our agreement with Kingsbridge, which we refer to as the purchase agreement, must be true and correct in all material respects as ofexercisable from the date when made and as of the draw down exercise date as though made at that time. One of the representations provides that no material and adverse event or series of events has or have occurred affecting our business, operations, properties or financial condition.We must have complied in all material respects with our obligations under the purchase agreement.The registration statement of which this prospectus is a part must bebecomes effective until the date six months after that date. The exercise price of these warrants, and available for use by Kingsbridge.We cannot have knowledge of any event more likely than not to cause the registration statement to be unavailable to Kingsbridge during the fifteen day draw down period.Trading in our common stock must not have been suspended by the Commission, the NASDAQ SmallCap Market or the NASD, and trading in securities generally on the NASDAQ SmallCap Market must not have been suspended or limited.The number of shares of our common stock beneficially owned by Kingsbridge, together with thosefor which these warrants may be exercised, is subject to adjustment if in the future we sell shares that we propose to sell to Kingsbridge in connection with a draw down, cannot exceed 9.9% of the total amount of our common stock that wouldfor, or issue options, warrants or convertible securities which may be outstanding upon completionexercised or converted into shares of our common stock at an exercise or conversion price, less than their respective effective exercise prices.draw down. ThereJuly 2005 Financing stockholders represented that it had acquired the securities for investment purposes only and with no present intention of distributing those securities, except in compliance with all applicable securities laws. In addition, each of the July 2005 Financing stockholders represented that it qualified as an “accredited investor”, as that term is no guarantee that we will be able to meet these and other conditionsdefined in Rule 501 under the purchase agreement or that we will be ableSecurities Act of 1933.draw downparticipate in any portionproposed sale of equity securities by us until the one-year anniversary of the $25 million commitment. Even if we meet these and other conditions,date the electionregistration statement of which this prospectus is a part becomes effective. This right does not apply to draw down amounts isthe issuance of securities upon exercise or conversion of previously outstanding securities, to the grant of options under company plans, including inducement grants, to certain strategic transactions, or to a firm commitment underwriting that results in net proceeds to us of at our sole discretion and we are not obligated to sell any shares to Kingsbridge.entered into a registration rights agreement with Kingsbridge in connection with the Committed Equity Financing Facility. As contemplated by the registration rights agreement, we have filedagreed to file a registration statement, of which this prospectus is a part, withprior to August 17, 2005 to register for resale the Commission relating to the resale by Kingsbridge of 3,684,782 shares of common stock purchased by Kingsbridge under the securities purchase agreement or issuedas well as the shares that may be purchased under the warrants. We also agreed to Kingsbridgehave this registration statement declared effective as a result ofsoon as possible and in any event within ninety days after July 18, 2005. Once the exercise of the warrant. The effectiveness of such registration statement is a condition precedentdeclared effective, we have agreed to use our abilitybest efforts to sell common stock to Kingsbridgekeep it effective for five years after the date the registration statement is declared effective, or the earlier date when all of the shares covered by this prospectus have been sold or may be sold without volume restrictions in accordance with Rule 144(k) under the purchase agreement.-19-TableSecurities Act of Contents During1933. If we do not comply with our registration obligations, we have agreed to pay to each selling stockholders liquidated damages of up to 1% of its investment amount per month that we are out of compliance with our registration obligations. We have also agree to pay liquidated damages in that amount during any time that the termexercisability of the Committed Equitywarrants is suspended. Facility, Kingsbridge. We entered into a promissory note and its affiliates are prohibited from entering into any hedging transaction or engagingwarrant purchase agreement, dated as of December 23, 2004, with some of the selling stockholders. We refer to these selling stockholders as the December 2004 Financing stockholders. The December 2004 Financing stockholders paid us an aggregate of $2 million in any short sellinggross proceeds in consideration for 8% unsecured subordinated promissory notes due December 31, 2006. In connection with respectthis financing, we issued warrants to our common stock. Provided, however, Kingsbridge has the right during the fifteen trading days following our draw down election to selleach December 2004 Financing stockholder exercisable for an aggregate of 75,000 shares of our common stock equalat an exercise price of $9.28 per share (for purchases by our directors, officers, employees or consultants, or affiliates of such persons), and for an aggregate of 75,000 shares of our common stock at an exercise price of $8.60 per share (for other purchasers). These warrants are exercisable until December 31, 2009.numbercompliance with all applicable securities laws. In addition, each of the December 2004 Financing stockholders represented that it qualified as an “accredited investor”, as that term is defined in Rule 501 under the Securities Act of 1933.aggregate numberESI stockholders.be purchased pursuantacquire 30,000 shares of our common stock at an exercise price of $2.75 per share. Jackson Strategic exercised this option in January 2005. We are including these shares in this prospectus as an accommodation to the applicable draw down. The termsJackson Strategic.the Committed Equity Financing Facility require us to pay liquidated damages in the event that a registration statement is not available for the resale of securities purchased by Kingsbridge under the Committed Equity Financing Facility or upon exercise of its warrant. Except for certain permitted periods of ineffectiveness described below, we are obligated to pay to Kingsbridge an amount, up to $2.5 million, equal to the number of shares purchased under the Committed Equity Financing Facility andour common stock held by Kingsbridge at the dateselling stockholders. The term “selling stockholders” includes the registration statement becomes unavailable, multiplied by any positive difference in price between the volume weighted average price on the trading day prior to such period of unavailabilitystockholders listed below and the volume weighted average price on the first trading day after the period of unavailability. We may, in lieu of paying such liquidated damages, offer to repurchase the securities held by Kingsbridge for a price equal to the volume weighted average price on the trading day prior to such period of unavailability. We are permitted to suspend the availability of the registration statement for resale of the shares purchased by Kingsbridge if there is material undisclosed information then existingtheir transferees, pledgees, donees or if we intend to file another registration statement with the SEC. However, we are permitted to suspend the use of the registration statement for only up to 30 days during any calendar year, and no more than six times in any 12 month period. In the event that we exercise this right of suspension within fifteen trading days following any settlement date for the purchase of our stock under the Committed Equity Financing Facility, we must pay to Kingsbridge as liquidated damages a percentage of the decline in value, if any, of shares purchased during the most recent draw down period and held by Kingsbridge, as follows: 75% if such notice of suspension is delivered prior to the fifth trading day after a settlement date, 50% if such notice of suspension is delivered on or after the fifth and prior to the tenth trading day after a settlement date, and 25% if such notice of suspension is delivered on or after the tenth and prior to the fifteenth trading day after a settlement date. The amount of such liquidated damages for any one period of suspension may not exceed $1.75 million. We may, in lieu of paying such liquidated damages, offer to repurchase the securities held by Kingsbridge for a price equal to the volume weighted average price on the trading day prior to such period of ineffectiveness. We may also elect to pay such liquidated damages in shares of common stock valued at the market value on the first trading day after such permitted suspension ends.-20-Table of Contents certain information regarding beneficial ownership of our common stock by Kingsbridgethe selling stockholders as of December 31, 2004. KingsbridgeJuly 18, 2005. This information is based upon information provided by the selling stockholders. The selling stockholders identified below may have sold, transferred or otherwise disposed of all or a portion of their shares of common stock in transactions exempt from the registration requirements of the Securities Act since the date as of which they provided this information.notheld any position or office or had aany other material relationship with us or any of our companypredecessors or affiliates within the past three years other than as a result of the Committed Equity Financing Facilityownership of our securities. We may amend or supplement this prospectus from time to time to update the disclosure set forth in it.above.under the heading “Issuance of Securities to Selling Stockholders” in the ordinary course of business and, at the time of purchase of those securities, did not have any plans to dispose of the shares offered by this prospectus. Special Situations Fund III, L.P. (3) 726,458 (4) 395,479 1,112,692 -- -- Special Situations Private Equity Fund, L.P. (3) 301,229 166,101 467,330 -- -- Special Situations Technology Fund, L.P. (3) 72,599 (5) 31,638 89,015 -- -- Special Situations Technology Fund II, L.P. (3) 452,986 (6) 197,739 556,345 -- -- SDS Capital Group SPC, Ltd. (7) 204,918 169,813 (8) 317,913 -- -- Iroquois Master Fund Ltd. (9) 614,754 338,983 953,737 -- -- Pequot Scout Fund, L.P. (10) 405,023 223,335 628,358 -- -- Pequot Mariner Master Fund, L.P. (10) 209,731 115,649 325,380 -- -- E. H. Hitchcock Charitable Foundation (11) -- 3,750 3,750 -- -- George A. Long (12) 51,200 (13) 7,500 7,500 -- -- James & Josephine Zolin (12) 328,900 (13) 101,800 (14) 7,500 -- -- Patience Partners LP (15) 5,000 (13) 3,750 3,750 -- -- Richard G. Daniels (12) 64,102 (13) 36,250 (16) 3,750 -- -- Robert D. van Roijen Jr. (15) 20,000 (13) 15,000 15,000 -- -- Urban LaRiccia (12) -- 3,750 3,750 -- -- Norris Family 1997 Trust (17) 3,629,015 (13) 37,500 37,500 Sunrise Capital, Inc. (18) 35,000 (13) 122,500 (19) 7,500 -- -- Sunrise Management, Inc. Profit Sharing Plan (18) 38,000 (13) 33,500 (20) 7,500 -- -- Philip & Thea Putnam (21) 33,500 (13) 7,500 7,500 -- -- Greg Endsley (22) 5,250 -- 5,250 -- -- Douglas Paschall (22) 5,852 (23) -- 5,250 -- -- Gordon & Holmes, A Partnership of Professional Corporations (24) 7,000 -- 7,000 -- -- Jackson Strategic, Inc. (25) 30,000 -- 30,000 -- -- Name of Selling StockholderNumber ofShares ofCommon StockBeneficiallyOwned Priorto OfferingPercent ofOutstandingShares ofCommon StockBeneficiallyOwned Priorto OfferingNumber of Sharesof Common Stockto be OfferedPursuant to thisProspectus(1)Number ofShares ofCommon StockBeneficiallyOwned After theOffering (2)Percent ofOutstandingShares ofCommon StockBeneficiallyOwned Afterthe Offering (2)Kingsbridge Capital Limited (3)----%3,959,782----%(1)3,684,7822,916,351 shares of common stock issuable in connection with the Committed Equity Financing Facilitypreviously issued and 275,0001,686,919 shares of common stock that may be acquired by Kingsbridgethe selling stockholders upon exercise of its warrant.their respective warrants.Kingsbridge doesthe selling stockholders do not acquire any additional shares of our common stock.stock..Valentine O’DonoghueAdam Gurneyinvestment adviser to, the Special Situations Technology Fund, L.P. and Special Situations Technology Fund II, L.P. MG Advisers, L.L.C., or MG, is the general partner of, and investment adviser to, the Special Situations Private Equity Fund, L.P. Austin W. Marxe and David M. Greenhouse are the principal owners of MGP, AWM, SSTA and MG, and are principally responsible for the selection, acquisition, voting and disposition of the portfolio securities by each investment adviser on behalf of its fund. Both Messrs. Marxe and Greenhouse share voting and dispositive power with respect to shares held by these selling stockholders.controlmanager of Pequot Scout Fund, L.P. and Pequot Mariner Master Fund, L.P. and the beneficial owner of the securitieslisted securities. Mr. Arthur J. Samberg is the sole shareholder of PCM and has voting and dispositive power with respect to shares held by KingsbridgePequot Scout Fund, L.P. and Kingsbridge doesPequot Mariner Master Fund, L.P. In August 2004, an affiliate of these selling stockholders purchased shares in a private placement of a broker-dealer admitted to membership in the National Association of Securities Dealers, Inc.accept third party investments.being offered under this prospectus.-21-under this prospectus on behalf of Kingsbridge. Allany stock exchange, market or a portion oftrading facility on which the shares offered hereby by Kingsbridgeare traded or in private transactions. These sales may be delivered and/or sold in transactions from time to time on the NASDAQ SmallCap Market, or another national securities exchange or quotation service on which our common stock trades, on the over-the-counter market, in privately-negotiated transactions, or a combination of such methods of sale, at fixed prices, market prices prevailing at the time, prices related to such prevailing prices or negotiated prices. KingsbridgeThe selling stockholders may use any one or more of the following methods when selling shares:· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; · block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; · purchases by a broker-dealer as principal and resale by the broker-dealer for its account; · an exchange distribution in accordance with the rules of the applicable exchange; · privately negotiated transactions; · short sales; · through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; · broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; and · a combination of any such methods of sale. throughunder Rule 144 under the writingSecurities Act, if available, rather than under this prospectus.options whichour securities and may sell or deliver shares in connection with these trades.not be listed on an options exchange. Kingsbridge may effect such transactions by sellingarrange for other brokers-dealers to or through one or more broker-dealers, and such broker-dealersparticipate in sales. Broker-dealers may receive compensationcommissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in the form of underwritingamounts to be negotiated. The selling stockholders do not expect these commissions and discounts concessions or commissions from Kingsbridge. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of thoseexceed what is customary in the types of transactions involved. Kingsbridge is an “underwriter” within the meaning of the Securities Act. We have agreed to indemnify Kingsbridge with respect to the shares offered hereby against certain liabilities including certain liabilities under the Securities Act, or, if such indemnity is unavailable, to contribute toward amounts required to be paid for such liabilities.broker-dealer participating in such transactions as agent may receive commissions from Kingsbridge and, it acts as agent for the purchaser of such shares, from such purchaser. Broker-dealers may agree with Kingsbridge to sell a specified number of shares at a stipulated price per share, and, to the extent such a broker-dealer is unable to do so acting as agent for Kingsbridge, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to Kingsbridge. Broker-dealers who acquire shares as principal may resell such shares from time to time in transactionsprofits on the NASDAQ SmallCap Market, or another national securities exchange or quotation service on which our common stock trades, on the over-the-counter market, in privately-negotiated transactions or otherwise at fixed prices, market prices prevailing at the time of sale, prices related to such prevailing prices or negotiated prices, and in connection with such resales may pay to or receive from the purchasers of such shares commissions computed as described above. Transactions by broker-dealers may include crosses, which are transactions in which the same broker acts as agent on both sides of the trade, and block transactions, and may involve sales to and through other broker-dealers, including transactions of the nature described above. To the extent required under the Securities Act, a supplemental prospectus will be filed, disclosing:the name of any such broker-dealers;the number of shares involved;the price at which such shares are to be sold;the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable;that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, as supplemented; andother facts material to the transaction. Kingsbridge and any other persons participating in the sale or distribution of the shares will be subject to the applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations under such Act, including, without limitation, Regulation M. These provisions may restrict certain activities of, and limit the timing of, purchases by Kingsbridge or other persons or entities. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.-22-Table of Contents Kingsbridge will pay all commissions, transfer taxes, and certain other expenses associated with the resale of securities. The shares offered by this prospectus are being registered to fulfill our contractual obligation to Kingsbridge and we have paid the expenses of the preparation of this prospectus. We have also agreed to reimburse Kingsbridge for certain costs and expenses incurred in connection with the resale of shares of our common stock. Thesestock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the applicable selling stockholder. The selling stockholders may includeagree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the fees, expenses and disbursements of counsel for Kingsbridge incurred inshares if liabilities are imposed on that person under the preparation of our agreement with Kingsbridge and associated documentation and the registration statement which includes this prospectus.theour common stock or otherwise, and subject to limitations in our agreement with Kingsbridge, Kingsbridgeinterests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions. These broker-dealers or financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume with Kingsbridge. Subject to limitation in our agreement with Kingsbridge, Kingsbridgeassume. The selling stockholders may also sell theshares of our common stock short and deliver these securities to close out suchtheir short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.aggregate proceedsselling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to Kingsbridge from the resalesuch broker-dealer or other financial institution of the common stockshares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).purchase priceselling beneficial owners for purposes of this prospectus and may sell the common stock less discounts and commissions, if any. Kingsbridge reserves the right to accept and, together with its agents, to reject, in whole or in part, any proposed purchaseshares of common stock from time to be made directlytime under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or through agents. In orderother applicable provision of the Securities Act of 1933 amending the list of selling stockholders to comply withinclude the securities laws of some states, if applicable, the common stock may be soldpledgee, transferee or other successors in these jurisdictions only through registered or licensed brokers or dealers. interest as selling stockholders under this prospectus.common stock may not be offered or sold inselling stockholders and any jurisdiction unless the offer and sale have been registered or qualified for sale or an exemption is available and complied with. Broker-dealersbroker-dealers or agents that participateare involved in selling the saleshares of the common stock may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act. Profits on the sale of the common stock by Kingsbridge andAct in connection with such sales. In such event, any discounts, commissions or concessions received by anysuch broker-dealers or agents mightand any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts and commissions under the Securities Act. Kingsbridge To knowledge, there are currently no plans, arrangements or understandings between Kingsbridge and any underwriter, broker-dealer or agent regarding the sale of the common stock. Kingsbridge may decide not to sell any common stock described in this prospectus. Any securities covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. In addition, Kingsbridge may transfer, devise or gift the common stock by other means not described in this prospectus. With respect to a particular offering of the common stock, to the extent required by the Securities Act, an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement which includes this prospectus, will be prepared and will set forth the following information:-23-Table of Contentsthe specific common stock to be offered and sold;the namesactivities of the selling stockholder ;stockholders.the respective purchase prices and public offering prices and other material terms of the offering;the names of any participating agents, broker-dealers or underwriters; andLEGAL MATTERSany applicable commissions, discounts, concessions and other items constituting, compensation from the selling stockholder. Certain legal matters will be passed upon for any agents or underwriters by counsel for such agents or underwriters identified in the applicable prospectus supplement.EXPERTSProspectusprospectus have been audited by BDO Seidman, LLP, independent registered public accounting firm, to the extent and for the periods set forth in their report incorporated herein by reference, and are incorporated herein in reliance upon such report given the authority of said firm as experts in auditing and accounting.www.sec.gov)www.sec.gov/) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.-24-Annual Report on Form 10-K for our fiscal year ended September 30, 2004;Current Reports on Form 8-K filed with the SEC on November 22, 2004, December 17, 2004, December 30, 2004 and January 18, 2005 (amended January 21, 2005); and· Annual report on Form 10-K, as amended, for our fiscal year ended September 30, 2004; Registration Statement on Form 10-SB, effective August 1, 1994 which includes a description of our common stock. We also incorporate by reference all documents we file pursuant to Section 13(a), 13(c), 14 or 15 of the Exchange Act after the date of the initial registration statement and prior to effectiveness of the registration statement. All documents we file in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and prior to the termination of the offering are also incorporated by reference and are an important part of this prospectus.· Quarterly Reports on Form 10-Q, as amended, for our fiscal quarters ended December 31, 2004 and March 31, 2005; · Quarterly Report on Form 10-Q, as amended, for our fiscal quarter ended June 30, 2005; · Current Reports on Form 8-K filed with the Securities and Exchange Commission on November 22, 2004, December 17, 2004, January 18, 2005 (amended January 21, 2005), January 31, 2005, March 21, 2005, March 24, 2005, March 25, 2005, April 1, 2005, May 3, 2005 (with respect to disclosure made under Items 1.01 and 3.02 only), June 17, 2005, July 1, 2005, July 6, 2005, July 13, 2005 and July 19, 2005; and · Registration Statement on Form 10-SB, effective August 1, 1994, which includes a description of our common stock. · We also incorporate by reference all documents we file pursuant to Section 13(a), 13(c), 14 or 15 of the Securities Exchange Act of 1934 after the date of the initial registration statement and prior to effectiveness of the registration statement. · We also incorporate by reference all documents we file in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and prior to the termination of the offering are also incorporated by reference and are an important part of this prospectus. , or from us without charge (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents) by contacting us at American Technology Corporation, 13114 Evening Creek Drive South, San Diego, California 92128, Attn: Director, Investor Relations.-25-Table of ContentsAMOUNT Commission Registration Fee$ 4,393 Printing and Related Fees$ 5,000 Legal Fees and Expenses$25,000 Accounting Fees and Expenses$14,000 Miscellaneous Expenses$ 1,607 Total$50,000 AMOUNT Commission Registration Fee $ 2,874.27 Printing and Related Fees 3,000.00 Legal Fees and Expenses 20,000.00 Accounting Fees and Expenses 18,000.00 Miscellaneous Expenses 1,125.73 $ 45,000.00 As permitted by Delaware law, our the we will indemnify our officers, directors, employees and agents against attorneys’ fees and other expenses, fines, settlements and liabilities they incurhe or she incurs to defend, settle or satisfy any administrative, civil or criminal action brought against themhim or her arising out of theirhis or her association with or activities on our behalf, so long as he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to our interests and, in the case of us unless, in any such action, theya criminal proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful. In addition, if the officer, director, employee or agent is successful on the merits or otherwise, we are adjudgedobligated to have acted with gross negligenceindemnify him or to have engaged in willful misconduct.her against his or her costs, charges and expenses, including attorneys’ fees. We may also bearadvance the expenses of suchany litigation forto any suchof these persons upon theirhis or her promise to repay such sumsthe advances if it is ultimately determined that they arehe or she is not entitled to indemnification. SuchThese expenditures could be substantial and may not be recouped, even if we are so entitled. Insofar as indemnification for liabilities arising under the Securities ActThe foregoing provisions of 1933 may be permitted to directors, officers or persons controlling us pursuantour Certificate of Incorporation are similar to the foregoing provisions we have been informed that, in the opinionof Section 145 of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. of Delaware, our Certificate of Incorporation excludes personal liability on the part of itsour directors to our company or our stockholders for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts in violation of Section 174 of the Delaware General Corporation Law, of Delaware, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any director’s liability under federal or applicable state securities laws.Table of Contents4.13.1Certificate of Incorporation of American Technology Corporation (Delaware) dated March 1, 1992. Filed as Exhibit 2.1 on Form 10-SB effective August 1, 1994 and incorporated herein by reference. 4.23.2Amendment to Certificate of Incorporation of American Technology Corporation dated March 24, 1997 and filed with Delaware on April 22, 1997. Filed as Exhibit 3.1.1 on Form 10-QSB for the quarter ended March 31, 1997, dated May 13, 1997 and incorporated herein by reference. 4.33.3Corrected Certificate of Designations of Series A Convertible Preferred Stock dated and filed with Delaware on August 25, 1997. Filed as Exhibit 3.1.3 on Form 8-K dated August 29, 1997 and incorporated herein by reference. 4.43.4Corrected Certificate of Designations of Series B Convertible Preferred Stock filed with Delaware on December 23, 1998. Filed as Exhibit 3.1.4 on Form 10-KSB for the year ended September 30, 1998, dated December 29, 1998 and incorporated herein by reference. 4.53.5Corrected Certificate of Designation of Series C Preferred Stock filed with Delaware on April 19, 2000. Filed as Exhibit 3.1.5 on Form 8-K dated April 19, 2000 and incorporated herein by reference. 4.63.6Certificate of Designation of Series D Preferred Stock filed with Delaware on May 3, 2002. Filed as Exhibit 3.1 on Form 10-Q for the quarter ended March 31, 2002, dated May 15, 2002 and incorporated herein by reference. 4.73.7Certificate of Amendment to Certificate of Incorporation filed with Delaware on September 26, 2002. Filed as Exhibit 3.1.6 on Form 10-K for the year ended September 30, 2002, dated December 23, 2002 and incorporated herein by reference. 4.83.8Certificate of Designation of Series E Preferred Stock filed with Delaware on February 28, 2003. Filed as Exhibit 4.2 on Form 8-K dated March 6, 2003 and incorporated herein by reference. 4.93.9Restated Bylaws of American Technology Corporation. Filed as Exhibit 3.1 on Form 10-Q for the quarter ended December 31, 2004, filed on February 11, 2005 and incorporated herein by reference. 4.104.1Specimen Common Stock Certificate. 4.11Registration Rights Agreement dated December 14, 2004 with Kingsbridge Capital Limited. Filed as Exhibit 10.2 on Form 8-K filed December 17, 2004 and incorporated herein by reference.5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP. 10.1Common Stock Purchase Agreement dated December 14, 2004 with Kingsbridge Capital Limited. Filed as Exhibit 10.1 on Form 8-K filed December 17, 2004 and incorporated herein by reference.10.2Warrant dated December 14, 2004 in favor of Kingsbridge Capital Limited. Filed as Exhibit 4.1 to Form 8-K filed December 17, 2004 and incorporated herein by reference.23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (included in Exhibit 5.1) 23.2 Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (included on signature page). 99.1 Securities Purchase Agreement, dated July 14, 2005, with the purchasers listed on the signature pages thereof. Filed as Exhibit 99.1 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.2 Form of Warrant A, originally issued July 18, 2005, in favor of the purchasers in the July 2005 Financing. Filed as Exhibit 99.3 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.3 Form of Warrant B, originally issued July 18, 2005, in favor of the purchasers in the July 2005 Financing. Filed as Exhibit 99.4 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.4 Registration Rights Agreement, dated July 14, 2005, with the purchasers listed on the signature pages thereof. Filed as Exhibit 99.2 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.5 Promissory Note and Warrant Purchase Agreement, dated December 23, 2004, with the purchasers described therein. Filed as Exhibit 10.39 on Form 10-K filed December 28, 2004 and incorporated herein by reference. 99.6 Form of Warrant, originally issued December 23, 2004, in favor of the purchasers in our December 2004 Financing. Filed as Exhibit 10.41 on Form 10-K filed December 28, 2004 and incorporated herein by reference. 99.7 Agreement of Settlement and Mutual Release, dated April 27, 2005, with eSoundIdeas, Inc., SoundIdeas, Greg O. Endsley, Douglas J. Paschall and Gordon & Homes. Filed as Exhibit 10.14 on Form 10-Q filed August 9, 2005 and incorporated herein by reference. 99.8 Registration Rights Agreement, dated April 27, 2005, with Greg O. Endsley, Douglas J. Paschall and Gordon & Homes. Filed as Exhibit 10.15 on Form 10-Q filed August 9, 2005 and incorporated herein by reference. 99.9 Option Agreement, made as of January 28, 2002 with Jackson Strategic, Inc. Table of Contents(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (A) of the Securities Act of 1933; (B) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; (C) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;provided, however, that paragraphs (1)(A) and (1)(B) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports we filed with or furnished to the SEC pursuant to Section 13 or 15(d) of the Exchange Act of 1934 that are incorporated by reference in the registration statement.(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.(4) That, for the purposes of determining any liability under the Securities Act of 1933, each filing of our annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.(5) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of the registration statement in reliance upon Rule 430A and contained in a form of prospectus we filed pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of the registration statement as of the time it was declared effective.II-3Table of Contentsthe Securities Act of 1933;(6) That, for the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.SECCommission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.II-4Table of ContentsSIGNATURESSIGNATURES24th12th day of January,August, 2005. AMERICAN TECHNOLOGY CORPORATION By: /s/ Elwood G. Norris Exchange Act of 1933, this registration statement has been signed below by the following persons on behalf of registrant in the capacities and on the dates indicated.Date: January 24,August 12, 2005/s/ ELWOOD G. NORRIS Elwood G. Norris Officer)Officer)Date: January 24, 2005By:/s/ KALANI JONES Date: August 12, 2005
Kalani JonesOfficer)Officer)Date: January 24, 2005By:/s/ MICHAEL A. RUSSELL Date: August 12, 2005 Officer)Officer)Date: January 24, 2005By:/s/ RICHARD M. WAGNER Date: August 12, 2005 Date: August 12, 2005 Date: January 24, 2005By:/s/ DAVID J. CARTER David J. CarterDirectorDate: January 24,August 12, 2005/s/ DANIEL HUNTER Daniel Hunter Date: August 12, 2005 Daniel HunterTable of Contents4.13.1Certificate of Incorporation of American Technology Corporation (Delaware) dated March 1, 1992. Filed as Exhibit 2.1 on Form 10-SB effective August 1, 1994 and incorporated herein by reference. 4.23.2Amendment to Certificate of Incorporation of American Technology Corporation dated March 24, 1997 and filed with Delaware on April 22, 1997. Filed as Exhibit 3.1.1 on Form 10-QSB for the quarter ended March 31, 1997, dated May 13, 1997 and incorporated herein by reference. 4.33.3Corrected Certificate of Designations of Series A Convertible Preferred Stock dated and filed with Delaware on August 25, 1997. Filed as Exhibit 3.1.3 on Form 8-K dated August 29, 1997 and incorporated herein by reference. 4.43.4Corrected Certificate of Designations of Series B Convertible Preferred Stock filed with Delaware on December 23, 1998. Filed as Exhibit 3.1.4 on Form 10-KSB for the year ended September 30, 1998, dated December 29, 1998 and incorporated herein by reference. 4.53.5Corrected Certificate of Designation of Series C Preferred Stock filed with Delaware on April 19, 2000. Filed as Exhibit 3.1.5 on Form 8-K dated April 19, 2000 and incorporated herein by reference. 4.63.6Certificate of Designation of Series D Preferred Stock filed with Delaware on May 3, 2002. Filed as Exhibit 3.1 on Form 10-Q for the quarter ended March 31, 2002, dated May 15, 2002 and incorporated herein by reference. 4.73.7Certificate of Amendment to Certificate of Incorporation filed with Delaware on September 26, 2002. Filed as Exhibit 3.1.6 on Form 10-K for the year ended September 30, 2002, dated December 23, 2002 and incorporated herein by reference. 4.83.8Certificate of Designation of Series E Preferred Stock filed with Delaware on February 28, 2003. Filed as Exhibit 4.2 on Form 8-K dated March 6, 2003 and incorporated herein by reference. 4.93.9Restated Bylaws of American Technology Corporation. Filed as Exhibit 3.1 on Form 10-Q for the quarter ended December 31, 2004, filed on February 11, 2005 and incorporated herein by reference. 4.104.1Specimen Common Stock Certificate. 4.11Registration Rights Agreement dated December 14, 2004 with Kingsbridge Capital Limited. Filed as Exhibit 10.2 on Form 8-K filed December 17, 2004 and incorporated herein by reference.5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP. 10.1Common Stock Purchase Agreement dated December 14, 2004 with Kingsbridge Capital Limited. Filed as Exhibit 10.1 on Form 8-K filed December 17, 2004 and incorporated herein by reference.10.2Warrant dated December 14, 2004 in favor of Kingsbridge Capital Limited. Filed as Exhibit 4.1 to Form 8-K filed December 17, 2004 and incorporated herein by reference.23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (included in Exhibit 5.1) 23.2 Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (included on signature page). 99.1 Securities Purchase Agreement, dated July 14, 2005, with the purchasers listed on the signature pages thereof. Filed as Exhibit 99.1 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.2 Form of Warrant A, originally issued July 18, 2005, in favor of the purchasers in the July 2005 Financing. Filed as Exhibit 99.3 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.3 Form of Warrant B, originally issued July 18, 2005, in favor of the purchasers in the July 2005 Financing. Filed as Exhibit 99.4 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.4 Registration Rights Agreement, dated July 14, 2005, with the purchasers listed on the signature pages thereof. Filed as Exhibit 99.2 on Form 8-K filed July 19, 2005 and incorporated herein by reference. 99.5 Promissory Note and Warrant Purchase Agreement, dated December 23, 2004, with the purchasers described therein. Filed as Exhibit 10.39 on Form 10-K filed December 28, 2004 and incorporated herein by reference. 99.6 Form of Warrant, originally issued December 23, 2004, in favor of the purchasers in our December 2004 Financing. Filed as Exhibit 10.41 on Form 10-K filed December 28, 2004 and incorporated herein by reference. 99.7 Agreement of Settlement and Mutual Release, dated April 27, 2005, with eSoundIdeas, Inc., SoundIdeas, Greg O. Endsley, Douglas J. Paschall and Gordon & Homes. Filed as Exhibit 10.14 on Form 10-Q filed August 9, 2005 and incorporated herein by reference. 99.8 Registration Rights Agreement, dated April 27, 2005, with Greg O. Endsley, Douglas J. Paschall and Gordon & Homes. Filed as Exhibit 10.15 on Form 10-Q filed August 9, 2005 and incorporated herein by reference. 99.9 Option Agreement, made as of January 28, 2002 with Jackson Strategic, Inc.