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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
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<SEC-DOCUMENT>0001266454-05-000039.txt : 20050318
<SEC-HEADER>0001266454-05-000039.hdr.sgml : 20050318
<ACCEPTANCE-DATETIME>20050317214558
ACCESSION NUMBER:		0001266454-05-000039
CONFORMED SUBMISSION TYPE:	10-K/A
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20040930
FILED AS OF DATE:		20050318
DATE AS OF CHANGE:		20050317

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMERICAN TECHNOLOGY CORP /DE/
		CENTRAL INDEX KEY:			0000924383
		STANDARD INDUSTRIAL CLASSIFICATION:	HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651]
		IRS NUMBER:				870361799
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-K/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24248
		FILM NUMBER:		05690264

	BUSINESS ADDRESS:	
		STREET 1:		13114 EVENING CREEK DRIVE SOUTH
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92128
		BUSINESS PHONE:		6196792114

	MAIL ADDRESS:	
		STREET 1:		13114 EVENING CREEK DRIVE SOUTH
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92128
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K/A
<SEQUENCE>1
<FILENAME>atc_10ka2-093004.htm
<TEXT>
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<p style='margin:0pt;margin-top:0in;margin-left:0in;text-align:center;font-size:11.0pt;font-family:"Times New Roman";color:black;font-weight:bold;margin-right:.9pt'>UNITED STATES<br>
<b
><Font style='font-size:11.0pt;font-size:
10.0pt;font-family:"Times New Roman"'>SECURITIES AND EXCHANGE COMMISSION<br>
WASHINGTON, D.C. 20549</Font></b></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-right:.9pt;text-align:center;
line-height:normal'><Font style='font-size:11.0pt;font-family:"Times New Roman"'>___________________</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-right:.9pt;text-align:center;
line-height:normal'><Font style='font-size:11.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>


<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-right:.9pt;text-align:center;
line-height:normal'><b
><Font style='font-size:18.0pt;font-size: 10.0pt;font-family:"Times New Roman"'>FORM 10-K/A<br>
</Font><font style="font-size: 10.0pt; font-family: Times New Roman" size="3">(Amendment
No. 2)</font></b></p>


<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-right:-22.3pt;text-align:center; line-height:normal'><b><Font style='font-size:10.0pt;font-family: "Times New Roman"'>&nbsp;</Font></b></p>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-left:.25in;text-indent:-.25in;line-height: normal' align="center"><b><Font style='font-size:10.0pt;font-family: "Times New Roman"'>&nbsp;ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
<br>
1934 FOR THE FISCAL YEAR&nbsp;ENDED SEPTEMBER 30, 2004</Font></b></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>&nbsp;</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>Commission File Number 0-24248</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;text-align:center;font-size:12.0pt;font-family:"Times New Roman";color:black;font-weight:bold;'><Font style='font-size:14.0pt;font-size:10.0pt'>AMERICAN
TECHNOLOGY CORPORATION</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>(Exact name of
registrant as specified in its charter)</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<table border=0 cellspacing=0 cellpadding=0 style='border-collapse:collapse;
 mso-padding-alt:0in 5.4pt 0in 5.4pt' width="673">
 <tr>
  <td valign=top style='width:73;'>
  &nbsp;</td>
  <td valign=top style='width:830;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
  ><Font style='font-size:10.0pt;font-family:
  "Times New Roman"'>DELAWARE</Font></b></p>
  </td>
  <td valign=top style='width:154;'>
  &nbsp;</td>
  <td valign=top style='width:428;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
  ><Font style='font-size:10.0pt;font-family:
  "Times New Roman"'>87-0361799</Font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:73;'>
  &nbsp;</td>
  <td valign=top style='width:830;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>(State or other
  jurisdiction of</Font></p>
  </td>
  <td valign=top style='width:154;'>
  &nbsp;</td>
  <td valign=top style='width:428;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>(I.R.S. Employer</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:73;'>
  &nbsp;</td>
  <td valign=top style='width:830;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Incorporation or
  organization)</Font></p>
  </td>
  <td valign=top style='width:154;'>
  &nbsp;</td>
  <td valign=top style='width:428;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Identification No.)</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:73;'>
  &nbsp;</td>
  <td valign=top style='width:830;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;</p>
  </td>
  <td valign=top style='width:154;'>
  &nbsp;</td>
  <td valign=top style='width:428;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:73;'>
  &nbsp;</td>
  <td valign=top style='width:830;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
  ><Font style='font-size:10.0pt;font-family:
  "Times New Roman"'>13114 Evening Creek Drive South, San Diego, California</Font></b></p>
  </td>
  <td valign=top style='width:154;'>
  &nbsp;</td>
  <td valign=top style='width:428;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
  ><Font style='font-size:10.0pt;font-family:
  "Times New Roman"'>92128</Font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:73;'>
  &nbsp;</td>
  <td valign=top style='width:830;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>(Address of principal
  executive offices)</Font></p>
  </td>
  <td valign=top style='width:154;'>
  &nbsp;</td>
  <td valign=top style='width:428;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>(Zip Code)</Font></p>
  </td>
 </tr>
</table>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Registrant's' telephone
number, including area code:&nbsp;&nbsp;(858)
679-2114</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>&nbsp;</Font></b></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:</Font></b></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>None</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:</Font></b></p>

<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;</p>

  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal;
  tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in;
  mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap:around;
  mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal:margin;
  mso-element-top:-2.5pt;mso-height-rule:exactly'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>Common Stock, $.00001 par value per share</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;line-height:normal;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt'>Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding in 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [&nbsp;&nbsp;]</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Indicate by check mark
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[&nbsp;&nbsp;]&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;tab-stops:.5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>


<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Indicate by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act) Yes [X] NO [&nbsp; ]</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant (based on the closing price as reported on the
NASDAQ SmallCap Market on March 31, 2004) was $94,391,214.*</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>


<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
The number of shares of Common Stock, $.00001 par value, outstanding on March
15, 2005, was 21,317,239.</Font></p>


<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;page-break-after:avoid'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>*&nbsp;Excludes the Common Stock held by executive officers, directors and
stockholders whose ownership exceeds 5% of the Common Stock outstanding at
March 31, 2004. This calculation does not reflect a determination that such
persons are affiliates for any other purpose.</Font></p>



&nbsp;<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>



<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>

<table border=0 cellspacing=0 cellpadding=0 style='border-collapse:collapse;
 mso-padding-alt:0in 5.4pt 0in 5.4pt' width="682">
 <tr>
  <td valign=top style='width:76;' align="center">
  &nbsp;</td>
  <td valign=top style='width:530;' align="center">



<p style='margin:0pt;margin:0in;text-align:center;font-size:12.0pt;font-family:"Times New Roman";color:black;font-weight:bold;'>
TABLE OF CONTENTS</p>

  </td>
  <td valign=top style='width:76;' align="center">
  &nbsp;</td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Page</Font></u></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:682;' colspan="3">
  <p align=center style='font-size:12.0pt;font-family:Times;color:black;margin-top:0;margin-bottom:0in;margin-bottom:0;text-align:center;
  line-height:normal'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>PART I</Font></b></p>
  </td>
 </tr>

 <tr>
  <td valign=top style='width:76;'>
  </td>
  <td valign=top style='width:530;'>
  <font style="font-size: 10.0pt; font-family: Times New Roman"><a href="#EXPLANATORY NOTE">Explanatory Note</a></font>
  </td>
  <td valign=top style='width:76;'>
  <p align="center"><font style="font-size: 10.0pt; font-family: Times New Roman">1</font>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Item 1. Business">ITEM 1.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Item 1. Business">Business</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><font style="font-size: 10.0pt; font-family: Times New Roman">2</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Overview">Overview</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  3</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Recent Developments">Recent
  Developments</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
 3</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Segment Reporting">Segment Reporting</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  3</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  <a href="#Our Technology and Products">Our
  Technology and Products</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><font style="font-size: 10.0pt; font-family: Times New Roman">4</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Operating Segment Information">Operating Segment Information</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  6</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Business Group">Business Group</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  6</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Government Group">Government Group</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  7</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Manufacturing and Suppliers">Manufacturing and Suppliers</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><font style="font-size: 10.0pt; font-family: Times New Roman">9</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Selling, Marketing and Customers">Selling, Marketing and Customers</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><font style="font-size: 10.0pt; font-family: Times New Roman">10</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Warranties">Warranties</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><font style="font-size: 10.0pt; font-family: Times New Roman">10</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Competition">Competition</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  10</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Seasonality">Seasonality</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  11</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Government Regulation and Environmental Matters">Government Regulation and Environmental Matters</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  11</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Intellectual Property Rights and Proprietary Information">Intellectual Property Rights and Proprietary Information</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  12</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Research and Development">Research and Development</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  14</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Executive Officers">Executive Officers</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  14</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Employees">Employees</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>15</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#item 2">ITEM 2.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#item 2">Properties</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  15</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Item 3. Legal Proceedings">ITEM 3.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Item 3. Legal Proceedings">Legal
  Proceedings</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  16</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Item 4. Submission of Matters to a Vote of Security Holders.">ITEM 4.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Item 4. Submission of Matters to a Vote of Security Holders.">Submission of Matters to a Vote of Security
  Holders</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  16</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:682;' colspan="3">
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;<b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>PART II</Font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Item 5. Market for Registrant&#146;s Common Equity, Related Shareholder Matters and Issuers Purchases of Equity Securities.">ITEM 5.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Item 5. Market for Registrant&#146;s Common Equity, Related Shareholder Matters and Issuers Purchases of Equity Securities.">Market for Registrant&#146;s Common Equity, Related</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#Item 5. Market for Registrant&#146;s Common Equity, Related Shareholder Matters and Issuers Purchases of Equity Securities.">Stockholder Matters and Issuers Purchases of Equity Securities</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  16</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Item 6. Selected Financial Data.">ITEM 6.
  </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Item 6. Selected Financial Data.">Selected Financial Data</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  18</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.">ITEM 7.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.">Management's Discussion and Analysis of
  Financial Condition</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;<a href="#Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.">and
  Results of Operations</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  18</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 7a">ITEM 7A.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 7a">Quantitative and Qualitative Disclosures About
  Market Risk</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  37</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 8">ITEM 8.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 8">Financial Statements and Supplementary Data</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  37</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 9">ITEM 9. </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 9">Changes in and Disagreements with Accountants
  on </a> </Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#item 9">Accounting and Financial Disclosure</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  37</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#item 9a">ITEM 9A.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#item 9a">Controls and Procedures</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  37</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 8">ITEM 9B.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 8">Other Information</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-family:Times;color:black;text-align:center;line-height:normal'>
  <font size="2">37</font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:682;' colspan="3">
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;<b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>PART III</Font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 10">ITEM 10.</a></Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 10">Directors and Executive Officers of the
  Registrant</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  39</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#item 11">ITEM 11. </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#item 11">Executive Compensation</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  40</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 12">ITEM 12. </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 12">Security Ownership of Certain Beneficial
  Owners and Management</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;<a href="#item 12">and
  Related Stockholder Matters</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  44</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 13">ITEM 13. </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 13">Certain Relationships and Related Transactions</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  47</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 14">ITEM 14. </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 14">Principal Accounting Fees and Services</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  48</p>
 </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:682;' colspan="3">
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'>&nbsp;<b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>PART IV</Font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 15">ITEM 15. </a> </Font></p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#item 15">Exhibits, Financial Statement Schedules</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  49</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'>
  <a href="#Financial Statements and Financial Statement Schedules">Financial Statements and Financial Statement
  Schedules</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>F-1</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  &nbsp;</td>
  <td valign=top style='width:530;'>
  <font size="2">
  <a href="#SIGNATURES">Signatures</a></font></td>
  <td valign=top style='width:76;'>
  <p align="center"><font size="2">54</font></td>
 </tr>
 <tr>
  <td valign=top style='width:76;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:530;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;
  font-family:"Times New Roman"'><a href="#Exhibit Index">Exhibit Index</a></Font></p>
  </td>
  <td valign=top style='width:76;'>
  <p align=center style='margin:0in;font-size:10pt;font-family:Times;color:black;text-align:center;line-height:normal'>
  55</p>
  </td>
 </tr>
</table>



<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<h1  style='margin:0in;text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;font-weight:bold;line-height:normal'>&nbsp;</h1>

<p  style='font-size: 14.0pt; font-family: Times New Roman; color: black; font-weight: bold; line-height: normal; margin: 0in' align="center"><a name="EXPLANATORY NOTE">EXPLANATORY
NOTE</a></p>


<p  style='font-size: 14.0pt; font-family: Times New Roman; color: black; font-weight: bold; line-height: normal; margin: 0in' align="left">&nbsp;</p>

<p  style='font-size: 14.0pt; font-family: Times New Roman; color: black; font-weight: bold; line-height: normal; margin: 0in' align="left"><font size="2" face="Times New Roman"><b>This Amendment No. 2 to Form 10-K/A for American Technology Corporation for the year ended September 30, 2004, which amends and restates the Form 10-K in its entirety, is being filed solely (a) to correct information in Part III, Item 10 regarding Section 16(a) Beneficial Ownership Reporting Compliance to include information previously omitted regarding one late filing by an executive officer, (b) to update the disclosure in Part II, Item 9A concerning controls and procedures, and (c) to include updated certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002. Our Form 10-K was originally filed on December 28, 2004, and was amended on January 28, 2005. In order to preserve the nature and character of the disclosures set forth in the Form 10-K, as amended, this Amendment No. 2 does not reflect events









 occurring after the filing of the original Form 10-K on December 28, 2004, with respect to Parts I and II and the Financial Statements and related notes, or events occurring after the filing of Amendment No. 1 on Form 10-K/A on January 28, 2005, with respect to Parts III and IV.</b></font></p>



<p align="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 1 -</FONT></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>
<p>&nbsp;</p>

</font>

<p  style='margin:0in;text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;font-weight:bold;line-height:normal'>&nbsp;</p>

<h1  style='margin:0in;text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;font-weight:bold;line-height:normal'>PART I</h1>

<p  style='margin:0in;text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;font-weight:bold;line-height:normal'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><b
><Font style='font-family:"Times New Roman"'>Forward
Looking Statements</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>This report contains certain statements of a forward-looking nature relating to future events or the future performance of our company.&nbsp; Words such as</Font></i> &#8220;<i >expects,</i>&#8221; &#8220;<i >anticipates,</i>&#8221; &#8220;<i >intends,</i>&#8221; &#8220;<i >plans,</i>&#8221; &#8220;<i >believes,</i>&#8221; &#8220;<i >seeks,</i>&#8221; &#8220;<i >estimates</i>&#8221;<i > and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the only means of identifying forward-looking statements.&nbsp; Prospective investors are cautioned that such statements are only predictions and that actual events or results may differ materially.&nbsp; In evaluating such statements, prospective investors should specifically consider various factors identified in this re









port, including the matters set forth below under the caption</i> &#8220;<i >Risk Factors,</i>&#8221;<i > which could cause actual results to differ materially from those indicated by such forward-looking statements.</i></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;line-height:normal'><Font style='font-size:10.0pt'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><b
><Font style='font-family:"Times New Roman"'><a name="Item 1. Business">Item
1. Business</a></Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Overview">Overview</a></Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>American
Technology Corporation is an innovator of proprietary sound reproduction
technologies and products. We believe our 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&reg; sound or HSS&reg;. 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&#153;. We have
filed over 70 patent applications in the United States, and over 90 patent
applications internationally covering our various sound technologies and
products. </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We
make significant investments in research and development to expand our
technology and product portfolio. We are expanding our LRAD product family,
introducing a new NeoPlanar product line for emergency notification and general
announcing markets which require high intelligibility, and are utilizing our
products to provide solutions for difficult acoustic challenges.&nbsp;&nbsp;We offer our products for sale worldwide,
but expect the largest markets to be the United States, Europe and Asia.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
four major products from our technology portfolio are listed below.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:6.0pt;mso-list:l13 level1 lfo23;
     tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
     HyperSonic sound, or HSS, technology is a new parametric speaker
     technology that creates sound &#8220;in the air.&#8221; 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.</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:6.0pt;mso-list:l13 level1 lfo23;
     tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>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 &#8220;The Sound of Force Protection&#153;&#8221;, 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.</Font></li>
 <li style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:6.0pt;mso-list:l13 level1 lfo23;
     tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
     NeoPlanar&reg; technology is a thin film magnetic speaker that produces sound
     of high quality, low distortion and high volume.&nbsp;&nbsp;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. </Font></li>
</ul>


<p align="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 2 -</FONT></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>
<p>&nbsp;</p>

</font>

<ul style='margin-top:0in' >
 <li style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l13 level1 lfo23;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our SoundCluster<sup>TM</sup>
     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.</Font></li>
</ul>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In
order to capitalize on our technology leadership position, we continue to focus
on our organization, management processes and business relationships.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level1 lfo20;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Organization:</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level2 lfo20;tab-stops:list 1.0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In fiscal 2004, we
      created a new Quality Department reporting directly to the President to
      ensure that we develop products that meet the high standards that our
      customers require.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:6.0pt;mso-list:l36 level2 lfo20;
      tab-stops:list 1.0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>During
      fiscal 2004, we increased the size of our engineering and quality
      organization to 20 people to more rapidly expand our product
      portfolio.&nbsp;&nbsp;</Font></li>
 </ul>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level1 lfo20;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Management
     Processes:</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level2 lfo20;tab-stops:list 1.0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In fiscal 2004, we
      continued to refine our phase gate development process. This process
      provides executive review of each project at key phases within the
      development cycle. The goal is to ensure development of products that
      meet our cost, reliability and business goals. Our new product
      developments use the phase gate development process.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:6.0pt;mso-list:l36 level2 lfo20;
      tab-stops:list 1.0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In
      2005, we intend to begin the ISO 9001 certification process to meet the
      needs of our customers.</Font></li>
 </ul>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level1 lfo20;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Business
     Relationships:</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level2 lfo20;tab-stops:list 1.0in'><Font style='font-size:10.0pt'>We will continue to seek relationships with
      national or global partners for sales, manufacturing and distribution to
      accelerate the worldwide adoption of our products.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l36 level2 lfo20;tab-stops:list 1.0in'>
  <p style="margin-top: 1; margin-bottom: 1"><Font style='font-size:10.0pt'>The Business Group, described below, intends to
      expand HSS sales into Western Europe and Asia. The Government
      Group intends to expand LRAD and other product sales into Western Europe,
      Asia and the Middle East.</font></li>
 </ul>
</ul>
<p style="margin-top: 1; margin-bottom: 1"><b><font size="2">
<a name="Recent Developments">Recent Developments</a></font></b></p>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In December 2004, we received a firm order for $4.5
million in LRAD products from ADS, Inc. for use by the U.S. Army 3rd Infantry
Division, Fort Stewart, Georgia.&nbsp; The order also includes $0.4 million in
ancillary products which we are providing on a value-added reseller basis along
with the LRAD units.&nbsp; The order calls for deliveries in December 2004 and
January 2005 and customary payment terms.&nbsp; <br>
&nbsp;</font></p>
<p style="margin-top: 1; margin-bottom: 1"><b><a name="Segment Reporting">
<font size="2">Segment Reporting</font></a></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We
organize our business into two reporting segments by the end-user markets we
serve. Our Business Products and Licensing Group, or Business Group, licenses
and markets HSS and NeoPlanar products to companies that employ audio in
consumer, commercial and professional applications. Our primary focus in the
Business Group has been expanding sales of HSS. We are concentrating our
efforts on the following vertical markets:</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l21 level1 lfo37;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Digital Signage,
     sometimes referred to as &#8220;In Store Television&#8221;;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l21 level1 lfo37;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Command and Control
     Centers;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l21 level1 lfo37;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Museums and
     Displays; </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l21 level1 lfo37;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Trade Shows and
     Conventions; and</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l21 level1 lfo37;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Kiosks.</Font></li>
</ul>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
Government and Force Protection Systems Group, or Government Group, markets
LRAD, NeoPlanar, SoundCluster and HSS products to government and military
customers and to the expanding force protection and commercial security
markets. We also engineer custom sound solutions for these customers. Based on
initial market response for long range hailing and warning, emergency response,
and engineered acoustic solutions, we expect significant continued revenue
growth for this segment in fiscal 2005. </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-top:12.0pt'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>During fiscal 2004, we improved the quality,
performance and manufacturability of our HSS products, and starting in October
of 2004, we began deliveries of our HSS Generation III (T120 and T220)
products. We also expanded our Government Group product line by adding new LRAD
features and new products. During fiscal 2004, we also expanded our Advanced
Development and Engineering departments to accelerate new product development
and support custom engineering solutions.</Font></p>

<p align="center"><font size="2" face="Times New Roman">- 3 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-top:12.0pt'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-top:12.0pt'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>We believe we are uniquely equipped to provide
our technologies and products in rapidly growing markets for new sound applications
not currently served by conventional sound devices and as an alternative to
conventional loudspeakers. We believe market factors such as the rapid growth
of plasma and flat panel screens offer significant growth opportunities for our
HSS focused sound solutions. We also believe that the growth in defense and
homeland security and related protection spending by commercial customers
provides a growing market for our sound products to be used for intelligible
communication over long distances.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-top:12.0pt'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>Our shares of common stock trade through the
NASDAQ SmallCap Market under the symbol &#8220;ATCO.&#8221;&nbsp;&nbsp;Our address is 13114 Evening Creek Drive South, San Diego,
California, our telephone number is 858-679-2114 and our internet website is
located at www.atcsd.com. We make available, free of charge through our
website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, reports filed by our directors, executive officers and
certain significant shareholders pursuant to Section 16 of the Securities
Exchange Act and all amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act of 1934 as soon as reasonably
practical after the reports are electronically filed with or furnished to the
Securities and Exchange Commission.&nbsp;&nbsp;The
information on our website is not incorporated by reference into this report
nor is it part of this report.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Our Technology and Products">Our Technology and Products</a></Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'>HyperSonic
Sound</Font></u></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We believe we have
pioneered a new paradigm in sound production based on well-known principles of
physics. The common speaker types in use today such as dynamic, electrostatic,
ribbon and other transducer-based designs, are direct radiating, which are
fundamentally a piston action directly pumping air molecules into motion to create
audible sound waves we hear. Parametric or nonlinear acoustics use changing
pressures in air to produce sound indirectly. We believe we are the first
company to employ the &quot;non-linearity&quot; of air into a commercial sound
product. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>HSS employs ultrasonic
frequencies to carry content, e.g. music and voice, into the air. Proprietary
ultrasonic emitters, or transducers which convert electrical energy to high
frequency acoustical energy, produce these ultrasonic frequencies beyond the
range of hearing.&nbsp;&nbsp;We have developed the ability to use such devices in lieu of
loudspeakers to emit a custom-generated ultrasonic wave with the proper
difference frequency characteristics to produce audible sound within and
throughout an invisible beam. Sound does not appear on the surface of the
ultrasonic emitter, which is a significant departure from a direct radiating
loudspeaker.&nbsp;&nbsp;For example, if the beam is directed towards a wall, the sound
first emanates from the surface of the wall, or if the beam is directed to a
person, the sound is created at the person. This directionality allows sound to be manipulated in
space or diffused from a surface in a wide variety of ways to produce desired
effects. The sound does not dissipate at the same rate over distance as it does
with traditional speakers. This unique feature provides greater sound volume at
selected distant points with less energy than traditional speakers, creating
the ability to communicate directed sound at distances up to hundreds of feet.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>With the rapid growth of
alternative advertising such as digital signage, point-of-purchase and in-store
TV networks, there is a trend towards sound clutter and even sound pollution.
In-store display advertising tends to irritate customers if too intrusive and
annoy workers due to the repetition. We have tested our sound with plasma
displays to achieve focused controlled sound such that only those customers
interested in the promotion are tuned in and nearby clerks do not hear the
message. We believe this ability to locate sound will be a driving feature of HSS systems. We believe our HSS technology offers a number of advantages:</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The ability to
     create a beam of sound and place it only where you want it;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Elimination of the
     need for a speaker enclosure;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Reduction of the
     effect of room acoustics on sound quality;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Ability to
     manipulate or selectively position or diffuse the source of sound;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Ability to deliver
     a beam of sound over longer distances than conventional speakers;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Ability to
     penetrate other competing sounds; and</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l39 level1 lfo11;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Elimination of feedback
     from live microphones.</Font></li>
</ul>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We expect additional HSS
applications to become evident as our products become more widely known. We
believe HSS will ultimately have application in much broader consumer, home,
vehicle, commercial and industrial environments.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p align="center"><font size="2" face="Times New Roman">- 4 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>
<p>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We are currently
producing and selling our HSS Generation III hypersonic sound directed audio
systems,&nbsp;&nbsp;(Model T120 and T220), which
have important improvements over prior generations including:</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Reduced distortion;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Slimmer package;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Wired remote
     control;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Volume thumb wheel
     with digital volume display;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Universal mounting
     studs;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Swivel mount; and</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l42 level1 lfo43;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Choice of audio
     inputs including, XLR Microphone, RCA and Mini-Jack.</Font></li>
</ul>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We expect to develop
improved electronics and emitters and introduce new HSS systems in fiscal 2005.
We seek to minimize distortion, improve output, reduce electronic packaging
size, and trim production costs to expand the applications of HSS to new
markets.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Long Range Acoustic
Device</Font></u></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We believe our Long
Range Acoustic Device, or LRAD, technology is a breakthrough directed acoustic
beam device for long-range hailing and warning.&nbsp;&nbsp;LRAD was developed to communicate at operationally-effective
ranges with authority and superior intelligibility, even in high ambient noise
environments. LRAD meets the need for clear voice communications at a distance
to issue instructions, influence behavior, and determine intent.&nbsp;&nbsp;LRAD was developed to support the security
needs of military, government, law enforcement and commercial customers
worldwide. Through intense marketing efforts, successful product deployments
and extensive product demonstrations, we believe that LRAD is becoming well
known by the U.S. Department of Defense as &#8220;The Sound of Force Protection&#153;&#8221;.
LRAD systems are currently in operational use in maritime, checkpoint,
vehicular, airborne, and integrated system applications by the U.S. Navy, U.S.
Marine Corps, U.S. Army and U.S. Coast Guard.&nbsp; Operational feedback by the U.S.
Navy, U.S. Marine Corps. and U.S. Army from LRAD deployment in Operation Iraqi
Freedom has been favorable. LRAD also supports applications for the Department
of Homeland Security, other government and law enforcement agencies and
customers where there is a need to protect critical high-value commercial
infrastructure, such as buildings, bridges, tunnels, dams, power plants,
pipelines, airports, sea ports, communications towers and other similar
important commercial facilities. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>LRAD was developed in
parallel with the release of Naval Vessel Protection Zone requirements to
enforce a 500-yard Exclusion Zone and 100-yard Protection Zone around U.S.
naval warships both in the U.S. and in the foreign ports and restricted waters.
LRAD provides the critical long range communication and intense but not harmful
ability to&nbsp;warn away friendlies,
classify non-compliants as hostile and support lethal rules of
engagement.&nbsp;&nbsp;This ability also allows
the LRAD operator to execute proactive responses at extended distances, which
in turn increases safety and the time to diffuse tense situations, thereby potentially
saving lives on both sides of the device. In the remote-operation pan/tilt
configuration, LRAD provides a first responder, immediately escalating
non-lethal capability for protecting important commercial facilities.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>LRAD&#146;s features include:</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>High source level
     acoustic transmissions with a series of phase coherent transducers;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Sound pressure
     levels in excess of 146 dB, or decibels during continuous operation at a
     distance of 1 meter with instantaneous peaks at 151 dB;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Limits to 120 dB at
     1 meter in normal operation, with a battle override key to allow maximum
     power to achieve longer hailing and warning distances for certain
     applications and ambient noise conditions;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>A beam center of 16
     degrees on either side of center line;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Effective hailing
     distances in excess of 500 yards, warning distances in excess of 750
     yards;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Both voice and
     warning tones for determining intent for multiple applications;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Low operating power
     requirement, (400 watts); easily powered by 12/24 volt invertors;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Input flexibility from
     networks, individual microphones, and audio output hand held and wearable
     computers;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
 Easily transportable or vehicle mounted, 33&#148; diameter x 4&#148; thickness,
 lightweight at 45 lbs.; </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Powerful
 and safe when used properly; and </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l12 level1 lfo14;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
 <font size="2"></font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Highly
 directional at distance.</Font></li>
</ul>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We also have other
customized LRAD applications under development to meet specific customer
requirements each with broad government and commercial applications.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p align="center"><font size="2" face="Times New Roman">- 5 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'>NeoPlanar Speakers</Font></u></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
NeoPlanar technology is a thin film planar magnetic type speaker that uses
novel films, magnetic materials and a manufacturing process that we believe
provides improved cost/performance benefits. Traditional planar magnetic
speakers use materials with limited power handling ability and are generally
associated with high distortion. Our NeoPlanar technology provides the ability
to build flat and thin speakers with the following distinguishing features:</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>High power handling;
     </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Low mass;</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>High durability; </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Superior sound
     quality; </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>High sensitivity; </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>High sound pressure
     levels; </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Extended high
     frequency output compatible with new compact disk standards; and</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l43 level1 lfo22;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Exceptional clarity
     over long distances.</Font></li>
</ul>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>At
present, we assemble NeoPlanar panels in 3, 8, and 24-inch segments of 3 inch
width. Other lengths and widths are manufacturable. Our NeoPlanar Sound Bar
product uses panels in an upright column and our NeoPlanar Sound Squares
product organizes panels in a square box configuration. Both products are
designed for public address with high intelligibility at very high output
levels. NeoPlanar products can be engineered and customized to fit the needs of
a particular facility or outdoor application. NeoPlanar speakers have been
employed successfully for military and government installations in ships and
hangars, and for outdoor public address and emergency response applications.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>NeoPlanar
technology provides a loud and clear outdoor and indoor public address and
emergency response communication system for military, government and commercial
facilities and areas.&nbsp;&nbsp;Due to their
unique intelligibility in high ambient noise environments and robust
survivability in most operational environments, NeoPlanar products are useful
for multiple military, government and force protection applications. Indoors,
particularly in large spaces such as aircraft hangars, NeoPlanar provides a
high level of clarity due to engineered reduction of multi-path and distortion.
Outdoors, NeoPlanar provides an effective range, up to approximately a half mile, of
clear high fidelity-quality communication even over high ambient noise.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'>SoundCluster</Font></u></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>SoundCluster
is a series of specifically engineered clusters of conventional high intensity
ruggedized speakers modeled and designed to provide scalable highly intelligible
and even sound coverage across the large areas.&nbsp;&nbsp;For example, our first SoundCluster installation was for the
flight deck of the USS Stennis (CVN-74), one of the most challenging acoustic
environments anywhere.&nbsp;&nbsp;The U.S. Navy is
considering SoundCluster as a permanent replacement for the aging 5MC flight
deck system. With this product, we have demonstrated that in addition to core
proprietary technologies, we possess the core competency to provide a
comprehensive engineered solution for unique industry acoustic challenges. <br>
&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-pagination:widow-orphan lines-together'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Other Proprietary
Technologies</Font></u></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We have other sound
inventions and technologies in various stages of development including our
PureBass&reg; Woofer technology for low frequency speakers, our Stratified Field
Technology, or SFT&reg;, that employs a thin form, non-magnetic film to produce
high quality sound, and other technologies and products in various stages of
development. In 2005, we expect our sales efforts to be focused on HSS, LRAD,
NeoPlanar and SoundCluster.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Operating Segment Information">Operating Segment Information</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We organize our business
into two reportable segments by the end-user markets we serve. Our Business
Products and Licensing Group (Business Group) licenses and markets HSS and
NeoPlanar speakers to companies that employ audio in consumer, commercial and
professional applications. Our Government and Force Protection Systems Group (Government
Group) markets LRAD, NeoPlanar, SoundCluster and HSS products to government and
military customers and to the expanding force protection and commercial
security markets.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Business Group">Business Group</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our Business Group
licenses and markets HSS and NeoPlanar technology and products to companies
which employ audio in consumer, commercial, industrial and professional
applications.&nbsp;&nbsp;Our Business Group's
primary marketing focus in fiscal 2005 will be on HSS product sales. Consumer
applications for our products include home theater, consumer electronics,
vehicle and computer multimedia sound systems. Commercial and industrial
applications include digital signage, public address systems, point-of-purchase
advertising, entertainment and messaging systems. Professional applications
include sound systems for theaters, stadiums, production studios and indoor and
outdoor entertainment venues.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p align="center"><font size="2" face="Times New Roman">- 6 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We sell our products to
a range of customers including end-users, Original Equipment Manufacturers, or
OEMs, who package our sound products with other products and system solutions,
and to distributors who sell our products to others.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our HSS strategy is to
drive use in growing markets that can benefit from directed or narrowcast
sound. The following are some key growing markets: </Font></p>

<ul>
  <li>

<p  align=left style='text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;text-align:left; margin-left:0in; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt;'><b>Digital Signage</b> - Digital Signage is a generic term used to describe the replacement of static, or passive, signs or displays with video screens such as cathode ray tube, or CRT, plasma, liquid crystal display, or LCD, or light-emitting diode, or LED, which may contain still or motion video images.&nbsp;&nbsp;The image content, usually advertising or informational, can be changed via network control of each individual sign. Directional audio is required to contain the audio program within a defined space, to eliminate objections to the material from local workers, and to lower the overall audio noise level in a confined space.
</font><Font style='font-size:10.0pt;font-family:Times'>
<li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in; margin-left:0in; margin-right:0in; margin-top:0in; margin-bottom:0.05in'><Font style='font-size:10.0pt'>
<b>Command and Control Centers </b>&#150; Command and Control Centers require directed audio so that a person monitoring a control station can clearly hear alarms and notifications without disturbing someone that is monitoring an adjacent control station.</p>

</li>
</Font>
<li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in; margin-left:0in; margin-right:0in; margin-top:0in; margin-bottom:0.05in'><Font style='font-size:10.0pt'>
<b>Museums and Comparable Display Facilities </b>- Directional audio is required in museums and similar facilities to focus audio information in targeted areas without distracting other patrons.&nbsp;&nbsp;It is also required to allow multiple audio programs to be played within a confined space. </p>

</li>
</Font>
<li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black; margin-left:0in; margin-right:0in; margin-top:0in; margin-bottom:0.05in'><Font style='font-size:10.0pt'>
<b>Trade Show and Conventions </b>- Trade shows and conventions require directional audio to lessen the overall room noise, attract patrons, focus instructional audio to individual displays, and contain audio programs within defined booth spaces. </p>

</li>
</Font>
<li>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>
<b>Kiosks</b> - Retail point of purchase or information kiosks require directional audio to contain sound within the immediate space of the kiosk and to maintain some privacy for each individual listener.<br>
&nbsp;</Font></p>

</li>
</ul>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;Our
NeoPlanar strategy is to seek customers requiring a simple, rugged, thin, low
distortion, high-clarity sound solution. We target customers to use NeoPlanar
panels for:</Font></p>

<ul>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-left:.75in;text-indent:-.25in;mso-pagination: widow-orphan lines-together; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt; '>Industrial applications such as factories, airports and other large facilities;</p>

  </li>
  </font>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-left:.75in;text-indent:-.25in;mso-pagination: widow-orphan lines-together; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt; '>Vehicles;</p>

  </li>
  </font>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-left:.75in;text-indent:-.25in; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt; '>Coupling with flat panel displays;</p>

  </li>
  </font>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-left:.75in;text-indent:-.25in; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt; '>Multimedia;</p>

  </li>
  </font>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-left:.75in;text-indent:-.25in; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt; '>Public address systems; and</p>

  </li>
  </font>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-left:.75in;text-indent:-.25in; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"; margin-right:0in; margin-top:0in; margin-bottom:0.05in'>
<Font style='font-size:10.0pt; '>High-end audio. </p>

  </li>
</ul>
</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In August 2001, we
entered into a non-exclusive license agreement with Harman International
Industries to manufacture and use NeoPlanar technology in the OEM automotive
market. The term of the agreement is perpetual unless terminated by either
party for cause, or terminated by Harman with 30 days advance written notice.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Government Group">Government Group</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family: "Times New Roman"'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Late in fiscal 2003, we organized our Government Group to design, manufacture and market LRAD, NeoPlanar and HSS products for military, government and the developing force protection and emergency response markets, including commercial applications. During fiscal 2004, we demonstrated the market potential for LRAD, particularly with wartime implementations in Operation Iraqi Freedom.&nbsp;&nbsp;We also completed key projects featuring the unique capabilities of NeoPlanar that have established our capabilities as an acoustic engineered solution provider.&nbsp;We are actively </Font><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext'>expanding </Font>relationships with the U.S. Department of Defense, U.S. Department of Home




land Security, other U.S. government agencies, major port authorities and police departments, international government agencies and commercial infrastructure security systems integrators.&nbsp;&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-size:10.0pt;font-family:"Times New Roman"'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>During fiscal 2004, we developed an automated pan/tilt model of LRAD for use in a wide variety of applications requiring a remotely operated force protection capability.&nbsp;&nbsp;Our initial customer was the Naval Surface Warfare Center (NSWC), Crane, Indiana, for integration into the Integrated Radar Sighting Surveillance System, or IROS3, for surface combatants, and the Aircraft Carrier Situational Awareness System, or ACSAS.&nbsp;&nbsp;</Font>ACSAS and IROS3 are the U.S. Navy&#146;s shipboard force protections systems, expected to be installed on all aircraft carriers and surface combatants to protect against small boat threats in port, restricted waters and littoral zones. LRAD adds capability to the integrated optics, comma




nd and control, and lethal weapon suite by providing a simple, repeatable and reliable way to determine intent through long range hailing and warning.&nbsp;Our LRAD
models are also positioned to support a first responder capability for critical
infrastructure protection for buildings, dams, bridges, tunnels, airports, power
plants, pipelines, ports, communication towers, water treatment facilities and
other similar important commercial facilities.</p>

<Font style='font-size:10.0pt;font-family:Times'>

<p align="center"><font size="2" face="Times New Roman">- 7 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

</font>

<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1">In December 2004,
we received a firm order for $4.5 million in LRAD products from ADS, Inc. for
use by the U.S. Army 3rd Infantry Division, Fort Stewart, Georgia.&nbsp; The order also
includes $0.4 million in ancillary products which we are providing on a
value-added reseller basis along with the LRAD units.</p>
<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>During fiscal 2004, we
also developed SoundCluster, a new product for which the initial implementation
was on the flight deck of a U.S. Navy aircraft carrier.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The
landscape of the global defense industry continues to evolve as events, such as
those of September&nbsp;11, 2001 and Operation Iraqi Freedom, demand
alternative strategic defense initiatives. The defense requirements of the
United States have shifted from defending against Cold War era threats to
focusing on the management of one or more regional conflicts, homeland security
and proactive threat identification. As a result of this shift towards low
intensity conflicts and military operations other than war, the defense
industry is influenced by several key factors which also may impact our
Government Group, such as those factors listed below.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l1 level1 lfo39;tab-stops:list .5in'>
 <p style="margin-bottom: 0.05in"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>New funding is
     available to implement new technologies to meet modern threats.</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l1 level1 lfo39;tab-stops:list .5in'>
 <p style="margin-bottom: 0.05in"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>There is increased
     focus on force protection through threat identification, and non-lethal
     capabilities. </Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l1 level1 lfo39;tab-stops:list .5in'>
 <p style="margin-bottom: 0.05in"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>As a result of
     consolidation in the industry, domestic prime contractors are relying on
     others to provide subsystems and components.</Font></li>
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-list:l1 level1 lfo39;tab-stops:list .5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The U.S. military
     is developing lighter, faster defense platforms that are able to react
     quickly to regional conflict. These highly mobile, rapidly deployable
     forces are relying on advanced technologies to provide a full awareness of
     the battlefield, improve communication and evaluate threats.<br>
&nbsp;</Font></li>
</ul>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our strategy is to
position LRAD, NeoPlanar, and our other engineered solutions as the premium
sound solution product suite for force protection, emergency response, and
advanced audio systems throughout government and the security industry, first
in the U.S. and then internationally. The following are examples of how our
products are being used in force protection.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level1 lfo19;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>LRAD</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  Sold and installed on ships in the 5<sup>th</sup> fleet in and around the Basra,
      Iraq, area of the Persian Gulf to support maritime interdiction, such as
      board, search and seizure operations and oil terminal protection
      operations.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Sold and delivered
      units to the 1<sup>st</sup> Marine Expeditionary Force and 3<sup>rd</sup>
      Marine Aircraft Wing deployed in and around Fallujah, Iraq, for Operation
      Iraqi Freedom.&nbsp;&nbsp;LRAD has been
      added to the force protection kits, and deployed with several Marine
      Expeditionary Units.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Sold and delivered
      units to the U.S. Army Rapid Expeditionary Force, and to the 3<sup>rd</sup>
      Battalion, 2<sup>nd</sup> Infantry Division Stryker force deployed in and
      around Mosul, Iraq in support of Operation Iraqi Freedom.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Delivered units to
      the New York Police Department for use in crowd control for the
      Republican National Convention.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Developed a
      remotely operated pan/tilt model for use in protecting U.S Navy vessels
      against small boat terrorist threats. </Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Sold the remotely
      operated pan/tilt model to the Port Authority of New York/New Jersey for
      an initial infrastructure protection system project on the critical rail
      Hackensack Bridge.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><font size="2">
  Received a large order for LRAD
  units to be deployed by the U.S. Army 3rd Infantry Division, Fort Stewart,
  Georgia.</font></li>
 </ul>
</ul>

 <p style="line-height: 100%">&nbsp;<Font style='font-size:10.0pt;font-family:Times'><p align="center"><font size="2" face="Times New Roman">-
 8-</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

</font>

 <p style="line-height: 100%">&nbsp;<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level1 lfo19;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
 <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>NeoPlanar</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Delivered and
      installed a waterfront hailing system for shipyard protection sponsored
      by the Naval Sea Systems Command to demonstrate improved communication
      intelligibility at long distances over varying levels of ambient noise. </Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Delivered and
      installed NeoPlanar Sound Bars for a newly constructed Navy aircraft
      hangar sponsored by the Naval Facilities Command.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Delivered and
      installed NeoPlanar Sound Bars in a secure building sponsored by the
      Naval Facilities Command.</Font></li>
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%; margin-top:1; margin-bottom:1"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Delivered and
      installed NeoPlanar Sound Bars and Sound Squares to a private academy for
  a campus emergency response system and to replace existing athletic
      field systems.</Font></li>
 </ul>
</ul>

  <p style="line-height: 100%; margin-top:1; margin-bottom:1">&nbsp;<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level1 lfo19;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
 <p style="line-height: 100%; margin-top:1; margin-bottom:1"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>SoundCluster</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Delivered a
      SoundCluster system to the U.S. Navy for evaluation on the USS Stennis
      (CVN-74) to replace the aging 5MC carrier flight deck sound system.</Font></li>
 </ul>
</ul>

<ul style='margin-top:0in' >
 <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level1 lfo19;
     tab-stops:list .5in left 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
 <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>HSS:</Font>
 <ul style='margin-top:0in' >
  <li  style='margin:0in;font-size:12.0pt;font-family:Times;color:black;line-height:normal;mso-list:l10 level2 lfo19;
      tab-stops:list 1.0in left 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>
  <p style="line-height: 100%"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Supported
      evaluations by government agencies for next generation command center
      communications.</Font></li>
 </ul>
</ul>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We
believe other military branches, government agencies and allied forces will
increasingly employ LRAD systems for long range hailing and warning as part of
their force protection strategies.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
Government Group sells products directly to end-user customers and also to
agents and distributors specializing in military, government and commercial
security sales.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Manufacturing and Suppliers">Manufacturing and Suppliers</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We believe establishing
and maintaining quality manufacturing capacity is essential to the performance
of our products and the growth of our business.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>During
fiscal 2004, our manufacturing was spread amongst several internal and external
resources. NeoPlanar manufacturing for both commercial and government systems
remains located in our Carson City, Nevada facility. LRAD and HSS manufacturing
transitioned from our San Diego facility to a contract manufacturer, Pemstar,
Inc. in San Jose California.  </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
<br>
</Font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We  </Font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
currently purchase completed products from Pemstar.&nbsp;&nbsp;These units are stored in
Pemstar warehouses and are shipped directly to our customers as required.&nbsp;&nbsp;Our strategy is to increasingly utilize Pemstar's global contract
manufacturing capabilities to allow us to meet our growing production needs.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
We have refined our internal business processes to improve how we design, test
and qualify product designs.&nbsp;&nbsp;We have implemented more rigorous manufacturing
and quality processes to track production and field failures.&nbsp;&nbsp;Key metrics for
line yields, warranty returns, root cause analysis and ongoing reliability
testing are being tracked.&nbsp;</Font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We
expect HSS, LRAD and NeoPlanar product lines to ramp production during 2005.</Font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Suppliers
are key members of our production chain and are selected and managed
accordingly.&nbsp;&nbsp;Of particular importance
is our HSS piezo-film supplier, which provides significant expertise in the
fabrication of component material used in our proprietary HSS emitters. We have
recently implemented more stringent testing of this crucial material. </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our HSS emitters and
NeoPlanar panels employ film as a key part of the product. LRAD systems employ
customized emitters. We have identified suppliers for film and other key parts, but
some are on a sole source basis. Although other suppliers are believed to be
available, the disruption and cost of changing suppliers could have a material
adverse effect on our financial condition and results of operations.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<Font style='font-size:10.0pt;font-family:Times'>

<p align="center"><font size="2" face="Times New Roman">- 9-</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

</font>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Selling, Marketing and Customers">Selling, Marketing and Customers</a></Font></b></p>

</font><Font style='font-size:10.0pt;'>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>
<Font style='font-size:10.0pt' face="Times New Roman">We market and sell products
and services through our direct sales force based in San Diego, California and
Topsham, Maine, and our administrative offices are located in San Diego,
California.&nbsp;&nbsp;Our sales and marketing
strategy is to secure orders for our products and services by, among other
things, providing high performance products that meet customer&#146;s need for
communication and notification in acoustically challenging environments.&nbsp;&nbsp;Sales and marketing expenses include
commission expense for our in-house sales people and the cost of participation
in technical conferences, preparation of marketing collateral materials, and
the acquisition of studies and other materials pertaining to our target markets
and customers.</Font></p>

</font><Font style='font-size:10.0pt;font-family:'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>For fiscal year ended September 30, 2004, sales of sound products to two Government Group customers, ADS, Inc. and General Dynamics, Armaments and Technical Products, Inc. accounted for </Font><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext'>47</Font>% and <Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext'>11</Font>% of revenues
respectively, with no other single customer accounting for more than 10% of revenues.&nbsp;&nbsp;ADS, Inc. is a reseller of our products via a prime vendor contract vehicle 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.</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>For the fiscal year
ended September 30, 2003, sales to one customer, Bath Iron Works Corporation,
accounted for 24% of revenues, with no other single customer accounting for
more than 10% of revenues.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our revenues have to
date relied on a few major customers.&nbsp;The loss of any customer could have a material adverse effect on our
financial condition, results of operations and cash flows.&nbsp;&nbsp;However, our goal is to diversify sound
technology revenues in future periods.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We do not consider order
backlog to be an important measure of future performance at this time.&nbsp;&nbsp;Our order backlog was approximately $316,000
at September 30, 2004. Backlog orders are subject to cancellation or
rescheduling by our customers.</Font></p>

<Font style='font-size:10.0pt;font-family:Times'>

</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Warranties">Warranties</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We generally warrant our
products to be free from defects in materials and workmanship for a period up
to one year from the date of purchase, depending on the product. The warranty
is generally a limited warranty, and in some instances imposes certain shipping
costs on the customer. To date we have been providing direct warranty service
but in the future may establish warranty service, through OEM customers or
others. Some of our agreements require OEM customers to stock certain quantities of
product for use as warranty replacements. International market warranties are
generally similar to the U.S. market.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In fiscal 2003, due to
performance failures of some of our first generation of HSS systems resulting
primarily from a vacuum emitter component, we agreed to replace emitters on
approximately 700 HSS Generation I units. At September 30, 2004, we had a
warranty reserve of $331,917 of which $186,454 was for HSS Generation I units.
Warranty costs on other products have not been material.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Competition">Competition</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our technologies and
products compete with those of other companies. The consumer, commercial and
government audio industry markets are fragmented and competitive and include
numerous manufacturers with audio products that vary widely in price, quality
and distribution channels. Manufacturers of consumer and commercial speakers
include Harman International, Bose, Boston Acoustics and many others. Suppliers
of government audio industry speakers include IML Sound Commander, Technomad
Inc, ATI, Dynalec, Henschel and others. Many of our present and potential
future competitors have, or may have, substantially greater resources to devote
to further technological and new product developments. We believe we compete
primarily on the originality of our concepts, the uniqueness and quality of our
technology and designs, the ease and cost of manufacturing and of implementing
our technologies, the ability to meet customer needs to differentiate their
products, the strength of our intellectual property and the strength of
licensee and contract supply arrangements. We may not, however, be competitive
with the existing or future products, technologies or services of our
competitors.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our HSS and NeoPlanar
products are offered by both our Business Group and our Government Group. We
believe HSS is the leading parametric speaker with limited direct competition
to date. Although others have attempted to use parametric speaker concepts to
produce sound, we do not believe they have progressed to the point of
cost-effective and directly competitive commercial products who compared to HSS. Holosonic
Research Labs, Inc. produces a parametric speaker called the Audio Spotlight.
Sennheiser Electronics has announced a parametric speaker product called the
AudioBeam Master. These companies employ electrostatic and piezoelectric
emitter devices, which we believe are less efficient and more expensive than our
proprietary emitters. However, these parametric speaker competitors or others
may introduce products with features and performance competitive to our
products. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We believe our patent
portfolio will be a barrier to entrants to penetrate the directed sound market
using parametric acoustics. Other companies such as Brown Innovations and
others have employed domes and other techniques to try to focus or contain
sound for directed sound applications such as point-of-sale. We do not believe
these methods are directly competitive to HSS in ease of use, cost and
performance. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<Font style='font-size:10.0pt;font-family:Times'>

<p align="center"><font size="2" face="Times New Roman">- 10 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We also believe our NeoPlanar technology is novel and has distinct market attributes compared to existing and competing flat panel and traditional speaker designs. We believe our NeoPlanar technology produces high intelligibility and reliability for a range of consumer, commercial and government applications. Other companies that are focusing marketing efforts in the flat panel market segment include, but are not limited to (i)&nbsp;high-end electrostatic flat panel manufacturers such as Martin Logan and others, (ii)&nbsp;NXT Plc and its licensees employing the NXT flat panel technology, which uses a magnetic actuator to produce vibrations over a rigid panel, (iii)&nbsp;NCT Group, Inc. and their Gekko line of flat panel speakers using a comparable a




ctuated panel. We are not aware of companies offering flat panel technology to the government market comparable to our government NeoPlanar Products, but </Font><Font style='font-size:10.0pt; font-family:"Times New Roman";color:windowtext'>others may </Font>introduce products with features and performance competitive to our government NeoPlanar products. </p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><Font style='font-size:10.0pt;font-family:"Times New Roman";color:windowtext'>Our LRAD and SoundCluster technology and products are offered by our Government Group. We are not aware of competitors who have achieved the sound output for both voice and warning tone, high directivity, light weight and other attributes necessary to accomplish the government's desired specifications for force protection hailing and non-lethal weapon applications. However, other companies supply a variety of sound products for government customers varying in performance, quality, price and distribution channels, and these products may become more competitive to our products.&nbsp;&nbsp;Others may also modify existing products or </Font>offer new products with features and performance competitive to our LRAD and SoundCluster product




s.</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>There are also
continuing attempts by a large number of competitors to innovate new methods of
sound reproduction to overcome limitations of traditional loudspeakers. It is
possible that alternate technologies and systems that would be directly
competitive with our sound technology have been developed but are unknown to
us. Such systems may also currently be in development, and may be developed by
others in the future.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Seasonality">Seasonality</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We have not experienced
any significant seasonality trends to date. Seasonality trends may occur in the future. Government business tends to be seasonal due to the U.S.
Government procurement cycle, with the quarter ending September 30 usually
producing relatively higher sales and the quarter ending December 31 usually
producing relatively lower sales.&nbsp;&nbsp;Our
Government Group business has not experienced this seasonality during calendar
year 2004, but we expect increasing seasonality in the future.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<Font style='font-size:10.0pt;font-family:Times'>

</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Government Regulation and Environmental Matters">Government Regulation and Environmental Matters</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Certain of our
electronic products are subject to various regulations and are required to meet
the specifications of agencies such as the Federal Communications Commission
(the &#8220;FCC&#8221;). We believe we are in substantial compliance with all current
applicable regulations, and that we have all material governmental permits,
licenses, qualifications and approvals currently required for our operations.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our HyperSonic Sound
technology is subject to control under the Radiation Control for Health and
Safety Act of 1968, and the associated regulations promulgated by the Food and
Drug Administration, as an electrical emitter of ultrasonic vibrations. Under
the terms of such regulations, we were required to provide an abbreviated report
to the FDA describing the technology, which we submitted in August 2001. The
FDA may respond to such report and request changes or safeguards to the
technology, but it has not done so to date. We will also be required to notify
the FDA in writing should an HSS product be found to have a defect relating to
safety of use due to the emission of electronic product radiation. We do not
believe our HSS technology poses any human health risks. However, it is
possible that we, or one of our OEM customers or licensees, could be required
to modify the technology, or a product incorporating the technology, to comply
with requirements that may be imposed by the FDA.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our products are being
produced to standard product safety requirements for sale in the United States
and to similar requirements for sale in Europe and Canada. We expect to meet
the electrical and other regulatory requirements for electronic systems or
components we sell throughout the world.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;margin-left:0in; margin-right:0in; margin-top:0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Some of our products may
be subject to certain export controls by the U.S. government in accordance with
various statutory authorities (including, for example the Trading with the
Enemy Act of 1917, the Arms Export Control Act of 1976, the Export
Administration Act of 1979 or the International Emergency Economic Powers Act),
regulations and related executive orders.&nbsp;These controls affect the export of products and services to foreign
customers and foreign business partners, in addition to exports to foreign
persons generally (including ATC employees who are foreign persons or foreign
regulatory bodies). </Font></p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;margin-left:0in; margin-right:0in; margin-top:0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Generally speaking,
there are three U.S. regulatory systems in place to implement these export
control laws:&nbsp;&nbsp;</Font></p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;margin-left:0in; margin-right:0in; margin-top:0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The first main
regulatory system is administered by the U.S. Department of Treasury, Office of
Foreign Asset Control (OFAC), which administers and enforces economic and
trade sanctions based on U.S. foreign policy and national security goals
against targeted individuals and specifically identified foreign
countries.&nbsp;&nbsp;None of our current business
dealings or business plans implicates the OFAC regulations.&nbsp;&nbsp;</p>

<Font style='font-size:10.0pt;font-family:Times'>

<p align="center"><font size="2" face="Times New Roman">- 11 -</font></p>
<hr size="3" color="#000080">
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  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

</font>

<p>The second main regulatory system is administered by the U.S. Department of State, Directorate of Defense Trade Controls (DDTC), which administers the International Traffic in Arms Regulations (ITAR).&nbsp;&nbsp;The ITAR requires licenses for the export of any product, service or technology that is specifically designed or adapted for a military application and is listed on the United States Munitions List.&nbsp;&nbsp;Since our products are directional speaker systems designed for both commercial and government use, we do not believe that our technologies will fall under ITAR restrictions.&nbsp;&nbsp;However, it is possible that </Font>some of our products may be deemed to have been specifically designed or adapted for military application and, if so, would be regulated under the ITAR<Font style='font-size:10.0pt;font-family:"Times New Roman"; color:#333333'>.&nbsp;&nbsp;</Font>For products, services or technology regulated under the ITAR, we will be required to submit an application for and obtain an exp









ort license to DDTC before exporting ITAR-controlled products, services or technology.</p>

<Font style='font-size:10.0pt;font-family:Times'>

</font>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;margin-left:0in; margin-right:0in; margin-top:0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The third main
regulatory system is administered by the U.S. Department of Commerce, Bureau of
Industry and Security (BIS), which administers the Export Administration
Regulations (EAR).&nbsp;&nbsp;The EAR requires
licenses only for certain products, services or technology that potentially
have both commercial and military uses.&nbsp;Whether a license is required involves analysis of the end use of the
product, as well as the destination country for the product, service or technology.&nbsp;&nbsp;We believe that products such as HSS, LRAD
and NeoPlanar are subject to the EAR because they have commercial applications
and, unless specifically customized for military applications, were not, in
their standard configurations, specifically designed for military use.&nbsp;&nbsp;Application of the EAR is generally routine,
and every company doing business in an international market must comply with
these regulations. </Font></p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;margin-left:0in; margin-right:0in; margin-top:0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We intend to comply with
all applicable laws and regulations, as required, in the export of our
products.&nbsp;&nbsp;</Font></p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;margin-left:0in; margin-right:0in; margin-top:0in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>As a defense contractor
or subcontractor, our contract costs may be subject to audit and review by the
U.S. Government. Routine audits and investigations are conducted from time to
time to determine if performance and administering of U.S. Government contracts
are compliant with applicable contractual requirements, and procurement and
other applicable Federal statutes and regulations. Under present U.S.
Government procurement regulations, if indicted or adjudged in violation of
procurement or other Federal civil laws, a contractor or subcontractor, such as
us, could be subject to fines, penalties, repayments or other damages. U.S.
Government regulations also provide that certain findings may lead to
suspension or debarment from eligibility for awards of new U.S. Government
contracts for up to three years.&nbsp;Suspension or debarment may also limit a company's ability to obtain
future subcontracts, to receive task orders on certain existing contracts, or
to have options exercised on existing contracts.&nbsp;&nbsp;Additionally, if a company is suspended or debarred the U.S.
Government can suspend or revoke a company's foreign export privileges.&nbsp;&nbsp;We are not currently subject to any
suspension or debarment proceedings, nor are we the subject of any
investigation by the U.S. Government.&nbsp;&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We do not believe we are
materially affected, nor do we expect to be materially affected, by the costs
and effects of compliance with environmental laws.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>
<a name="Intellectual Property Rights and Proprietary Information">Intellectual Property Rights and Proprietary Information</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We operate in an
industry where innovations, investment in new ideas and protection of resulting
intellectual property rights are important to success. We rely on a variety of
intellectual property protections for our products and technologies, including
patent, copyright, trademark and trade secret laws, and contractual
obligations, and we pursue a policy of vigorously enforcing such rights.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We have a substantial
base of intellectual property assets. We have 38 issued U.S. patents and 4
issued international patents.&nbsp;&nbsp;We also
have approximately 33 U.S. and 91 international patents pending on our
proprietary sound technologies. Our issued patents expire between 2006 and
2021. We are preparing and intend to file other sound technology patent
applications. We own one U.S. patent on a portable consumer product and two U.S.
patents on other technology. We purchased and own one patent on transducer
technology primarily targeted for government applications. We target our patent
coverage to provide protection in the major manufacturing and commercial
centers of the world.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In addition to such
factors as innovation, technological expertise and experienced personnel, we
believe that a strong patent position is important to compete effectively in
the sound reproduction industry. We believe this is especially important to
protect our leadership position in parametric acoustics (HSS). The following
table lists some of our key HSS patents and patent applications and the
inventions they cover:</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
<p align="center"><font size="2" face="Times New Roman">- 12 -</font></p>
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</font>

<table border=0 cellspacing=0 cellpadding=0 style='mso-cellspacing:0in;
 mso-padding-alt:0in 0in 0in 0in' width="658">
 <tr>
  <td valign=top style='width:425;'>
  <div style="border-top-style: solid; border-top-width: 2; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-weight: 700; layout-grid-mode: line; color: windowtext' size="2">
  Key Patent Title
  </font></div>
  </td>
  <Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>
  <td valign=top style='width:74;'>
  <div style="border-top: 2px solid #000000">
    <p style="margin-top: 6pt; margin-bottom: 6pt">&nbsp;</div>
  </td>
  </font>
  <td valign=top style='width:483;'>
  <div style="border-top-style: solid; border-top-width: 2; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-top: 6pt; margin-bottom: 6pt">

  <Font style='font-weight: 700; layout-grid-mode: line; color: windowtext' face="Times New Roman" size="2">
  Coverage
  </font>
  </div>
  </td>
 </tr>

 <tr>
  <td valign=top style='border-bottom:1px dotted #000000; width:425;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Acoustic Heterodyne Device and Method</Font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">

 &nbsp;
 </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Virtual loudspeaker projection, controlling virtual
projection attributes and direction with a computer driver and in ear applications for HSS<br>
&nbsp;</Font></td>
 </tr>
</table>

<table border=0 cellspacing=0 cellpadding=0 style='mso-cellspacing:0in;
 mso-padding-alt:0in 0in 0in 0in' width="658">

 <tr>
  <td valign=top style='border-bottom:1px dotted #000000; width:425;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Piezoelectric Film Sonic Emitter</Font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">
 <Font style='font-size: 10.0pt' face="Times New Roman">

 &nbsp;</font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Piezoelectric film based emitters<br>
&nbsp;</Font></td>
 </tr>
 <tr>
  <td valign=top style='border-bottom:1px dotted #000000; width:425;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman"><Font style='font-size: 10.0pt'>
  Parametric Loudspeaker w/ Electro-Acoustical<br>
  One
stage Diaphragm Transducer<br>
&nbsp;
  </Font></font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">
 <Font style='font-size: 10.0pt' face="Times New Roman">

 &nbsp;</font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  All film type transducers for HSS</Font></td>
 </tr>
</table>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size: 10.0pt' face="Times New Roman">&nbsp;</Font></p>

<Font style='font-size:10.0pt'>

<table border=0 cellspacing=0 cellpadding=0 style='mso-cellspacing:0in;
 mso-padding-alt:0in 0in 0in 0in' width="658" height="286">
 <tr>

  <td valign=top style='border-bottom:1px dotted #000000; width:425;' height="33">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman"><Font style='font-size: 10.0pt'>
  Modulator Processing for a Parametric
  Loudspeaker<br>
&nbsp;</Font></font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;' height="33">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;' height="33">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Advanced distortion correction</Font></td>
 </tr>
 <tr>

  <td valign=top style='border-bottom:1px dotted #000000; width:425;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman"><Font style='font-size: 10.0pt'>
  Parametric Loudspeaker with Improved Phase
  Characteristics<br>
&nbsp; </Font></font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Ideal tuning of parametric carriers for <br>
  maximum efficiency</Font></td>
 </tr>
 <tr>

  <td valign=top style='border-bottom:1px dotted #000000; width:425;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Power Amplification for Parametric Loudspeakers</Font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  All high efficiency switch-mode power amplifiers<br>
for HSS<br>
&nbsp;</Font></td>
 </tr>
 <tr>

  <td valign=top style='border-bottom:1px dotted #000000; width:425;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Parametric Virtual Speaker and Surround Sound System<br>
&nbsp;</Font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">HSS for virtual surround sound </Font>
  </td>
 </tr>
 <tr>

  <td valign=top style='border-bottom:1px dotted #000000; width:425;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman"><Font style='font-size: 10.0pt'>
  Pre-encoded Signals for Playback though a <br>
  Parametric
  Loudspeaker System
  </Font></font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;' height="47">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Pre recorded HSS processing for <br>
  reduced processing cost and hardware<br>
&nbsp;</Font></td>
 </tr>
 <tr>

  <td valign=top style='border-bottom:2px solid #000000; width:425;' height="48">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Dynamic Carrier System for Parametric Arrays</Font></td>
  <td valign=top style='border-bottom:2px solid #000000; width:74;' height="48">
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:2px solid #000000; width:483;' height="48">
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Reduced power consumption and increased
<br>
efficiency in HSS<br>
&nbsp;</Font></td>
 </tr>
 <Font style='font-size:10.0pt;font-family:Times'>

 <tr>
  <Font style='font-size:10.0pt;font-family:Symbol'>

  <td valign=top style='width:425;' height="10">
  <p style="margin-top: 0pt; margin-bottom: 0pt">
  </td>
  <td valign=top style='width:74;' height="10">
  <p style="margin-top: 0pt; margin-bottom: 0pt">
  </td>
  <td valign=top style='width:483;' height="10">
  <p style="margin-top: 0pt; margin-bottom: 0pt">
  </td>
  </font>
 </tr>
</table>

</font>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size: 10.0pt' face="Times New Roman">
<br>
The following table lists some of our other key sound patents and patent
applications and the inventions they cover: </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size: 10.0pt' face="Times New Roman">
<br>
&nbsp;</Font></p>

</font><Font style='font-size:10.0pt;'>

<table border=0 cellspacing=0 cellpadding=0 style='mso-cellspacing:0in;
 mso-padding-alt:0in 0in 0in 0in' width="658">
 <tr>
  <td valign=top style='width:425;'>
  <div style="border-top-style: solid; border-top-width: 2; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-top: 6pt; margin-bottom: 6pt">
   <Font style='font-size:10.0pt;font-weight:700; layout-grid-mode:line; color:windowtext' face="Times New Roman" size="2">
  Key Patent Title
   </font>
  </div>
  </td>

   <Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>
  <td valign=top style='width:74;'>
  <div style="border-top: 2px solid #000000">
    <p style="margin-top: 6pt; margin-bottom: 6pt">&nbsp;</div>
  </td>
   </font>
  <td valign=top style='width:483;'>
  <div style="border-top-style: solid; border-top-width: 2; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-top: 6pt; margin-bottom: 6pt">
   <Font style='font-size: 10.0pt; font-weight: 700; layout-grid-mode: line; color: windowtext' face="Times New Roman" size="2">
  Coverage
   </font>
  </div>
  </td>
 </tr>
 </font>

 <tr>

  <td valign=top style='border-bottom:1px dotted #000000; width:425;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Single End Planar Magnetic Speaker</Font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman">

  &nbsp;
  </font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  a) Single Ended, Planar Magnetic loudspeaker w/high<br>
energy magnets<br>
  b) High speed/low cost planar magnetic diaphragm<br>
production<br>
  c) Specialized film for use in planar magnetic
<br>
loudspeakers<br>
&nbsp;</Font></td>
 </tr>
 <tr>
  <td valign=top style='border-bottom:1px dotted #000000; width:425;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman"><Font style='font-size: 10.0pt'>
  Acoustically Asymmetric Band-Pass Loudspeaker<br>
  With
  Multiple Acoustic Filters
  </Font></font></td>
  <td valign=top style='border-bottom:1px dotted #000000; width:74;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">

 <Font style='font-size: 10.0pt' face="Times New Roman">

 &nbsp;

</font>
  </td>
  <td valign=top style='border-bottom:1px dotted #000000; width:483;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  a) Low distortion/High Powered Subwoofer<br>
  b) Increased bandwidth subwoofer<br>
&nbsp;</Font></td>
 </tr>
 <tr>
  <td valign=top style='border-bottom:2px solid #000000; width:425;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">
  <Font style='font-size: 10.0pt' face="Times New Roman"><Font style='font-size: 10.0pt'>
  Dynamic Power Sharing in a Multi-Channel<br>
  Sound
  System
  </Font></font></td>
  <td valign=top style='border-bottom:2px solid #000000; width:74;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt">

 <Font style='font-size: 10.0pt' face="Times New Roman">

 &nbsp;
</font>

  </td>
  <td valign=top style='border-bottom:2px solid #000000; width:483;'>
  <p style="margin-top: 6pt; margin-bottom: 6pt"><Font style='font-size: 10.0pt' face="Times New Roman">
  Power/cost savings, increased output in surround<br>
  sound/home theater systems<br>
&nbsp;</Font></td>
 </tr>
</table>

 <Font style='font-size:10.0pt;font-family:Symbol'>

 <Font style='font-size:10.0pt;font-family:Symbol'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We have an ongoing
policy of filing patent applications to seek protection for novel features of
our products and technologies. Prior to the filing and granting of patents, our
policy is to disclose key features to patent counsel and maintain these
features as trade secrets prior to product introduction. We cannot assure you
that any additional patents on our products or technology will be granted.</Font></p>

<p align="center"><font size="2" face="Times New Roman">- 13 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We are investing
significant management, legal and financial resources toward our technology
patents. The electronics industry is characterized by frequent litigation
regarding patent and other intellectual property rights. Others, including
academic institutions and competitors, hold numerous patents in electronics and
sound reproduction. Although we are not aware of any existing patents that
would materially inhibit our ability to commercialize our sound technology;
others may assert claims in the future. Such claims, with or without merit, may
have a material adverse effect on our financial condition or results of
operations. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The validity of our
existing patents has not been adjudicated by any court. Competitors may bring
legal action to challenge the validity of our existing or future patents or may
attempt to circumvent the protection provided by such patents.&nbsp;&nbsp;The failure to obtain patent protection or
the loss of patent protection on our existing and future technologies or the
circumvention of our patents by competitors could have a material adverse
effect on our ability to compete successfully.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We generally take
advantage of the Patent Convention Treaty procedures for patent protection in
foreign countries. This procedure is more cost efficient, but results in a
delay in the application and issuance of foreign patents; however, any resulting
foreign patents, if and when issued, enjoy the same priority date as U.S.
counterparts.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We also file for trade
name and trademark protection when appropriate. We are the owner of federally
registered trademarks including HYPERSONIC&reg;, HSS&reg;, SFT&reg;, STRATIFIED FIELD&reg;,
PMT&reg;, NEOPLANAR&reg;, PUREBASS&reg; and SHAPING THE FUTURE OF SOUND&reg;. Trade names or
trademarks may not be successfully maintained, defended or protected.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our policy is to enter
into nondisclosure agreements with each employee and consultant or third party
to whom any of our proprietary information is disclosed. These agreements
prohibit the disclosure of confidential information to others, both during and
subsequent to employment or the duration of the working relationship. There can
be no assurance, however, that these agreements will not be breached, that we
will have adequate remedies for any breach or that our trade secrets will not
otherwise become known or be independently developed by competitors.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We are obligated to pay
a $2.50 per unit royalty on one electronic component for our HSS product. We
are also obligated to pay Elwood G. Norris, our Chairman, a 2% royalty on net
sales from certain of our technologies, of which only HSS is a current offering
of our company. The royalty obligation continues until at least March 1, 2007,
and for any longer period during which we sell products or license technologies
subject to any patent assigned to us by Mr. Norris. No royalties were paid
or recorded under this agreement in the fiscal years ended September 30, 2004, 2003 or
2002, as these royalties were immaterial and were waived by Mr. Norris. We may owe royalties in
future periods based on actual sales or technology revenues.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family: "Times New Roman"'><b >
<a name="Research and Development">Research and Development</a></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The sound reproduction
market is subject to rapid changes in technology and designs with frequent
improvements and new product introductions. We believe our future success will
depend on our ability to enhance and improve existing technologies and to
introduce new technologies on a competitive basis. Accordingly, we have in the
past, and we expect in the future, to engage in significant research and
development activities. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>For the fiscal years
ended September 30, 2004, 2003 and 2002 we spent $2,988,784, $2,437,591 and
$3,537,355 respectively, on company-sponsored research and development, and
$0, $55,760 and $84,708, on customer-sponsored research and development.
Future levels of research and development expenditures will vary depending on
the timing of further new product development and the availability of funds to
carry on additional research and development on currently owned technologies or
in other areas.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
<a name="Executive Officers">Executive Officers</a></Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
current executive officers of American Technology Corporation and their ages
and business experience for the last five years are set forth below.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;tab-stops: -1.0in -.5in 3.5in;font-size:10.0pt;font-family:"Times New Roman"'><b><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Elwood G. Norris,</Font></i></b><b> </b>age 66, has been a Director of our company since August 1980.&nbsp;Mr. Norris served as Chief Executive Officer from October 2000 until February 2003. He currently serves as Chairman of the Board, an executive position.&nbsp;&nbsp;He served as President from August 1980 to February 1994.&nbsp;&nbsp;Mr. Norris managed our research and development activities as Chief Technology Officer through December 2000. From 1988 to November 1999, he was a director and Chairman of e.Digital Corporation, a public company engaged in electronic product development, distribution and sales. During that period, he also held various other executive officer positions at e.Digital. From August 1989 to October 1999, he served as director and held vari









ous executive officer positions with Patriot Scientific Corporation, a public company engaged in the development of microprocessor technology. He is an inventor with over 44 U.S. patents, primarily in the fields of electrical and acoustical engineering. He is the inventor of our HyperSonic Sound and other technologies.</p>

 <Font style='font-size:10.0pt;font-family:'>

<p align="center"><font size="2" face="Times New Roman">- 14 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

</font>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;tab-stops: -1.0in -.5in 3.5in;font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</p>

</font>

</font>

<Font style='font-size:10.0pt;font-family:Symbol'>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;font-size:10.0pt'><b><i style='font-style:normal'><Font style='font-size:10.0pt'>Kalani Jones,</Font></i></b> age 42, was appointed President of our company in April 2004.&nbsp;&nbsp;&nbsp;He joined us as Vice President of Operations in September 2003 and later that month assumed the position of Chief Operating Officer. From October 1999 to November 2002, he was Vice President Engineering and Product Operations for Tachyon Inc., a San Diego provider of satellite networking solutions. From 1997 to 1999, he was Senior Director for Program Management at Iomega Corporation, a provider of removable computer storage solutions, and previously held engineering management positions at General Instrument and TRW. From November 2002 until being recruited by the Company, Mr. Jones was a self-employed entrepreneur developing technology based remote monitoring solutions. Mr. Jones obtained an M.S.E.E. degree in Digital Comm




unications and Digital Signal Processing from USC (1988) and a B.S.E.E. in Electrical and Computer Engineering from California State Polytechnic University (1984).</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;font-size:10.0pt'><b><i style='font-style:normal'><Font style='font-size:10.0pt'>Michael A. Russell</Font></i></b>, age 58, joined our company in June 2004 as our Chief Financial Officer.&nbsp;&nbsp;From May 2000 until July 2003, he was the Chief Financial Officer of Metallic Power, Inc, a San Diego developer of zinc-air regenerative fuel cells.&nbsp;&nbsp;From November 1998 until February of 2000, he was the Group Vice President of Finance for the Financial Solutions Group of HNC Software, Inc. (acquired by Fair Isaac Corporation in July 2002), a developer of fraud detection software.&nbsp;Mr. Russell obtained an M.B.A. degree (1971) and a B.S.E.E. degree in electrical engineering (1968) from the University of California at Los Angeles (UCLA). </p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><b><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Carl Gruenler,</Font></i></b> age 51, has served as our Vice President of Government and Force Protection Systems Group since July 2003.&nbsp;&nbsp;During the period from November 2003 until June 2004, he assumed the additional responsibilities of Interim Chief Financial Officer. From May 1998 to June 2003, he served as Smart Wing Program Manager for the Combat Patrol and Reconnaissance Wing as a Captain in the United States Navy Reserve. He was responsible for identifying and developing new integrated systems for physical security/access control, waterside force protection and mobile computing. Mr. Gruenler&#146;s prior business experience includes serving as president of Thomas D. Mangelsen, Inc., a national retail, manufacturing and distribution company; chief financial officer of Automated Monitoring and Control








International, Inc., a railroad systems technology company; and a project manager/financial analyst at Union Pacific Railroad. He holds an M.B.A. from the University of Nebraska-Lincoln (1981) and a B.S. in Business Administration from Oral Roberts University in (1975).</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman";
layout-grid-mode:line'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman";
layout-grid-mode:line'>We are currently seeking an individual to serve as the
Vice President of our Business Group.&nbsp;We are actively recruiting qualified candidates at this time.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'><a name="Employees">Employees</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>At September 30, 2004,
we employed a total of 53 people. Of such employees, 15 were in research and
development, 16 were in production, quality assurance and materials control, 11
were in general and administrative and 11 were in marketing, sales and
licensing.&nbsp;&nbsp;We also lease technical
personnel from time to time on an as needed basis and use outside consultants
for various services.&nbsp;&nbsp;We have not
experienced any work stoppages and are not a party to a collective bargaining
agreement, and we consider our relations with our employees to be favorable.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<b>
<Font style='font-size:10.0pt;font-family:Symbol' size="2">

 <Font style='font-family:"Times New Roman"; font-size:10.0pt'>



<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-family:"Times New Roman"'>
<a name="item 2">Item
2. Properties.</a></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-family:"Times New Roman"'>&nbsp;</Font></p>

</font></font></b>

<p style="margin-top: 1; margin-bottom: 1"><Font style='font-family:"Times New Roman"'>
Our executive offices
and our research and development facilities for our Business Group and
Government Group are located at 13114 Evening Creek Drive South, San Diego,
California.&nbsp;&nbsp;In January 2004, we amended
our lease agreement to increase the office, laboratory, production and
warehouse space we occupy to 23,548 square feet and extend the term of the
lease until July&nbsp;31, 2006.&nbsp;&nbsp;In June
2004, we exercised an option in the lease agreement to reduce the space we
occupy to 14,997 square feet. Our current aggregate monthly payments are&nbsp;$17,996, exclusive of utilities and costs.&nbsp;&nbsp;In order to meet our ongoing needs, we may
increase the space we occupy at this facility or seek new facilities during
fiscal 2005.<br>
&nbsp;</font></p>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;
</p>

 <Font style='font-family:"Times New Roman"'>

<p style="margin-top: 1; margin-bottom: 1"><Font style='font-family:"Times New Roman"'>
We rent on a monthly
basis office space utilized for development and production of our NeoPlanar
technology for our Business Group and Government Group, located at 3170
Research Way, Unit 81, Carson City, Nevada.&nbsp;We occupy approximately 2,200 square feet with a monthly payment of
$1,250 excluding utilities.</font></p>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1"><Font style='font-family:"Times New Roman"'>
Our East Coast sales
office for the Government Group is located at 1 Main Street, Topsham, Maine. We
currently rent, on a month-to-month basis, 600 square feet of office space with
monthly payments of $919. We believe that we will be seeking additional space
at this location to meet our needs for fiscal 2005.&nbsp;&nbsp;&nbsp;We believe there is adequate availability of office and
development space in the general vicinity to meet our future needs.&nbsp;&nbsp;</font></p>

 <Font style='font-family:"Times New Roman"; font-size:10.0pt'>

<Font style='font-size:10.0pt;font-family:Symbol' size="2">

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'>&nbsp;</p>

 <Font style='font-size:10.0pt;font-family:Symbol'>

 <Font style='font-size:10.0pt;' size="2">

 <p align="center"><font size="2" face="Times New Roman">- 15 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'>&nbsp;</p>

</font>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-family:"Times New Roman"'>
<a name="Item 3. Legal Proceedings">Item
3. Legal Proceedings.</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-family:"Times New Roman"'>&nbsp;</Font></b></p>

</font>

</font>
 <Font size="2">
 <Font style='font-size:10.0pt;'>
 <p style="margin-top: 1; margin-bottom: 1">In September 2003, we filed a
complaint against eSOUNDideas, Inc., in the Superior Court of California,
County of San Diego, alleging breach of contract and seeking a declaratory
judgment to the effect that a License, Purchase and Marketing Agreement dated
September 28, 2000, which we refer to as the ESI License Agreement with
eSOUNDideas, a California partnership, was properly terminated in May 2003. The
principals of eSOUNDideas are Greg O. Endsley and Douglas J. Paschall. The
principals also founded a corporation, eSOUNDideas, Inc., which purported to
assume the contractual obligations of eSOUNDideas. We amended the complaint in
November 2003 to include eSOUNDideas (the general partnership), Mr. Endsley and
Mr. Paschall as defendants. For convenience, the following discussion refers to
eSOUNDideas and eSOUNDideas, Inc. collectively as &#8220;ESI.&#8221; In November 2003, we
filed complaints in the Superior Court of California, County of San Diego,
against Mr. Endsley and Paschall seeking declaratory judgments that options
granted to each of Mr. Endsley and Mr. Paschall in April 2001 were terminated
in October 2002.<br>
&nbsp;</p>

 <Font style='font-size:10.0pt;font-family:Symbol'>

 </font>

</font>

<Font style='font-family:"Times New Roman"'>

 <Font style='font-size:10.0pt; font-family:Symbol'>

<p style="margin-top: 1; margin-bottom: 1"><Font style='font-family:"Times New Roman"'>
The
ESI License Agreement formerly appointed ESI as an exclusive distributor of HSS
products specifically targeted to the point of sale/purchase, kiosk and
display, and the event, trade show and exhibit markets in North America for
five years. In June 2002, we and ESI purported to enter into an amendment to
the ESI License Agreement, extending the term to ten years commencing on the
first delivery of a commercial HSS product to an end user, and eliminating
minimum purchase requirements for the first three years. We believe the
amendment was invalid as it was given in consideration for a large order from
ESI, which was later withdrawn by ESI due to a dispute over the payment and
delivery terms of such order. In May 2003, we gave notice to ESI of termination
of the ESI License Agreement. We based our termination on our belief that ESI
had failed to fulfill certain covenants contained in the ESI License Agreement
related to efforts and resources required to maximize the distribution and
sales of HSS products in its product categories. Under the terms of the ESI
License Agreement, the termination was effective immediately, but ESI had sixty
days to cure conditions giving rise to termination and reinstate the agreement.
ESI did not tender a cure within such sixty day period.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The
three cases were consolidated upon motion by the defendants and order of the
court. The defendants filed a cross-action in the consolidated action alleging
fraud, breach of contract in connection with the ESI License Agreement and the
options, breach of the implied covenant of good faith and fair dealing, intentional
interference with contract, negligent interference with contract, intentional
interference with prospective economic advantage, negligent interference with
prospective economic advantage, defamation, and violation of California
Business and Professions Code &sect;17200.&nbsp; We filed our answer to the second
amended cross-complaint in August 2004.&nbsp; Discovery is ongoing.&nbsp; Trial
has been set for May 2005.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We
intend to vigorously pursue our complaint against the defendants in this case
and to vigorously challenge the defendant&#146;s cross complaint.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We
may at times be involved in litigation in the ordinary course of business.
Except as set forth above, there are no pending material legal proceedings to
which we are a party or to which any of our property is subject.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-family:"Times New Roman"'>
<a name="Item 4. Submission of Matters to a Vote of Security Holders.">Item
4. Submission of Matters to a Vote of Security Holders.</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-family:"Times New Roman"'>&nbsp;</Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>None.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-family:"Times New Roman"'>&nbsp;</Font></b></p>

<h1  style='margin:0in;text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;font-weight:bold;mso-pagination:widow-orphan lines-together'>PART
II</h1>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><b
><Font style='font-family:"Times New Roman"'>
<a name="Item 5. Market for Registrant&#146;s Common Equity, Related Shareholder Matters and Issuers Purchases of Equity Securities.">Item
5. Market for Registrant&#146;s Common Equity, Related Stockholder Matters and
Issuers Purchases of Equity Securities.</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>&nbsp;</Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>Market Information</Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our common stock is
traded and quoted on NASDAQ SmallCap Market under the symbol &#8220;ATCO&#8221;. The market
for our common stock has often been sporadic and limited.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

<Font style='font-family:"Times New Roman"; font-size:10.0pt'>
<p align="center"><font size="2" face="Times New Roman">- 16 -</p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The following table sets
forth the high and low bid quotations for our common stock for the fiscal years
ended September 30, 2003 and 2004:<br>
&nbsp;</Font></p>



<table border=0 cellspacing=0 cellpadding=0 style='margin-left:5.4pt;
 border-collapse:collapse;mso-padding-alt:0in 5.4pt 0in 5.4pt' width="581">
 <tr>
  <td valign=top style='width:433;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td colspan=2 valign=top style='width:148;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Palatino;color:black;text-align:center;line-height:normal;
  tab-stops:.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'><b>Bid
  Quotations</b></Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'><b>High</b></Font></u></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><u><Font style='font-size:10.0pt;font-family:"Times New Roman"'><b>&nbsp;Low</b></Font></u></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Fiscal Year Ending
  September 30, 2003</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:39;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$4.77</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$2.87</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$3.99</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$3.00</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$6.56</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$3.11</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$7.65</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$5.43</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Fiscal Year Ending
  September 30, 2004</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'>&nbsp;</p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$6.19</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$4.01</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$6.07</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$4.05</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$7.77</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$5.50</Font></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:433;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth Quarter</Font></p>
  </td>
  <td valign=top style='width:109;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$6.70</Font></p>
  </td>
  <td valign=top style='width:39;'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Palatino;color:black;line-height:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$4.38</Font></p>
  </td>
 </tr>
</table>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>The above quotations
reflect inter-dealer prices, without retail markup, markdown or commission and
may not represent actual transactions.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-weight:bold'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
We had 1,112 holders of record of our common stock at December <Font style='font-weight:bold'>
20</Font>, 2004 with 19,808,819 shares issued and outstanding. We have never paid a cash dividend on our common stock or preferred stock and do not expect to pay dividends in the foreseeable future.&nbsp;&nbsp;The terms of our Series D and Series E Preferred Stock require preferred dividends be paid to the holders of such stock in preference to dividends to holders of our common stock.</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

</font>

</font>

 <Font style='font-size:10.0pt; ' face="Times New Roman">

<p style="margin-top: 0; margin-bottom: 0"><b>Equity
Compensation Plan Information</b></font></p>

<p style="margin-top: 0; margin-bottom: 0">

 <Font style='font-size: 10.0pt' face="Times New Roman">

At September&nbsp;30, 2004, we had two equity incentive plans under which equity
securities are or have been authorized for issuance to our employees,
consultants or directors: the 2002 Stock Option Plan and the 1997 Stock Option
Plan.&nbsp;&nbsp;These plans have been approved by
our stockholders. In addition, from time to time we issue to employees,
directors and service providers special stock options, inducement grants and
warrants to purchase common shares, and these grants have not been approved by
stockholders. The following table gives information as of September&nbsp;30,
2004:</font></p>

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

 <Font style='font-size:10.0pt; font-family:Symbol'>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'>&nbsp;</p>

</font></font>

<table border=1 cellspacing=0 cellpadding=0 style='border-collapse:collapse;
 border:none;mso-border-alt:solid windowtext .5pt;mso-padding-alt:0in 5.4pt 0in 5.4pt' width="638">
 <tr>
  <td valign=top style='width:270;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">Plan
  Category</font></b></p>
  </td>

 <Font style='font-size:10.0pt; font-family:Symbol'>

  <td valign=top style='width:17;border:medium none;'>
  &nbsp;</td>
  </font>
  <td valign=top style='width:227;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">Number
  of securities to be issued upon exercise of outstanding options, warrants and
  rights</font></b></p>
  </td>

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

  <td valign=top style='width:20;border:medium none;'>
  &nbsp;</td>
  </font>
  <td valign=top style='width:255;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">&nbsp;</font></b></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman"><br>
  Weighted-average
  exercise price of outstanding options, warrants and rights</font></b></p>
  </td>

 <Font style='font-size:10.0pt; font-family:Symbol'>

  <td valign=top style='width:16;border:medium none;'>
  &nbsp;</td>
  </font>
  <td valign=top style='width:239;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-pagination:widow-orphan lines-together;
  mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">Number
  of securities remaining available for future issuance under equity
  compensation plans (excluding securities reflected in column (a))</font></b></p>
  </td>
 </tr>

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

 <tr>
  <td valign=top style='width:270;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'>&nbsp;</p>
  </td>
  <td valign=top style='width:17;border:medium none;'>
  &nbsp;</td>
</font>
  <td valign=top style='width:227;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><u><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">(a)</font></b></u></p>
  </td>

 <Font style='font-size:10.0pt; font-family:Symbol'>

  <td valign=top style='width:20;border:medium none;'>
  &nbsp;</td>
</font>
  <td valign=top style='width:255;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><u><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">(b)</font></b></u></p>
  </td>

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

  <td valign=top style='width:16;border:medium none;'>
  &nbsp;</td>
</font>
  <td valign=top style='width:239;border:medium none;'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><u><b><font style="font-size: 10.0pt" size="2" face="Times New Roman">(c)</font></b></u></p>
  </td>
 </tr>

 <Font style='font-size:10.0pt; font-family:Symbol'>

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

 <tr>
  <td valign=top style='width:270;border:medium none;'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><Font style='font-size:9.0pt;font-family:
  "Times New Roman"'>&nbsp;</Font></p>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><Font style='font-size:9.0pt;font-family:
  "Times New Roman"'>Equity compensation plans approved by security holders</Font></p>
  </td>
  <td valign=top style='width:17;border:medium none;'>
  &nbsp;</td>
  <td valign=top style='width:227;border:medium none;'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  1,652,498</Font></p>
  </td>
  <td valign=top style='width:20;border:medium none;'>
  &nbsp;</td>
  <td valign=top style='width:255;border:medium none;'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  $4.59</Font></p>
  </td>
  <td valign=top style='width:16;border:medium none;'>
  &nbsp;</td>
  <td valign=top style='width:239;border:medium none;'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>
  <p align=center style='margin:0in;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><font size="2">284,928</font></p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:270;border:medium none;'>
  <Font style='font-size:10.0pt;font-family:"Times New Roman"'><Font style='font-size:9.0pt;font-family:
  "Times New Roman"'>Equity compensation plans not approved by security holders</Font></td>
  <td valign=top style='width:17;border:medium none;'>
  &nbsp;</td>
  <td valign=top style='width:227;border:medium none;'>
  <p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly' align="center"><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  <br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 337,000<sup> (1)</sup></Font></p>
  </td>
  <td valign=top style='width:20;border:medium none;'>
  &nbsp;</td>
  <td valign=top style='width:255;border:medium none;'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'>&nbsp;</p>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>$4.84</Font></p>
  </td>
  <td valign=top style='width:16;border:medium none;'>
  &nbsp;</td>
  <td valign=top style='border:medium none; width:239' bordercolor="#FFFFFF">
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'>&nbsp;</p>
  <Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  <p align=center style='margin:0in;font-family:Times;color:black;text-align:center;mso-element:frame;
  mso-element-frame-hspace:9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:
  paragraph;mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;
  mso-height-rule:exactly'>--</p>

</font>
  </td>
 </tr>
 <tr>
  <td valign=top style='width:270;border:medium none;'>

  <div style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">

  <p align=left style='border-bottom:medium none; margin:0in; font-size:12.0pt;font-family:Times;color:black;mso-border-top-alt:solid windowtext .5pt;
  mso-border-bottom-alt:solid windowtext 2.25pt;padding:0in;mso-padding-alt:
  1.0pt 0in 1.0pt 0in;mso-element:frame;mso-element-frame-hspace:9.0pt;
  mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly; border-left-color:inherit; border-right-color:inherit; border-top-color:inherit'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Total</Font></p>

  </div>

  </td>
  <td valign=top style='width:17;border:medium none;'>

  &nbsp;</td>
  <td valign=top style='width:227;border:medium none;'>

  <div style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">

  <p align=center style='border-style:none; border-color:inherit; margin:0in; font-family:Times;color:black;text-align:center;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext 2.25pt;
  padding:0in;mso-padding-alt:1.0pt 0in 1.0pt 0in;mso-element:frame;mso-element-frame-hspace:
  9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly'><font size="2">1,989,498</font></p>

  </div>

  </td>
  <td valign=top style='width:20;border:medium none;'>

  &nbsp;</td>
  <td valign=top style='width:255;border:medium none;'>

  <div style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">

  <p align=center style='border-bottom:medium none; margin:0in; font-size:12.0pt;font-family:Times;color:black;text-align:center;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext 2.25pt;
  padding:0in;mso-padding-alt:1.0pt 0in 1.0pt 0in;mso-element:frame;mso-element-frame-hspace:
  9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly; border-left-style:none; border-left-color:inherit; border-right-style:none; border-right-color:inherit; border-top-style:none; border-top-color:inherit'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
  $4.63</Font></p>

  </div>

  </td>
  <td valign=top style='width:16;border:medium none;'>

  &nbsp;</td>
  <td valign=top style='border:medium none; width:239;'>

  <div style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">

  <Font style='font-size:10.0pt;font-family:"Times New Roman"'>

  <p align=center style='border-bottom:medium none; margin:0in; font-family:Times;color:black;text-align:center;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext 2.25pt;
  padding:0in;mso-padding-alt:1.0pt 0in 1.0pt 0in;mso-element:frame;mso-element-frame-hspace:
  9.0pt;mso-element-wrap:no-wrap-beside;mso-element-anchor-vertical:paragraph;
  mso-element-anchor-horizontal:margin;mso-element-top:-1.5pt;mso-height-rule:
  exactly; border-left-style:none; border-left-color:inherit; border-right-style:none; border-right-color:inherit; border-top-style:none; border-top-color:inherit'>
  284,928</p>

</font>

  </div>

  </td>
 </tr>
</table>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-left:.5in;text-indent:-.25in; tab-stops:list .5in;font-size:10.0pt;font-family:"Times New Roman"'>
<br>
(1)<Font style='font:7.0pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;</Font>Consists of 187,000 of individual stock option grants and 150,000 of warrant grants to employees, directors
<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and service providers approved by the Board of Directors from time to time.</p>

<p>&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1"><b>Recent Sales of Unregistered Securities</b></p>
<p style="margin-top: 1; margin-bottom: 1">In March 2004, we issued 32,733 shares of common
stock upon conversion of 10,000 shares of our Series E Preferred Stock.&nbsp; We
received no consideration in connection with such issuance.&nbsp; For this issuance,
we relied on the exemption provided by Section 3(a)(9) of the Securities Act.</p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

<Font style='font-family:"Times New Roman"; font-size:10.0pt'>
<p align="center"><font size="2" face="Times New Roman">- 17 -</p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

 </font>
<p style="margin-top: 1; margin-bottom: 1">In April 2004,
we issued 65,856 shares of common stock upon conversion of 20,000 shares of our
Series E Preferred Stock.&nbsp; We received no consideration in connection with such
issuance.&nbsp; For this issuance, we relied on the exemption provided by Section
3(a)(9) of the Securities Act.</p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'><b
><Font style='font-family:"Times New Roman"'>
<a name="Item 6. Selected Financial Data.">Item
6. Selected Financial Data.</a></Font></b></p>
</font><Font face="Times New Roman" size="2">
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<Font style='font-size:10.0pt;font-family:"Times New Roman"' size="2">

<p style="margin-top: 1; margin-bottom: 1">The following selected financial data
has been derived from our audited consolidated financial statements and the
related notes. This information should be read in conjunction with Item 7 of
this report - &quot;Management&#146;s Discussion and Analysis of Financial Condition and
Results of Operations,&quot; and with our consolidated financial statements and the
related notes set forth at the pages indicated in Item 15(a) of this report.</p>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1">

 <Font style='font-size:10.0pt; font-family:Symbol' size="2">

<Font style='font-size:10.0pt;font-family:"Times New Roman"' size="2" face="Times New Roman">
<DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the fiscal years ended September 30,</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">

<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2002 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2001 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Statement of Operations: </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net revenues </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,752,549</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,315,426</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,010,752</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">855,342</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,433,050</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Gross profit (loss) </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,282,728</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(228,651</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">326,908</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">277,066</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">382,155</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,960,436</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,227,013</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,220,132</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,046,219</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(3,068,046</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss available to common stockholders </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(7,325,785</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(10,636,241</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,503,044</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,166,941</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(7,948,994</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss per share-basic and diluted </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.37</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.67</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.60</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.38</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.67</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Weighted average number of shares-basic</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;and diluted </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">19,603,265 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">15,857,569 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">14,193,508 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">13,563,101 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">11,868,511 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of September 30,</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">

<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2002 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2001</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Working capital </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,472,984</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">8,484,210</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">554,713</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">892,040</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">4,794,743</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Total assets </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">7,645,291</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">11,744,371</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,789,634</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,837,284</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">7,275,614</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Long-term obligations </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">12,131</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">23,097</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,153,012</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">-</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">-</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Total stockholders' equity (deficit) </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,192,915</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,728,171</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(884,882</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,993,495</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">6,829,875</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV>
</DIV>
</font></font>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

</font>

</font>

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avoid; margin-left:0in; margin-right:0in; margin-top:0in'><b
><Font style='font-family:"Times New Roman"'>
<a name="Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.">Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.</a></Font></b></p>

</font>


<Font style='font-size:10.0pt; '>

<p style="margin-top: 1; margin-bottom: 1"><font style="font-size: 10.0pt" size="2" face="Times New Roman">This discussion should
be read in conjunction with the information presented in other sections of this
report on Form 10-K, including &#8220;Item 1. Business,&#8221; &#8220;Item 6. Selected Financial
Data,&#8221; and &#8220;Item 8. Financial Statements and Supplementary Data.&#8221; This
discussion contains forward-looking statements which are based on our current
expectations and industry experience, as well as our perception of historical
trends, current market conditions, current economic data, expected future
developments and other factors that we believe are appropriate under the
circumstances. These statements involve risks and uncertainties that could
cause actual results to differ materially from those suggested in the
forward-looking statements.</font> </p>

 <Font style='font-size:10.0pt; ' face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

</font>

<p style="margin-top: 1; margin-bottom: 1"><font style="font-size: 10.0pt" face="Times New Roman">We begin this discussion
with an overview to give you an understanding of our business and the markets
we serve. We then discuss our critical accounting policies. This is followed by
a discussion of our results of operations for the fiscal years ended
September&nbsp;30, 2004, 2003 and 2002. We include in this discussion
additional disclosure regarding our two reportable business segments, the Business
Group and the Government Group. We then discuss our financial condition at
September&nbsp;30, 2004 with a comparison to September&nbsp;30, 2003 and 2002.
This section includes information regarding our liquidity and capital
resources, cash flows, and contractual obligations. Finally, we provide risk
factors at the end of this discussion.</font></p>

 <Font style='font-size:10.0pt; font-family:Symbol'>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

</font>

<p style="margin-top: 1; margin-bottom: 1"><b><font style="font-size: 10.0pt" face="Times New Roman">Overview</font></b></p>
<p style='margin:1 0in;font-family:Times;color:black'><font style="font-size: 10.0pt" face="Times New Roman">We
are an innovator of proprietary sound reproduction technologies and products.
Our HyperSonic Sound, or HSS, technology is a new method of sound reproduction
that creates sound &#8220;in the air.&#8221;&nbsp;&nbsp;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 HyperSonic Sound&#146;s unique features are useful in new sound
applications. We believe we are the leader in developing and commercializing
parametric loudspeakers.</font></p>

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<hr size="3" color="#000080">
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  &nbsp;
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<Font style='font-size:10.0pt;' face="Times New Roman">


<p style="margin-top: 1; margin-bottom: 1">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
used as directed long-range hailing and warning systems.</p>


<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1">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 and public address systems. Our SoundCluster technology is a new
multi-transducer, speaker cluster optimized for even sound coverage over large
areas such as aircraft hangar decks.&nbsp;&nbsp;We
have other proprietary sound technologies and products in various stages of
development.</p>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

</font>

 </font>

<p style="margin-top: 1; margin-bottom: 1"><font style="font-size: 10.0pt" face="Times New Roman">Our primary products
sold to date have been LRAD and HSS products. These products are currently
manufactured for us by Pemstar, Inc., an established contract manufacturer with
multiple locations worldwide. Our sales have been highly dependent on large
orders from a few customers.&nbsp;&nbsp;We target
our products for sale worldwide, but expect the largest markets to be the U.S., Europe
and Asia. To date, our sales have been made in U.S. dollars and we do not
expect currency fluctuations to have a material impact on our operations.</font> </p>

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<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

 </font>

<p style="margin-top: 1; margin-bottom: 1"><font style="font-size: 10.0pt" face="Times New Roman">Fiscal 2004 was a good
year for our company. We successfully introduced new products, transitioned to
contract manufacturing to allow for increased production capacity and achieved
record revenues. Our Government Group established LRAD as an important new
product for protection in defense and homeland security. To date, we have
incurred operating losses, as we have not yet achieved revenues sufficient to
support our significant expenditures on research and development and our
growing sales and administrative support services.</font></p>

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<Font style='font-size:10.0pt;' face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1">Our various technologies
are high risk in nature. Our future is largely dependent upon the success of
our proprietary sound technologies. We invest significant funds in research and
development and on patent applications related to our proprietary technologies.
Unanticipated technical or manufacturing obstacles can arise at any time,
disrupt sales or licensing activities, and result in lengthy and costly delays.
Our technologies may not achieve market acceptance sufficient to sustain
operations or achieve future profits. See &#8220;Risk Factors&#8221; below.</p>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

  </font>

<p style="margin-top: 1; margin-bottom: 1">  <Font style='font-size:10.0pt; font-family:Symbol'><Font style='font-size:10.0pt;' face="Times New Roman">
We incurred net losses of
$5,960,436, $8,227,013, and $8,220,132 in the fiscal years ended September 30,
2004, 2003 and 2002.&nbsp; We have substantial research and development and selling,
marketing and general administrative expenses, and our margins from the sale of
our products have not yet been sufficient to offset these costs.&nbsp; We may incur
additional operating losses during fiscal 2005, and we may need additional
operating funds to support our growth.&nbsp; See &#147;Liquidity and Capital Resources&#148;
below. Based on our current plan and without drawing any additional funds from
the CEFF described below, we anticipate that we will be able to meet our cash requirements for
the next twelve months.&nbsp; We have significant flexibility to adjust the level of
research and development and selling and administrative expenses based on the
availability of resources.&nbsp; However, reductions in expenditures could delay
development and adversely affect our ability to generate future revenues.&nbsp; </p>

</font>

<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black'> &nbsp;</p>

<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black'> <Font style='font-size:10.0pt;font-family: "Times New Roman";color:windowtext'>
<b>Recent Developments</b></font></p>

</font></font><Font face="Times New Roman">

<p style='margin:1 0in;font-family:Times;color:black'>
In December 2004, we received a firm
order for $4.5 million in LRAD products from ADS, Inc. for use by the U.S. Army
3rd Infantry Division, Fort Stewart, Georgia.&nbsp; The order also includes $0.4
million in ancillary products which we are providing on a value-added reseller
basis along with the LRAD units.&nbsp; The order calls for deliveries in December
2004 and January 2005 and customary payment terms.&nbsp; We expect to recognize
approximately 65% of the revenue for this order during the first quarter of
fiscal 2005 and the balance during the second quarter of fiscal 2005.<br>
&nbsp;</p>

</font><Font style='font-family:Symbol'>

</font><Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">In December 2004, we sold for cash in a private
offering an aggregate of $2,000,000 of unsecured subordinated promissory notes
due December 31, 2006.&nbsp; In connection with the financing, we also issued
five-year warrants to purchase an aggregate of 150,000 shares, 75,000 of which
have an exercise price of $9.28 per share, and 75,000 of which have an exercise
price of $8.60 per share.&nbsp; A trust affiliated with Elwood G. Norris, our
Chairman and the beneficial owner of 19.5% of our common stock before the
financing, purchased a note in the principal amount of $500,000 and received a
warrant exercisable for 37,500 shares with an exercise price of $9.28 per
share.&nbsp; For more information on this financing, see &#147;Liquidity and Capital
Resources&#150;Financing Activities&#148; below.</p>
<p class="Normal" style="margin-top: 0; margin-bottom: 0">
&nbsp;</p>
<p style="margin-top: 0; margin-bottom: 0">
In December 2004,
we entered into a Committed Equity Financing Facility (CEFF) with Kingsbridge
Capital Ltd., pursuant to which Kingsbridge committed, subject to certain
significant limiting conditions, to purchase up to
$25,000,000 of our common stock, subject to various conditions, at a price that
is between 88% and 92% of the volume weighted average price during a 15 day
purchase period.&nbsp; We are obligated to use 40% of the proceeds we may receive
from the CEFF to prepay any outstanding interest and principal on the notes sold
in December 2004.&nbsp; We believe the CEFF will offer us flexibility to raise
capital to support our growth as required, at the time, price and in the amounts
deemed suitable to us.&nbsp; For more information on the CEFF, see &#147;Liquidity and
Capital Resources&#148; and &#147;Risk Factors&#148; below.</p>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

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<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black;tab-stops:
..5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'><b
><Font style='font-size:10.0pt;font-family:
"Times New Roman"'>Business Outlook</Font></b></p>

</font><Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">We produced record
revenues for the fiscal year ended September 30, 2004 while reducing our
operating losses. In fiscal 2005, we believe revenues will continue to grow
primarily due to increased acceptance of our LRAD and other Government Group
products and from anticipated growth in HSS product sales. We also expect other
products such as NeoPlanar and SoundCluster products will support growth in
fiscal 2005. We expect our expenditure levels for research and development and
for selling, general and administrative purposes to increase as revenues grow.
We are aggressively developing new versions of existing products and new
products based on our proprietary sound technologies to support future growth.</p>

</font><Font style='font-family:Symbol'>

<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">We believe the success
of our LRAD product, growing HSS product shipments and our significant
investment in new technologies and new products provide a solid foundation for
business growth over the next several years.&nbsp;We also believe that LRAD, NeoPlanar and SoundCluster are positioned for
significant long term contract awards in military, government and commercial
markets during fiscal 2005.</p>

</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1"><b>Critical Accounting Policies and Estimates</b></p>
<p style="margin-top: 1; margin-bottom: 1">We have identified the
policies below as critical to our business operations and the understandings of
our results of operations. Our accounting policies are more fully described in
our financial statements located in Item 8 of Part II, &#8220;Financial Statements
and Supplementary Data.&#8221; The impact and any associated risks related to these
policies on our business operations is discussed throughout Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations when
such policies affect our reported and expected financial results.</p>

</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">The methods, estimates
and judgments we use in applying our accounting policies, in conformity with
generally accepted accounting principles in the United States, have a
significant impact on the results we report in our financial statements. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. The estimates affect the
carrying values of assets and liabilities. Actual results may differ from these
estimates under different assumptions or conditions. We believe that the
following discussion addresses our most critical accounting policies, which are
those that are most important to the portrayal of our financial condition and
results of operations and require our most difficult, subjective, and complex
judgments, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain.</p>

</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1"><i>Revenue Recognition.</i> &nbsp;We currently derive our revenue primarily from two sources: (i) component and product sale revenues and associated engineering and installation, which we refer to collectively as Product Sales and (ii) contract and license fee revenue. &nbsp;Product Sales revenues are recognized in the periods that products are shipped to customers, FOB shipping point or destination, per contract, if a signed contract exists, the fee is fixed and determinable, collection of resulting receivables is probable and there are no remaining obligations. Revenues from engineering contracts are recognized based on milestones or completion of the contracted services. Revenues from ongoing per unit license fees are earned based on units shipped incorporating our patented proprietary technologies and are recognized in the period when the ultimate customer accepts the product and collectibility is reasonably assured. Revenues from up-front license and other fees









 and annual license fees are generally recognized ratably over the specified term of the particular license or agreement.</p>

</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1"><i>Valuation of Intangible Assets.</i>&nbsp;&nbsp;Intangible assets include purchased technology and patents, which are amortized over their estimated useful lives. We must make judgments and estimates regarding the future utility and carrying value of intangible assets. The carrying values of such assets are periodically reviewed and impairments, if any, are recognized when the expected future benefit to be derived from an individual intangible asset is less than its carrying value.&nbsp;&nbsp;In fiscal 2004, we reviewed the carrying value of our intangible assets and reduced the carrying value of these assets. Our judgments and estimates regarding carrying value and impairment of intangible assets have an impact on our financial statements. </p>

</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<Font face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1"><i>Warranty Reserve.</i> We establish a warranty reserve based on anticipated warranty claims at the time
product revenue is recognized. These warranties require us to make estimates
regarding the amount and costs of warranty repairs we expect to
make over a period of time. Factors affecting warranty reserve levels include the number of units sold and
anticipated cost of warranty repairs and anticipated rates of warranty claims.
We evaluate the adequacy of the provision for warranty costs each reporting
period. See Note 8 to our financial statements for additional information
regarding warranties. The estimates we use have an impact on our financial
statements.</p>

</font>

</font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>

</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt; font-family:"Times New Roman";font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</p>

</font></font></font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><i style='font-style:normal'><Font style='color: windowtext' face="Times New Roman" size="2">Guarantees and Indemnifications</font></i><Font style='color: windowtext' size="2"><Font style='color: windowtext' face="Times New Roman">.&nbsp;&nbsp;Under our bylaws, we have agreed to indemnify our officers and directors for certain events. We also enter into certain indemnification agreements in the normal course of our business.
We have no liabilities recorded for such indemnities. This estimate has an impact on our financial statements.</font></font></p>

 <Font style='font-size:10.0pt; font-family:Symbol'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>
</font>
<p align="center"><font size="2" face="Times New Roman" style="color: windowtext">-
20 -</font></p>

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<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

</font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt; font-family:"Times New Roman"'><i style='font-style:normal'><Font style='color: windowtext' face="Times New Roman" size="2">Deferred Tax Asset.

</font> </i>


<Font style='color: windowtext' size="2">

<Font style='color: windowtext' face="Times New Roman">We have provided a full valuation reserve related to our substantial deferred tax assets. In the future, if sufficient evidence of our ability to generate sufficient future taxable income in certain tax jurisdictions becomes apparent, we may be required to reduce our valuation allowances, resulting in income tax benefits in our consolidated statement of operations. We evaluate the realizability of the deferred tax assets and assess the need for valuation allowance quarterly. The utilization of the net operating loss carryforwards
could be substantially limited due to restrictions imposed under federal and
state laws upon a change in ownership. Congress passed the American Jobs
Creation Act of 2004 in October 2004.&nbsp; The new law contains
numerous changes to existing tax laws, including both domestic and foreign tax
incentives.&nbsp; We have not yet determined what impact, if any, this new law may
have on our deferred tax asset, or our future results of operations and
financial condition.

</font></font>

</p>

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 <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt; font-family:"Times New Roman";font-style:italic'><i style='font-style:normal'>Legal
Proceedings.</i>&nbsp;&nbsp;We are currently involved in certain legal proceedings.&nbsp;&nbsp;Although unfavorable outcomes in any of these matters
could have a material adverse effect on our operating results, liquidity or financial position, we believe the claims are without merit and intend to vigorously defend the actions. We estimate the range of liability relating to pending litigation, where the amount and range of loss can be estimated.&nbsp;&nbsp;We record our best estimate of a loss when the loss is considered probable.&nbsp;&nbsp;Where a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the claim.&nbsp;&nbsp;As additional information becomes available, we assess the potential liability related to our pending litigation and revise our estimates.&nbsp;&nbsp;We have recorded an accrual of $150,000 for contingent liability associated with our legal proceedings.&nbsp;&nbsp;Revisions in our estimates of the potential liability could materially impact our results of operations.</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman";font-style:italic'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman";font-style:italic'><i>Valuation of Inventory. </i>Our inventory is comprised of raw materials, assemblies and finished products that we intend to sell to our<i> </i>customers<i>. </i>We<i> </i>
must periodically make judgments and estimates regarding the future utility and
carrying value of our inventory.&nbsp;&nbsp;The carrying value of our inventory is
periodically reviewed and impairments, if any, are recognized when the expected
future benefit from our inventory is less than its carrying value.&nbsp;&nbsp;In fiscal 2004 we reviewed the carrying value of our inventory and increased the reserve for obsolescence by $90,000 for raw materials that were used on our HSS Generation II products but are not required for our HSS Generation III products.</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman";font-style:italic'>&nbsp;</Font></p>

</font><Font style='color:windowtext' face="Times New Roman" size="2">

<p style='margin:0in;font-family:Times;color:black'><b
>Results of Operations</b></p>

<p style='margin:1 0in;font-family:Times;color:black'>&nbsp;</p>

</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<p style="margin-top: 1; margin-bottom: 1"><b><i>Revenues</i></b></p>
<p style="margin-top: 1; margin-bottom: 1">Revenues
increased 337% in fiscal 2004 to $5,752,549 compared to $1,315,426 for fiscal
2003. Fiscal 2003 revenues were 30% higher than fiscal 2002 revenues of
$1,010,752. Fiscal 2004 revenues included $5,581,936 of product sales and
$170,613 of contract and license revenues. Fiscal 2003 revenues included
$1,070,645 of product sales and $244,781 of contract and license revenues.
Fiscal 2002 revenues included $693,097 of product sales and $317,655 of
contract and license revenues.</p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1">During
fiscal 2002, we recorded revenues of $305,208 for portable consumer products.
These revenues represented products sourced by us, private labeled under our
name and resold to sporting good stores and other retailers. In fiscal 2003, we
reduced our marketing emphasis on portable consumer products in order to focus
financial, personnel and facility resources on our proprietary sound
technologies. As a result, sales of portable consumer products in fiscal 2003
totaled $94,980. Sound products provided the balance of fiscal 2003 revenues
and all of fiscal 2004 revenues.</p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<p style="margin-top: 1; margin-bottom: 1">Late
in fiscal 2003, with the addition of new personnel, we organized operations
into two segments by the end-user markets they serve. Our Business Products and
Licensing Group (Business Group) licenses and markets HSS and NeoPlanar
speakers to companies which employ audio in consumer, commercial and
professional applications. Our Government and Force Protection Systems Group
(Government Group) markets LRAD, NeoPlanar, SoundCluster and HSS products to
government and military customers and to the expanding force protection and
commercial security markets. Although the segments became separately managed in the last quarter of fiscal 2003, we have also
segmented historical operations for comparable end-user customers for comparison
purposes.</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Presented
below is a summary of revenues by business segment:</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

</font><Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<table border=0 cellspacing=0 cellpadding=0 width=577 style='width:433.0pt;
 border-collapse:collapse;mso-padding-alt:0in 0in 0in 0in'>
 <tr style='height:12.75pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>
  <b>Years Ended September
  30,&nbsp;</b>&nbsp;</Font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
  <td width=85 colspan=2 valign=bottom style='width:63.65pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>
  <Font style='font-size:10.0pt; font-weight:700'>2004 </Font></p>
  </td>
  </font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>
  <td width=37 colspan=2 valign=bottom style='width:27.9pt;border:none;border-bottom:
  solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext'>
  <td width=90 colspan=3 valign=bottom style='width:67.4pt;border:none;border-bottom:
  solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>
  <Font style='font-size:10.0pt; font-weight:700' face="Times New Roman">2003 </Font></p>
  </td>
  </font>
  <td width=24 colspan=2 valign=bottom style='width:17.95pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=85 nowrap colspan=2 valign=bottom style='width:63.75pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>
  <Font style='font-size:10.0pt; font-weight:700'>2002 </Font></p>
  </td>
  <td width=1 valign=bottom style='width:1.0pt;border:none;border-bottom:solid windowtext .5pt;
  height:12.75pt'>
  <p align=center style='margin:0in;font-family:Times;color:black;text-align:center'>
  <font size="2">&nbsp;</font></p>
  </td>
 </tr>
 </font><Font style='font-size:10.0pt; color:windowtext'>
 <tr style='height:12.75pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>
  <Font style='font-size:10.0pt' face="Times New Roman">&nbsp;Revenues: </Font></p>
  </td>
  </font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=10 valign=top style='width:7.8pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=36 valign=top style='width:26.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=10 colspan=2 valign=top style='width:7.55pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=80 valign=top style='width:59.9pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'>&nbsp;</td>
 </tr>
 </font><Font style='font-size:10.0pt; color:windowtext'>
 <tr style='height:12.75pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;text-indent:2.4pt;mso-char-indent-count:1.0;
  mso-char-indent-size:2.4pt'>
  <Font style='font-size:10.0pt' face="Times New Roman">&nbsp;&nbsp;&nbsp; Business Group </Font></p>
  </td>
  </font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=10 valign=bottom style='width:7.8pt;
  height:12.75pt' align="left">
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>$</Font></p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>933,373 </Font></p>
  </td>
  </font>
  <td width=36 valign=top style='width:26.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=10 colspan=2 valign=bottom style='width:7.55pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>$</Font></p>
  </td>
  <td width=80 valign=bottom style='width:59.9pt;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>861,091 </Font></p>
  </td>
  </font>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$</Font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>922,542 </Font></p>
  </td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'><font size="2">&nbsp;</font></td>
 </tr>
 </font><Font style='font-size:10.0pt; color:windowtext'>
 <tr style='height:12.75pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;text-indent:2.4pt;mso-char-indent-count:1.0;
  mso-char-indent-size:2.4pt'>
  <Font style='font-size:10.0pt' face="Times New Roman">&nbsp;&nbsp;&nbsp; Government Group </Font></p>
  </td>
  </font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=10 valign=bottom style='width:7.8pt;
  height:12.75pt' align="left">
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext'>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'>
  <Font style='font-size:10.0pt' face="Times New Roman">4,819,176 </Font></p>
  </td>
  </font>
  <td width=36 valign=top style='width:26.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=10 colspan=2 valign=bottom style='width:7.55pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext'>
  <td width=80 valign=bottom style='width:59.9pt;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'>
  <Font style='font-size:10.0pt' face="Times New Roman">454,335 </Font></p>
  </td>
  </font>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>88,210 </Font></p>
  </td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'><font size="2">&nbsp;</font></td>
 </tr>
 </font>
 <tr style='height:13.5pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=10 valign=bottom style='width:7.8pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt' align="left">
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>$</Font></p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>5,752,549 </Font></p>
  </td>
  </font>
  <td width=36 valign=top style='width:26.85pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=10 colspan=2 valign=bottom style='width:7.55pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>$</Font></p>
  </td>
  <td width=80 valign=bottom style='width:59.9pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>1,315,426 </Font></p>
  </td>
  </font>
  <td width=8 colspan=2 valign=top style='width:6.2pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;border-top:
  solid windowtext .5pt;border-left:none;border-bottom:double windowtext 2.25pt;
  border-right:none;height:13.5pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$</Font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>1,010,752 </Font></p>
  </td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'><font size="2">&nbsp;</font></td>
 </tr>
 </font>
 <tr style='height:13.5pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=10 valign=top style='width:7.8pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=36 valign=top style='width:26.85pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=10 colspan=2 valign=top style='width:7.55pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=80 valign=top style='width:59.9pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
  </td>
  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'>&nbsp;</td>
 </tr>

 </font>

</table>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<Font style='font-family:"Times New Roman"; font-size:10.0pt'>
<Font style='font-size:10.0pt; color:windowtext; font-family:Symbol' face="Times New Roman" size="2">

<Font style='font-size:10.0pt;font-family:"Times New Roman"'>

</font>

</font></font>
<p align="center"><font size="2" face="Times New Roman">- 21 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Business Group</Font></i> - The Business Group reported net revenues of $933,373 in fiscal 2004, representing an 8% increase from net revenues of $861,091 in fiscal 2003. The fiscal 2003 net revenues represented a 7% decrease from net revenues of $922,542 in fiscal 2002. Sound product revenues were $933,373 in fiscal 2004, and there were no consumer portable product sales. Sound product revenues were $594,703 in fiscal 2003, consumer portable product sales were $95,730 and contract and licensing revenues were $170,658. The increase in sound product revenues in fiscal 2004 was primarily the result of increased HSS sales offset in part by reduced NeoPlanar sales in the personal boating market.&nbsp;&nbsp;During most of fiscal 2004, we were developing and testing our new HSS Generation III product line and HSS sales were l









imited to certain older systems. We only recently began shipping HSS Generation III systems manufactured by our contract manufacturer to existing and new customers. Accordingly, we expect increased Business Group HSS revenues in fiscal 2005.</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:0pt;margin-right:0in;margin-bottom:5.0pt; margin-left:0in;mso-layout-grid-align:none;text-autospace:none;font-size:10.0pt; font-family:"Times New Roman"'><i ><Font style='font-size:10.0pt;font-family: "Times New Roman"'>Government Group</Font></i> &#150; Government Group net revenues for fiscal 2004 were $4,819,176 compared to $454,335 in fiscal 2003, a 961% increase.&nbsp;&nbsp;Net revenues for fiscal 2003 were $454,335 compared to $88,210 in fiscal 2002, a 415% increase. Fiscal 2004 revenues included LRAD revenues of $3,907,291, NeoPlanar revenues of $265,520, SoundCluster revenues of $484,827 and contract fees and other fees of $161,538.&nbsp;&nbsp;Fiscal 2003 revenues included LRAD revenues of $261,106, NeoPlanar revenues of $124,674 and contract fees and other fees of $68,555. LRAD
revenues were $85,849 in fiscal 2002 and contract fees and other were
$2,361.&nbsp;&nbsp;The increase in LRAD revenues in fiscal 2004 was primarily the result of increased customer knowledge of the capabilities of LRAD products and their acceptance of the product.&nbsp;&nbsp;Our marketing efforts, successful product deployments and extensive product demonstrations have contributed to customer acceptance of the force protection capabilities of LRAD.&nbsp;&nbsp;We expect LRAD revenues to continue to grow in fiscal 2005 as market awareness
increases and as we improve the product and introduce multiple versions with optional feature sets.</p>

</font></font></font></font>
<Font style='color:windowtext' face="Times New Roman" size="2">

<p style='margin:0in;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'>
<b><i><br>
Gross Profit</i></b></p>

<Font style='font-size:10.0pt; color:windowtext' size="2">

<p style='margin:0in;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'>Gross profit for fiscal
2004 was $2,282,728 or 40% of revenues, compared to a gross loss on revenues
for fiscal 2003 of $228,651. The
gross loss in fiscal 2003 was principally the result of our $319,500 for special warranty reserve for HSS Generation I
units. We had a gross profit in fiscal 2002 of $326,908 or 32% of revenues.</p>

<p style='margin:0in;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'>&nbsp;</p>

</font></font></font>

<p style='margin:0in;font-family:Times;color:black;mso-pagination:widow-orphan lines-together'>

<Font style='font-size: 10.0pt; color: windowtext' size="2" face="Times New Roman">

Presented below is the
gross profit or loss by business segment.

</font></p>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

</font>

<table border=0 cellspacing=0 cellpadding=0 width=577 style='width:433.0pt;
 border-collapse:collapse;mso-padding-alt:0in 0in 0in 0in'>
 <tr style='height:12.75pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>
  <b><Font style='font-size: 10.0pt; color: windowtext' face="Times New Roman">
  Years Ended September
  30,&nbsp;</Font></b><Font style='font-size: 10.0pt; color: windowtext' face="Times New Roman">&nbsp;</Font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size: 10.0pt; color: windowtext' face="Times New Roman">&nbsp;</Font></p>
  </td>
  <td width=85 colspan=2 valign=bottom style='width:63.65pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>
  <Font style='font-size: 10.0pt; font-weight: 700; color: windowtext' face="Times New Roman">2004 </Font></p>
  </td>
  <td width=37 colspan=2 valign=bottom style='width:27.9pt;border:none;border-bottom:
  solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><Font style='font-size: 10.0pt; color: windowtext' face="Times New Roman">
  &nbsp;</font>
  </p>
  </td>
  <td width=90 colspan=3 valign=bottom style='width:67.4pt;border:none;border-bottom:
  solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>
  <Font style='font-size: 10.0pt; font-weight: 700; color: windowtext' face="Times New Roman">2003 </Font></p>
  </td>
  <td width=24 colspan=2 valign=bottom style='width:17.95pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><Font style='font-size: 10.0pt; color: windowtext' face="Times New Roman">
  &nbsp;</font>
  </p>
  </td>
  <td width=85 nowrap colspan=2 valign=bottom style='width:63.75pt;border:none;
  border-bottom:solid windowtext .5pt;height:12.75pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'>
  <Font style='font-size: 10.0pt; font-weight: 700; color: windowtext' face="Times New Roman">2002 </Font></p>
  </td>
  <td width=1 valign=bottom style='width:1.0pt;border:none;border-bottom:solid windowtext .5pt;
  height:12.75pt'>
  <p align=center style='margin:0in;font-family:Times;color:black;text-align:center'>
  <font size="2" face="Times New Roman" style="font-size: 10.0pt; color: windowtext">&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:12.75pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>
  <font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">&nbsp;Gross Profit (Loss):</font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 valign=top style='width:7.8pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=36 valign=top style='width:26.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 colspan=2 valign=top style='width:7.55pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=80 valign=top style='width:59.9pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'>
  <Font style='font-size: 10.0pt; color: windowtext' face="Times New Roman" size="2">
  &nbsp;
 </font></td>
 </tr>
 <tr style='height:12.75pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;text-indent:2.4pt;mso-char-indent-count:1.0;
  mso-char-indent-size:2.4pt'>
  <font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp; Business Group</font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 valign=bottom style='width:7.8pt;
  height:12.75pt' align="left">
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">$</font></p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in">
  <font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">
  (534,174)</font></td>
  <td width=36 valign=top style='width:26.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 colspan=2 valign=bottom style='width:7.55pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in"><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">$</font></td>
  <td width=80 valign=bottom style='width:59.9pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in">
  <font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">
  (501,748)</font></td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">$</font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in"><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">256,779</font></td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'><font size="2" face="Times New Roman" style="font-size: 10.0pt; color: windowtext">&nbsp;</font></td>
 </tr>
 <tr style='height:12.75pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;text-indent:2.4pt;mso-char-indent-count:1.0;
  mso-char-indent-size:2.4pt'>
  <font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp; Government Group</font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 valign=bottom style='width:7.8pt;
  height:12.75pt' align="left">
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>

  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in">
  <font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">
  2,816,902&nbsp;</font></td>
  <td width=36 valign=top style='width:26.85pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 colspan=2 valign=bottom style='width:7.55pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=80 valign=bottom style='width:59.9pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in">
  <font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">
  273,097&nbsp;</font></td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:12.75pt'>
  <p align="right" style="font-family: Times; color: black; margin: 0in"><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">70,129&nbsp;</font></td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'><font size="2" face="Times New Roman" style="font-size: 10.0pt; color: windowtext">&nbsp;</font></td>
 </tr>
 <tr style='height:13.5pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 valign=bottom style='width:7.8pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt' align="left">
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">$</font></p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align="right"><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">2,282,728&nbsp;</font></td>
  <td width=36 valign=top style='width:26.85pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 colspan=2 valign=bottom style='width:7.55pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">$</font></p>
  </td>
  <td width=80 valign=bottom style='width:59.9pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align="right"><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">(228,651)</font></td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;border-top:
  solid windowtext .5pt;border-left:none;border-bottom:double windowtext 2.25pt;
  border-right:none;height:13.5pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><font style="font-size: 10.0pt; color: windowtext" size="2" face="Times New Roman">$</font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;border-top:solid windowtext .5pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;
  height:13.5pt'>
  <p align="right"><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">326,908&nbsp;</font></td>
  <td style='mso-cell-special:placeholder;border:none;'
  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'><font size="2" face="Times New Roman" style="font-size: 10.0pt; color: windowtext">&nbsp;</font></td>
 </tr>
 <tr style='height:13.5pt;mso-row-margin-right:1.0pt'>
  <td width=191 nowrap valign=bottom style='width:143.0pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=64 nowrap valign=bottom style='width:48.35pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 valign=top style='width:7.8pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=74 nowrap valign=bottom style='width:55.85pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=36 valign=top style='width:26.85pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=10 colspan=2 valign=top style='width:7.55pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=80 valign=top style='width:59.9pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=8 colspan=2 valign=top style='width:6.2pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=23 nowrap colspan=2 valign=bottom style='width:17.55pt;height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
  <td width=79 nowrap valign=bottom style='width:58.95pt;
  height:13.5pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; color: windowtext" face="Times New Roman">&nbsp;</font></p>
  </td>
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  width=1>
<p align=right style='margin:0in;font-family:Times;color:black'>
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  &nbsp;

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<p style="margin-top: 1; margin-bottom: 1">During fiscal year 2003
and fiscal 2004 we changed our HSS Generation I emitter design to eliminate the
requirement for a vacuum in the emitter, and we improved film quality. During
fiscal 2004, we made further raw material improvements in the electronics and
the manner in which the film and emitters are produced.&nbsp;&nbsp;We believe that our recently introduced HSS
Generation III product is more reliable. We therefore expect that warranty costs
will decrease in fiscal 2005, and that HSS product sales will produce positive
margins. </p>


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<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1">Gross profit for our
Government Group was $2,816,902 in fiscal 2004, or 58% of revenue.&nbsp;&nbsp;Gross profit percentage continues to be
highly dependent on sales prices, volumes, purchasing costs and overhead allocations.&nbsp;&nbsp;Our various sound products have different
margins, so product sales mix will materially affect gross profits. In
addition, we continue to make model updates and changes including raw material
and component changes thus changing product costs. We therefore do not believe
that historical gross profit margins should be relied upon as an indicator of
future gross profit margins.</p>

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<p style="margin-top: 1; margin-bottom: 1"><i><b>Selling, General and Administrative Expenses</b></i></p>
<p style="margin-top: 1; margin-bottom: 1">Selling, general and administrative expenses as
a percentage of sales were 92% in fiscal 2004, 370% in fiscal 2003 and 301% in
fiscal 2002. These costs in fiscal 2004 totaled $5,309,547, an increase of
$445,836 from the $4,863,711 incurred in fiscal 2003. Legal and professional
costs decreased $1,316,323 to $852,644 in fiscal 2004 compared to $2,168,967 in
fiscal 2003. Included in legal and professional costs in fiscal 2004 was an
estimated settlement cost accrual of $150,000 associated with an ongoing legal
action with a former licensee. Included in legal and professional costs in fiscal
2003 were settlement costs and accruals of $1,233,754 related to legal
settlements and a buyout of NeoPlanar royalties due. Personnel costs increased
from $1,562,852 in fiscal 2003 to $2,449,739 in fiscal 2004 as a result of
increased headcount. </p>
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<p style="margin-top: 1; margin-bottom: 1">We incurred non-cash
selling, general and administrative expenses in each of the three years. In
fiscal 2004 we incurred $65,863 of non-cash compensation from extending the
exercise period of options for certain terminated employees due to stock
trading restrictions. In fiscal 2003, we incurred $410,816 of non-cash
compensation from the issuance of 109,844 common shares related to purchased
technology and $179,995 for the issuance of stock options and warrants to
non-employees. In fiscal 2002, we had non-cash compensation of $304,920 for
services paid through the issuance of 74,129 shares of common stock and
$517,836 for the issuance of stock options and warrants to non-employees. </p>
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<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt; font-family:"Times New Roman";font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</p>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">During fiscal 2004,
we reviewed the ongoing  value of our capitalized patent expenses and identified some of
these costs as  being associated with patents that are no longer associated with our
business  strategy.&nbsp;&nbsp;As a result, we incurred a  charge in fiscal 2004 of
$37,798 for the impairment of previously capitalized  patent expenditures.</FONT></P>

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<p style="margin-top: 1; margin-bottom: 1">We may expend additional
resources on marketing our proprietary sound technologies in future periods,
which may increase selling, general and administrative expenses. We also expect
to incur additional costs in fiscal 2005 to comply with various sections of the
Sarbanes-Oxley Act, particularly those related to Section 404 concerning
management assessment of internal controls.&nbsp;We do not currently have an estimate of these increased costs, but they
are expected to include increased staffing, outside consultants and increased
legal and audit costs.</p>
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<p style="margin-top: 1; margin-bottom: 1"><i><b>Research and Development Expenses</b></i></p>
<p style="margin-top: 1; margin-bottom: 1">Research and development
expenses increased from fiscal 2003 to fiscal 2004.&nbsp;&nbsp;Fiscal 2004 expenses were $2,988,784 of which salaries, benefits
and consultant expenses accounted for $2,015,828 or 67% of total costs.&nbsp;&nbsp;Fiscal 2003 research and development
expenses declined from fiscal 2002 to fiscal 2003. Fiscal 2003 expenses totaled
$2,493,351, including $315,636 of NeoPlanar technology amortization. Salaries
and benefits and consultant costs accounted for $1,780,345 or 71% of these
costs. Fiscal 2002 expenses totaled $3,622,063, including $420,808 of
amortization. Salaries and benefits and consultant costs accounted for
$2,243,586 or 62% of fiscal 2002 research and development costs. In fiscal
2003, we issued stock options to an electronics design consultant and incurred
non-cash costs of $47,782 in that year. Outside consulting costs and testing
supplies totaled $1,066,597 in fiscal 2002 and declined to $207,390 in fiscal
2003 as we made the transition from research and development to product
manufacturing and sales. </p>
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<p style="margin-top: 1; margin-bottom: 1">Research and development
costs vary period to period due to the timing of projects, the availability of
funds for research and development and the timing and extent of use of outside
consulting, design and development firms. We expect fiscal 2005 research and
development costs to be somewhat higher than fiscal 2004 levels based on
current plans and staffing.</p>

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<p style='margin:0in;font-family:Times;color:black'><i><b>Loss From Operations</b></i></p>

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<p style='margin:0in;font-family:Times;color:black'>Total operating expenses were $8,298,331 in
fiscal 2004 compared to $7,332,549 in fiscal 2003 and $6,689,292 in fiscal
2002. The increase in fiscal 2004 operating expenses resulted from the increase
in both research and development and selling, general and administrative
expenses.&nbsp;&nbsp;The increase in operating
expenses in fiscal 2003 over fiscal 2002 was due to the increase in selling,
general and administrative expenses partially offset by a decrease in research
and development expenses.&nbsp;&nbsp;As a result
of the operating expenses incurred in fiscal 2004, our loss from operations was
$6,015,603 compared to a loss from operations of $7,561,200 in fiscal 2003,
This reduction in loss from operations from fiscal 2003 to fiscal 2004 is due
in part to the improvement of $2,511,379 in gross profit in fiscal 2004 versus
fiscal 2003, partially offset by higher operating expenses.&nbsp;&nbsp;We expect increased product sales in fiscal
2005, offset in part by somewhat higher operating expenses, to reduce the loss
from operations from fiscal 2004 levels.</p>

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<p style='margin:0in;font-family:Times;color:black'><i><b>Other Income (Expense)</b></i></p>

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<p style='margin:0in;font-family:Times;color:black'>In fiscal 2004, we earned $58,056 of interest on
our cash balances. In fiscal 2003, we incurred interest expense of $686,639,
which included non-cash amortization of debt discount of $405,000, and $169,753
of interest paid in common stock. In fiscal 2002, we incurred interest expense
of $1,872,544, which included non-cash amortization of bond discount of
$1,620,000. During fiscal 2003, our outstanding long-term debt was converted to
equity causing the decline in interest expense from fiscal 2002 to 2003.</p>

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<p style='margin:0in;font-family:Times;color:black;page-break-after:avoid'><i>
<b>Net Loss</b></i></p>

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<p style='margin:0in;font-family:Times;color:black;page-break-after:avoid'>The net loss for fiscal
2004 was $5,960,436 compared to the net loss of $8,227,013 in fiscal 2003. The
net loss for fiscal 2002 was $8,220,132.</font></font><Font style='font-size:10.0pt;font-family:"Times New Roman";
color:windowtext'> We had no tax expense for each of the last three fiscal years
due to net losses. </Font></p>

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<p style="margin-top: 1; margin-bottom: 1"><i><b>Net Loss Available to Common Stockholders</b></i></p>
<p style="margin-top: 1; margin-bottom: 1">Net loss
available to common stockholders was increased during fiscal 2004, 2003, and
2002 in computing net loss per share by imputed deemed dividends based on the
value of warrants issued in connection with convertible preferred stock. The
net loss available to common stockholders was also increased in fiscal 2004,
2003 and 2002 by an additional deemed dividend computed from a discount
provision in convertible preferred stock. The imputed deemed dividends are not
contractual obligations to pay such imputed dividends. Net loss available to
common stockholders is also increased by the 6% accretion (similar to a
dividend) on outstanding preferred stock. These amounts aggregated $1,365,349
in fiscal 2004, $2,409,228 in fiscal 2003 and $282,912 in fiscal 2002
increasing the net loss in each year. Accordingly, the net loss available to
common stockholders was $7,325,785, $10,636,241 and $8,503,044 in fiscal 2004,
2003 and 2002, respectively.</p>

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<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

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<p style='margin:0in;font-family:Times;color:black'>
<b>Liquidity and Capital Resources</b></p>

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<p style='margin:0in;font-family:Times;color:black'>We continue to experience
significant negative cash flow from operating activities including developing,
introducing and marketing our proprietary sound technologies.&nbsp;&nbsp;We have financed our working capital requirements through cash
generated from products sales and from financing activities. Cash at September
30, 2004 was $4,178,968 compared to $9,850,358 at September 30, 2003.&nbsp;&nbsp;The decrease in cash was primarily the
result of the operating loss and cash used to support operating activities. </p>

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In December 2004,
we received a firm order for $4.5 million in LRAD products from ADS, Inc. for
use by the U.S. Army 3rd Infantry Division, Fort Stewart, Georgia.&nbsp; The order also
includes $0.4 million in ancillary products which we are providing on a
value-added reseller basis along with the LRAD units.&nbsp; The order calls for
deliveries in December 2004 and January 2005 and customary payment terms.</p>

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In December 2004, we sold for cash in a private offering an aggregate of
$2,000,000 of unsecured subordinated promissory notes due December 31, 2006. In connection with the financing, we also issued five-year warrants to purchase
an aggregate of 150,000 shares, 75,000 of which have an exercise price of $9.28
per share, and 75,000 of which have an exercise price of $8.60 per share. A trust affiliated with Elwood G. Norris, our Chairman and the beneficial owner
of 19.5% of our common stock before the financing, purchased a note in the
principal amount of $500,000 and received a warrant exercisable for 37,500
shares with an exercise price of $9.28 per share. For more information on
this financing, see &#147;Financing Activities&#148; below.</p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In
December 2004, we entered into a Committed Equity Financing Facility (CEFF)
with Kingsbridge Capital Ltd., pursuant to which Kingsbridge committed, subject
to certain significant limiting conditions, to
purchase up to $25 million of our common stock to support future growth.&nbsp;&nbsp;As part of the 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 six months after
the date of grant and for a period of five years thereafter. Subject to certain conditions and limitations, from
time to time under the CEFF, we may 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 price during a 15 day purchase period, and
thereby raise capital as required, at the time, price and in the amounts deemed
suitable to us.&nbsp;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.&nbsp; Our agreement with Kingsbridge permits Kingsbridge to
terminate the CEFF 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.<Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext'>&nbsp;</Font></p>

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The CEFF requires us to have a resale registration </Font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
statement filed within 45 days of entering into the CEFF, and to have such
registration statement declared effective by the Securities and Exchange
Commission (SEC) within 45 days or 120 days of filing, depending on whether the
SEC elects to review the registration statement.&nbsp;No draws can be made by
  the Company until the registration statement is effective. As of December 14, 2004, we had
not filed the required resale registration statement.</Font></font></p>

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  The terms of the CEFF 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 CEFF
  or by exercise of its warrant.&nbsp; 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 CEFF 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 period of unavailability and the volume weighted average price on the
first trading day after the period of unavailability.&nbsp; 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.</font></p>

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  <p style="margin-top: 1; margin-bottom: 1">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 existing or if we intend to file another&nbsp; registration
  statement with the SEC.&nbsp; 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 15 trading days following any settlement date for
  the purchase of our stock under the CEFF, 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.&nbsp; The
  amount of such liquidated damages for any one period of suspension may not
  exceed $1.75 million.&nbsp; 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.&nbsp; 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.<br>
&nbsp;</p>

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<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Based on such factors as market
conditions, financing needs and the time required for the SEC to declare the
resale registration statement effective, we currently expect that we may begin
to utilize the CEFF during fiscal 2005, in order to fund working capital
requirements. However, the timing and extent of our ability to utilize the CEFF
is uncertain.
We are obligated to use 40% of the proceeds we may receive from the CEFF to
prepay any outstanding interest and principal on the notes sold in December
2004. Under the rules of
the Nasdaq Stock Market, the maximum number of shares we may sell to Kingsbridge
without approval of our stockholders is 3,684,782 (exclusive of the warrant
shares), which may further limit the
amount of proceeds we are able to obtain from the CEFF.&nbsp;&nbsp; We agreed to pay to a
consultant a finder fee equal to 4% of the first $5 million raised under the
CEFF, 3% for the second $5 million raised under the CEFF, 2% for the third $5
million raised under the CEFF, and 1.5% for any additional amounts raised under
the CEFF.
See &quot;Risk Factors&quot; below for a discussion of other risks associated
with the CEFF.</Font></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Other
than cash, cash equivalents, the CEFF and the private offering described
above, we have no other unused sources of liquidity at this time. We expect to
incur additional operating losses as a result of expenditures for research and
development and marketing costs for our sound products and technologies.&nbsp;&nbsp;The timing and amounts of these expenditures
and the extent of our operating losses will depend on many factors, some of
which are beyond our control. </Font></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Principal
factors that could affect the availability of our internally generated funds
include:</Font></p>

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<ul>
 <li>government spending levels;<br>
&nbsp;</li>
 <li>introduction of competing technologies;<br>
&nbsp;</li>
 <li>failure of sales from our Government Group or Business Group to meet planned projections;<br>
&nbsp;</li>
 <li>product mix and effect on margins; and<br>
&nbsp;</li>
 <li>product acceptance in new markets.</li>
</ul>
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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Principal
factors that could affect the availability to obtain cash from external sources
include:</Font></p>

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<ul>
 <li>failure to obtain an effective registration statement as required by our CEFF;<br>
&nbsp;</li>
 <li>reduction of our stock price to a level below $3.00; at which price Kingsbridge is not
 obligated to buy our shares;<br>
&nbsp;</li>
 <li>volatility in the capital markets; and<br>
&nbsp;</li>
 <li>market price and trading volume of our common stock.</li>
</ul>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Based
on our current cash position, our recently received order for $4.9 million in
LRAD products, and the private offering, and assuming currently planned
expenditures and level of operations, we believe
we will have sufficient cash for operations for the next twelve months. We
believe increased sales of LRAD, HSS and, to a lesser extent, NeoPlanar
products will continue to contribute cash in fiscal 2005. We believe that any
investment capital we may require will be available to us, but there can be no
guarantee that we will be able to raise funds on terms acceptable to us, or at
all. We have flexibility
to adjust the level of research and development and selling and administrative
expenses based on the availability of resources. However, reductions in
expenditures could delay development and adversely affect our ability to
generate future revenues.</Font></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><b><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Cash Flows</Font></i></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><b><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></i></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><i style='font-style:normal'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Operating Activities</Font></i></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our
net cash used in operating activities was $6,030,043 for the year ended
September 30, 2004 compared to $5,457,369 for the year ended September 30,
2003. For the year ended September 30, 2004, the net loss of $5,960,436
included certain expenses not requiring the use of cash totaling $535,280 or a
net of $5,425,156. In addition, in fiscal 2004, cash was used in operating
activities through an increase of $332,151 in inventories, an increase of
$742,585 in accounts receivable, and an increase of $122,570 in prepaid expenses.
Further cash provided by operating activities included a $592,419 increase in
accounts payable and accrued liabilities.<br>
&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>At
September 30, 2004, we had working capital of $3,472,984 compared to working
capital of $8,484,210 at September 30, 2003. Net working capital, excluding
cash and short-term debt, was a deficit of $695,017 at September 30, 2004. This
represents a decrease of&nbsp;&nbsp;$661,216 from
the net working capital deficit at September 30, 2003 of $1,356,233. The
decrease in the deficit in net working capital primarily resulted from
increases in receivable balances offset in part by increases in accounts
payable. In fiscal 2005, we expect increases in receivable and inventory
balances as revenues increase.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>At
September 30, 2004, we had trade accounts receivable of&nbsp;&nbsp;$926,747.&nbsp;&nbsp;This compares to $184,162 in trade accounts
receivable at September 30, 2003. The
level of trade accounts receivable at September 30, 2004 represented
approximately 43 days of revenues. Terms with individual customers vary
greatly. We typically require thirty-day terms for our sound technology
components and products. Our receivables can vary dramatically due to overall sales
volumes and due to quarterly variations in sales and timing of shipments to and
receipts from large customers and the timing of contract payments.</Font></p>

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<i ><Font style='font-size:10.0pt;font-family:
"Times New Roman";mso-fareast-font-family:"Times New Roman";color:black;
mso-ansi-language:EN-US;mso-fareast-language:EN-US;language:AR-SA'></Font></i>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Investing Activities</Font></i></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>For
the year ended September 30, 2004, capital expenditures were $395,932 for the purchase
of laboratory and computer equipment and software and $346,818 for investment
in patents and new patent applications. We anticipate continued capital
expenditures for patents in fiscal 2005.</Font></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><i ><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Financing Activities</Font></i></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><font size="2">During the 2004, 2003 and 2002 fiscal
years, we</font></font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'><Font style='font-size:10.0pt;font-family:"Times New Roman"'> financed our working capital requirements primarily through the sale of
common and preferred stock and warrants, secured promissory notes and the exercise of stock
options.&nbsp;&nbsp;In fiscal 2004, we received
cash proceeds from the exercise of options and warrants of $1,111,317.&nbsp;&nbsp;In January 2003, we received $500,000 from
the sale of senior secured promissory notes. In February 2003, we received
proceeds of $2,432,500 and converted senior secured promissory notes in the
aggregate principal amount of $1,000,000 from the sale of shares of our Series
E Preferred Stock and warrants exercisable for common stock.&nbsp;&nbsp;In July 2003, we received proceeds of
$10,000,000 from the sale of common stock and warrants.&nbsp;&nbsp;In fiscal 2003, we received proceeds of
$1,614,227 from the exercise of options.</Font></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In December 2004, we sold for
cash in a private offering an aggregate of $2,000,000 of unsecured subordinated
promissory notes due December 31, 2006.&nbsp; Interest on these notes accrues at the
rate of 8% per year and is due and payable quarterly in arrears.&nbsp; We are
required to use 40% of the net proceeds of any future equity financing to prepay
these notes, including any amounts we raise pursuant to the CEFF.&nbsp; We may also
prepay these notes in our discretion at any time without penalty after June 30,
2005. </p>
<p class="Normal">In connection with the issuance
of these notes, each purchaser was granted a warrant to purchase 7,500 shares of
our common stock until December 31, 2009 for each $100,000 of notes purchased
(prorated for amounts less than $100,000) such that we issued in the aggregate
warrants exercisable for an aggregate of 150,000 shares of our common stock.&nbsp;
The exercise price of the warrants was $9.28 per share for purchasers who were
directors, officers, employees or consultants of our company, or affiliates of
such persons, and $8.60 per share for other purchasers.&nbsp; Warrants exercisable
for 75,000 shares were issued at each such exercise price.&nbsp; The holders of these
warrants are entitled to be included on any registration statement we file after
the registration statement for the CEFF described above, subject to customary
exceptions and cut-back rights.</p>
<p class="Normal">A trust affiliated with Elwood
G. Norris, our Chairman and the beneficial owner of 19.5% of our common stock
before the financing, purchased a note in the principal amount of $500,000 and
received a warrant exercisable for 37,500 shares with an exercise price of $9.28
per share.&nbsp; Mr. Norris now beneficially owns 19.7% of our common stock</p>
</Font>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>In
December 2004, we entered into a Committed Equity Financing Facility (CEFF)
with Kingsbridge Capital Ltd., pursuant to which Kingsbridge committed to
purchase up to $25 million of our common stock to support future growth as
described above. We are obligated to use 40% of the proceeds we may receive from
the CEFF to prepay any outstanding interest and principal on the notes sold in
December 2004.</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

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<p class="Normal" style="margin-top: 1; margin-bottom: 1"><b>
Off-Balance Sheet Arrangements</b></p>
<Font style='font-size:10.0pt; font-family:Times; color:black>We do not have any
off-balance sheet arrangements, financings or other relationships with
unconsolidated entities or other persons.</p>
</font>
  <Font style='font-size:10.0pt; font-family:Times; color:black>
  <p style="margin-top: 1; margin-bottom: 1">
 We do not have
  any off-balance sheet arrangements, financings or other relationships with
  unconsolidated entities or other persons.</p>

  <p style="margin-top: 1; margin-bottom: 1">
 &nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Contractual Commitments
and Commercial Commitments</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>The following table
summarizes our contractual obligations at September 30, 2004, and the effect
such obligations are expected to have on our liquidity and cash flow in future
periods:</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<table border=0 cellspacing=0 cellpadding=0 width=569 style='width:427.0pt;
 border-collapse:collapse;mso-padding-alt:0in 0in 0in 0in'>
 <tr style='height:25.5pt'>
  <td width=216 valign=bottom style='width:2.25in;border:none;border-bottom:
  solid windowtext .5pt;background:white;height:25.5pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b><Font style='font-size:10.0pt'>Contractual Obligations </Font></b></p>
  </td>
  <td width=65 valign=bottom style='width:49.0pt;border:none;border-bottom:
  solid windowtext .5pt;background:white;height:25.5pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b><Font style='font-size:10.0pt'>Total </Font></b></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;border-bottom:solid windowtext .5pt;
  background:white;height:25.5pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b><Font style='font-size:10.0pt'>&nbsp;Less than 1
  Year </Font></b></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;border-bottom:solid windowtext .5pt;
  background:white;height:25.5pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b><Font style='font-size:10.0pt'>&nbsp;1-3 Years </Font></b></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;border-bottom:solid windowtext .5pt;
  background:white;height:25.5pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b><Font style='font-size:10.0pt'>&nbsp;4-5 Years </Font></b></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;border-bottom:solid windowtext .5pt;
  background:white;height:25.5pt'>
  <p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b><Font style='font-size:10.0pt'>&nbsp;After 5
  Years </Font></b></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;Capital leases </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$&nbsp;&nbsp;&nbsp;25,612 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$&nbsp;&nbsp;&nbsp;12,806 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$&nbsp;&nbsp;&nbsp;12,806 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;</Font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;Operating leases </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>457,760 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>237,262 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>218,146 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,352 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;</Font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;Employment agreements </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>12,917 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>12,917 </Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;</Font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=left style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;Total contractual cash obligations </Font></p>
  </td>
  <td nowrap valign=bottom style='border-top:solid windowtext .5pt;border-left:
  none;border-bottom:solid windowtext .5pt;border-right:none;background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$ 496,289 </Font></p>
  </td>
  <td nowrap valign=bottom style='border-top:solid windowtext .5pt;border-left:
  none;border-bottom:solid windowtext .5pt;border-right:none;background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$ 262,985 </Font></p>
  </td>
  <td nowrap valign=bottom style='border-top:solid windowtext .5pt;border-left:
  none;border-bottom:solid windowtext .5pt;border-right:none;background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$ 230,952 </Font></p>
  </td>
  <td nowrap valign=bottom style='border-top:solid windowtext .5pt;border-left:
  none;border-bottom:solid windowtext .5pt;border-right:none;background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,352 </Font></p>
  </td>
  <td nowrap valign=bottom style='border-top:solid windowtext .5pt;border-left:
  none;border-bottom:solid windowtext .5pt;border-right:none;background:white;
  height:12.75pt'>
  <p align=right style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:right'><Font style='font-size:10.0pt'>-&nbsp;&nbsp;</Font></p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
  <td nowrap valign=bottom style='background:white;
  height:12.75pt'>
  <p align=right style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>
  </td>
 </tr>
</table>

</font><Font style='font-size:10.0pt; font-family:Times; color:windowtext'>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>&nbsp;</Font></p>

<p style="margin-top: 1; margin-bottom: 1">The above table does not include the
long term debt obligations associated with the $2,000,000 in subordinated notes
we sold in December 2004 and due December 31, 2006, with interest at the rate of
8% per year payable quarterly in arrears.<br>
&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1"><b>New Accounting Pronouncements</b></p>
<p style="margin-top: 1; margin-bottom: 1">In December 2004, the Financial
Accounting Standards Board (FASB) issued Financial Accounting Standard (FAS)
123(R), &#147;Share Based Payment&#148;.&nbsp; Statement 123(R) is effective for public
companies at the beginning of the first interim or annual period after June 15,
2005. This statement eliminates the ability to account for share-based
compensation using the intrinsic value-based method under APB Opinion No. 25,
&#147;Accounting for Stock Issued to Employees.&#148; Statement 123(R) would require the
Company to calculate equity-based compensation expense for stock options and
employee stock purchase plan rights granted to employees based on the fair value
of the equity instrument at the time of grant. Currently, the Company discloses
the pro forma net income (loss) and the related pro forma income (loss) per
share information in accordance with FAS 123 and FAS 148, &#147;Accounting for
Stock-Based Compensation Costs-Transition and Disclosure.&#148; The Company has not
evaluated the impact that Statement 123(R) will have on its financial position
and results of operations.</p>

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<p style="margin-top: 1; margin-bottom: 1"><font face="Times New Roman"><Font style='font-size: 10.0pt; color: windowtext'>In
December 2003, the FASB issued FIN&nbsp;46-R, &#147;Consolidation of Variable Interest Entities
- - an interpretation of ARB&nbsp;51&nbsp;(revised December 2003)&#148;, which replaces FIN&nbsp;46.&nbsp; FIN&nbsp;46-R incorporates certain modifications to FIN 46 adopted by the FASB subsequent to the issuance of FIN&nbsp;46, including modifications of the scope of FIN&nbsp;46.&nbsp; For all non-special purpose entities (&#147;SPE&#148;) created prior to February&nbsp;1, 2003, public entities will be required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March&nbsp;15, 2004.&nbsp; For all entities (regardless of whether the entity is an SPE) that were created subsequent to January&nbsp;31, 2003, public entities are already required to apply the provisions of FIN 46, and should continue doing so unless they elect to adopt the provisions of Fin 46-R early as of the first interim or annual reporting period ending after December&nbsp;15, 2003.&nbsp; If they do not elect to adopt FIN&nbsp;46-R early, public entities would be required to apply FIN&nbsp;46-R to those pos









t-January&nbsp;31, 2003 entities as of the end of the first interim or annual reporting period ending after March&nbsp;15, 2004. The adoption of FIN 46-R for non-SPEs
did not have a material impact on the Company&#146;s financial position, results of
operations or cash</font>.</font> </p>
<p style="margin-top: 1; margin-bottom: 1"><font size="2">&nbsp;</font></p>
<p style="margin-top: 1; margin-bottom: 1">
<Font style='font-size:10.0pt; font-family:Times; color:windowtext' face="Times New Roman">

In March 2004, the
Emerging Issues Task Force (&quot;EITF&quot;) reached a consensus on Issue No. 03-1, &quot;The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments.&quot; EITF 03-1 provides guidance on other-than-temporary impairment
models for marketable debt and equity securities accounted for under SFAS No.
115, &quot;Accounting for Certain Investments in Debt and Equity Securities,&quot; and
SFAS No. 124, &quot;Accounting for Certain Investments Held by Not-for-Profit
Organizations,&quot; and non-marketable equity securities accounted for under the
cost method. The EITF developed a basic three-step model to evaluate whether an
investment is other-than-temporarily impaired. On September 30, 2004, the FASB
approved the issuance of FASB Staff Position (FSP) EITF 03-1-1, which delays the
effective date until additional guidance is issued for the application of the
recognition and measurement provisions of EITF 03-1 to investments in securities
that are impaired. The Company does not expect the adoption of EITF 03-1 to
have a material effect on its consolidated financial position, results of
operations or cash flows.</FONT><font face="Times New Roman"> </font></p>

<p>
<Font style='font-size:10.0pt;font-family:"Times New Roman"; font-weight:700'>

Risk Factors</p></font>

<p style="margin-top: 1; margin-bottom: 1">
<Font style='font-size:10.0pt;font-family:"Times New Roman"; font-style:italic'>
An investment in our company involves a high degree of
risk.&nbsp; In addition to the other information included in this report, you
should carefully consider the following risk factors in evaluating an
investment in our company.&nbsp; You should consider these matters in
conjunction with the other information included or incorporated by reference in
this report. 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.</font></p>


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&nbsp;</p>


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<p style='margin:1 0in;font-family:Times;color:black'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>We have a history of net losses. We expect to continue to incur net losses and we may not achieve or maintain profitability.&nbsp; </STRONG></FONT> </p>

<p style='margin:0in;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-family:Times;color:black'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have incurred significant operating losses and anticipate continued losses in fiscal 2005. At September 30, 2004, we had an accumulated deficit of $42,327,493. In addition, for fiscal 2004, we incurred a net loss of $5,960,436. 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.</FONT></p>

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<p style='margin:0in;font-family:Times;color:black'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>
We may need additional capital for growth. </STRONG></FONT></p>

<p style='margin:0in;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-family:Times;color:black'>
<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; color:windowtext" size="2">
Our current plans
indicate that depending on sales, we may need additional capital to support our
growth.&nbsp; We may generate a portion of these funds from operations.&nbsp;  </font></p>

<p style='margin:0in;font-family:Times;color:black'>
&nbsp;</p>
<p style='margin:0in;font-family:Times;color:black'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The actual amount of
funds that we will need will be determined by many factors, some of which are
beyond our control, and we may need funds sooner than currently anticipated.&nbsp;
Principal factors that could affect the availability of our internally generated
funds include:</FONT></p>

<p style='margin:0in;font-family:Times;color:black'>&nbsp;</p>

<p style="margin-top: 0; margin-bottom: 0">

<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;
government spending
levels;<br>
&nbsp;</font></p>
<p style="margin-top: 0; margin-bottom: 0">
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;
introduction of new competing technologies;<br>
&nbsp;</font></p>
<p style="margin-top: 0; margin-bottom: 0">
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;
failure of sales from our Government Group to meet planned projections;<br>
&nbsp;</font></p>
<p style="margin-top: 0; margin-bottom: 0">
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;
product mix and effect on margins; and<br>
&nbsp;</font></p>
<p style="margin-top: 0; margin-bottom: 0">
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#149;
acceptance of our products in new markets.<br>
&nbsp;</font></p>
<p style="margin-top: 0; margin-bottom: 0"></p>
<p style='margin:0in;font-family:Times;color:black'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When we require
additional funds, general market conditions or the then-current market price of
our common stock may not support capital raising transactions.&nbsp; If we require
additional funds and we are unable to obtain them on a timely basis or on terms
favorable to us, we may be required to scale back our research and development
efforts, sell or license some or all of our technology or assets or curtail or
cease operations.&nbsp; If we raise additional funds by selling additional shares of
our capital stock or securities convertible into common stock, the ownership
interest of our stockholders will be diluted. </FONT></p>

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<p><b>The 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.</b></p>
<p>We have entered into a Committed Equity Financing Facility, or CEFF, 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 15 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 CEFF will not be an available source of financing.
In addition, we are obligated to use 40% of the proceeds we may raise from the
CEFF to prepay any outstanding interest and principal on the notes we sold in
December 2004. Our agreement with Kingsbridge permits Kingsbridge to terminate the CEFF 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.</p>
<p>The issuance of shares under the CEFF 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 CEFF, 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 15 day trading period after initiation of each draw down. Issuing shares at such a discount will further dilute the interests of other stockholders.<br>
&nbsp;</p>

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 </font></font></font></font></font>
<p style="margin-top: 1; margin-bottom: 1">To the extent that Kingsbridge sells shares of our common stock issued under the CEFF to third parties, 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.</p>

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</font><Font style='font-family:"Times New Roman"'>
<p style='margin:1 0in;font-family:Times;color:black'>
<b>The Committed Equity Financing Facility imposes certain
liquidated damages and limitations on our ability to issue future priced securities. These liquidated damages and limitations may significantly impair our liquidity and ability to raise capital.</b></p>
<p style='margin:1 0in;font-family:Times;color:black'>&nbsp;</p>
</font><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
<p style="margin-top: 1; margin-bottom: 1">The terms of the CEFF 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 CEFF or by exercise of its warrant. These liquidated damages provisions generally require us to pay an amount based on the decline in value, if any, of shares held by Kingsbridge during the time a registration statement is unavailable. See "Liquidity and Capital Resources" above for a further description of these liquidated damages provisions. 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.</p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<p style="margin-top: 1; margin-bottom: 1">In addition, during the two-year term of the proposed CEFF, 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) during the two-year term of our agreement with 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.</p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<p style="margin-top: 1; margin-bottom: 1"><b>Two
customers collectively accounted for more than half of our net revenues in
fiscal 2004 and we continue to be dependent on a few large customers. </b></p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<p style="margin-top: 1; margin-bottom: 1">For fiscal 2004, ADS, Inc. accounted for 47% of
our revenues and General Dynamics, Armaments and Technical Products, Inc., or
GD-ATP, accounted for 11% of our revenues.&nbsp;Both of these customers distributed products they purchased from us to
end users. &nbsp;GD-ATP is no longer a
distributor for our products.&nbsp;&nbsp;ADS has
the right to cease doing business with us at any time.&nbsp;&nbsp;If that were to occur,
due to loss of demand for our products from their customers, our net revenues
could 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. </p>

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<p style="margin-top: 1; margin-bottom: 1"><b>We must
expand our customer base in order to grow our business. </b></p>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>
<p style="margin-top: 1; margin-bottom: 1">To grow our business, we must fulfill orders
from our existing customers, obtain additional orders from our existing
customers, develop relationships with new customers and obtain and fulfill
orders from new customers. We cannot guarantee that we will be able to increase
our customer base. Further, even if we do obtain new customers, we cannot
guarantee that those customers will purchase from us enough quantities of our
product or at product prices that will enable us to recover our costs in
acquiring those customers and fulfilling those orders. Whether we will be able
to sell more of our products will depend on a number of factors, including: </p>

<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<ul>
 <li>our ability to manufacture reliable products that have the features that are
     required by our customers;<br>
&nbsp;</li>
 <li>our ability to expand relationships with existing customers and to develop
     relationships with new customers that will lead to additional orders for
     our products;<br>
&nbsp;</li>
 <li>our ability to develop and expand new markets for directed sound products; and<br>
&nbsp;</li>
 <li>our ability to develop international product distribution directly or through
     strategic partners.</li>
</ul>

</font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;mso-pagination:lines-together;page-break-after:
avoid'><b><Font style='font-size:10.0pt'>The
growth of our Government Group revenues is materially dependent on acceptance
of our LRAD 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.</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:lines-together;page-break-after:avoid'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:lines-together;font-size: 10.0pt;font-family:"Times New Roman";layout-grid-mode:line'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although our LRAD products are designed to be used by both government and commercial customers, our LRAD products have to date been predominately 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 the product has not yet 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 is 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.</FONT></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:lines-together;font-size: 10.0pt;font-family:"Times New Roman";layout-grid-mode:line'>&nbsp;</p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:lines-together;font-size: 10.0pt;font-family:"Times New Roman";layout-grid-mode:line'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Perceptions that long range hailing devices are unsafe or may be used in an abusive manner may hurt sales of our LRAD products which could cause our revenues to decline.</STRONG></FONT></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:lines-together;font-size: 10.0pt;font-family:"Times New Roman";layout-grid-mode:line'>&nbsp;</p>

<p style='margin:1 0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:lines-together;font-size: 10.0pt;font-family:"Times New Roman";layout-grid-mode:line'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Potential customers for our LRAD products, including government, military and force protection and emergency response agencies may be influenced by claims or perceptions that long range hailing devices are unsafe or may be used in an abusive manner. These claims or perceptions could cause our product sales to decline. In addition, if these agencies have these perceptions, it will be difficult for us to grow our customer base beyond these markets. These factors could reduce future revenues, adversely affecting our financial condition and results of operations.</FONT></p>

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<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>

<p style="margin-top: 1; margin-bottom: 1"><b>We are an
early stage company introducing new products and technologies. If commercially
successful products are not produced in a timely manner, we may be unprofitable
or forced to cease operations. </b></p>
</font>


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<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>


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<p style="margin-top: 1; margin-bottom: 1">Our HSS, NeoPlanar and LRAD 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. </p>
</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>


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<p style="margin-top: 1; margin-bottom: 1"><b>Our products have never been produced in quantity, and we may incur significant and unpredictable warranty costs as these products are mass produced.</b></p>
</font>
<p style="margin-top: 1; margin-bottom: 1">&nbsp;</p>


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<p style="margin-top: 1; margin-bottom: 1">None of our products has
been produced in sufficient quantities to be considered mass produced. Our
technologies are substantially different from proven, mass produced sound
transducer designs. We may incur substantial and unpredictable warranty costs
from post-production product or component failures. We generally warrant our
products to be free from defects in materials and workmanship for a period up
to one year from the date of purchase, depending on the product.</p>
</font>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">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. At
September 30, 2004, we had a warranty reserve of $331,917, of which $186,454 was
reserved for this replacement program. During fiscal 2004, we incurred 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.&nbsp;&nbsp;Future  warranty costs could further
adversely affect our financial position, results  of operations and business prospects.&nbsp;The
failure rate of our latest HSS Generation  III may not be reduced to acceptable levels.</FONT></P>


</font>


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</font></font>
</font>
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<p style='margin:0in;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-family:Times;color:black'><b>We do not
have the ability to predict future operating results. Our quarterly and annual
revenues will likely be subject to fluctuations caused by many factors, any of
which could result in our failure to achieve our revenue expectations. </b></p>

</font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>

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<p style="margin-top: 1; margin-bottom: 1">All of our fiscal 2004 revenues were
generated from our sound proprietary reproduction technologies, and we expect
these to 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:</p>


</font>
</font>


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</font></font></font></font>

</font><Font style='color:windowtext' face="Times New Roman" size="2">

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<ul>
 <li>our ability to develop and supply sound reproduction components to customers,
     distributors or OEMs or to license our technologies;</li>
 <li>market acceptance of and changes in demand for our products or products of our customers;</li>
 <li>gains or losses of significant customers, distributors or strategic relationships;</li>
 <li>unpredictable volume and timing of customer orders;</li>
 <li>the availability, pricing and timeliness of delivery of components for our products and OEM products;</li>
 <li>fluctuations in the availability of manufacturing capacity or manufacturing yields and
     related manufacturing costs;</li>
 <li>the timing of new technological advances, product announcements or introductions by us, by OEMs or licensees and by our competitors;</li>
 <li>product obsolescence and the management of product transitions and inventory;</li>
 <li>unpredictable warranty costs associated with new product models;</li>
 <li>production delays by customers, distributors, OEMs or by us or our suppliers;</li>
 <li>seasonal fluctuations in sales;</li>
 <li>the conditions of other industries, such as military and commercial industries, into which our technologies may be licensed;</li>
 <li>general consumer electronics industry conditions, including changes in demand and
     associated effects on inventory and inventory practices;</li>
 <li>general economic conditions that could affect the timing of customer orders and
     capital spending and result in order cancellations or rescheduling; and</li>
 <li>general political conditions in this country and in various other parts of the
     world that could affect spending for the products that we offer.</li>
</ul>

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 <p style="margin-top: 1; margin-bottom: 1">Some or all of these factors could adversely
affect demand for our products or technologies, and therefore adversely affect
our future operating results.<br>
&nbsp;</p>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<p style='margin:1 0in;font-family:Times;color:black'>Most of our operating expenses are relatively
fixed in the short term. We may be unable to rapidly adjust spending to
compensate for any unexpected sales or license revenue shortfalls, which could
harm our quarterly operating results. We do not have the ability to predict
future operating results with any certainty. </p>

<p style='margin:1 0in;font-family:Times;color:black'><b>&nbsp;</b></p>

<p style='margin:0in;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><b>Our expenses may vary
from period to period, which could affect quarterly results and our stock
price. </b></p>

</font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'>&nbsp;</p>

</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<p style='margin:1 0in;font-family:Times;color:black'>If we incur additional expenses in a
quarter in which we do not experience increased revenue, our results of
operations would be adversely affected and we may incur larger losses than
anticipated for that quarter. Factors that could cause our expenses to
fluctuate from period to period include:&nbsp; </p>

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</font><Font style='font-size:10.0pt; color:windowtext'>
  <ul>
    <li>the timing and extent of our research and development efforts;</li>
    <li>investments and costs of maintaining or protecting our intellectual property;</li>
    <li>the extent of marketing and sales efforts to promote our products and technologies;</li>
    <li>the timing of personnel and consultant hiring; and</li>
    <li>the cost of settling legal disagreements.</li>
</ul>
</font>

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<BR>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Many potential
competitors who have greater resources and experience than we do may develop
products and technologies that make ours obsolete. </Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Technological
competition from other and longer established electronic and loudspeaker
manufacturers is significant and expected to increase. Most of the companies
with which we expect to compete have substantially greater capital resources,
research and development staffs, marketing and distribution programs and
facilities, and many of them have substantially greater experience in the
production and marketing of products. In addition, one or more of our
competitors may have developed or may succeed in developing technologies and
products that are more effective than any of ours, rendering our technology and
products obsolete or noncompetitive. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Sound reproduction
markets are subject to rapid technological change, so our success will depend
on our ability to develop and introduce new technologies. </Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Technology
and standards in the sound reproduction markets evolve rapidly, making timely
and cost-effective product innovation essential to success in the marketplace.
The introduction of products with improved technologies or features may render
our technologies obsolete and unmarketable. If we cannot develop products in a
timely manner in response to industry changes, or if our technologies do not
perform well, our business and financial condition will be adversely affected.
The life cycles of our technologies are difficult to estimate, particularly
those such as HSS and LRAD for which there are no well established markets. As
a result, our technologies, even if successful, may become obsolete before we
recoup our investment. </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>Our competitive position will be
seriously damaged if we cannot obtain patent protection for important&nbsp;&nbsp;differentiating aspects of our products or
otherwise protect intellectual property rights in our technology. </p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>&nbsp;</p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>We rely on a combination of contracts and trademark, patent and trade secret laws to establish and protect our proprietary rights in our technology. However, we may not be able to prevent misappropriation of our intellectual property, our competitors may be able to independently develop and the agreements we enter into may not be enforceable.
<br>
&nbsp;</p>

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<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>Our success, in part, depends on our ability to obtain and enforce intellectual property protection for our technology, particularly our patents.&nbsp;&nbsp;There is no guarantee any patent will issue on any patent application that we have filed or may file. Claims allowed from existing or pending patents may not be of sufficient scope or strength to protect the economic value of our technologies.&nbsp;Further, any patent that we may obtain will expire, and it is possible that it may be challenged, invalidated or circumvented. If we do not secure and maintain patent protection for our technology and products, our competitive position will be significantly harmed because it will be much easier for competitors to sell products similar to ours. Alternatively, a competitor may independently develop or patent technologies that are substantially equivalent to or superior to our technology.&nbsp;&nbsp;For exampl









e, patent protection on our LRAD product is limited, and we may not be able to prevent others from introducing products with similar functionality.&nbsp;&nbsp;If this happens, any patent that we may obtain may not provide protection and our competitive position could be significantly harmed. </p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>&nbsp;</p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>As we expand our product line or develop new uses for our products, these products or uses may be outside the protection provided by our current patent applications and other intellectual property rights. In addition, if we develop new products or enhancements to existing products we cannot assure you that we will be able to obtain patents to protect them. Even if we do receive patents for our existing or new products, these patents may not provide meaningful protection. In some countries outside of the United States where our products can be sold or licensed, patent protection is not available. Moreover, some countries that do allow registration of patents do not provide meaningful redress for violations of patents. As a result, protecting intellectual property in these countries is difficult and our competitors may successfully sell products in those countries that have functions and features that infri









nge on our intellectual property.
<br>
&nbsp;</p>

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</font>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>We may initiate claims or litigation against third parties in the future for infringement of our proprietary rights or to determine the scope and validity of our proprietary rights or the proprietary rights of our competitors. These claims could result in costly litigation and divert the efforts of our technical and management personnel. As a result, our operating results could suffer and our financial condition could be harmed. </p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>&nbsp;</p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>Our competitive position will be
seriously damaged if our products are found to infringe on the intellectual
property rights of others. </p>

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<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>Other companies and our competitors may currently own or obtain patents or other proprietary rights that might prevent, limit or interfere with our ability to make, use or sell our products. As a result, we may be found to infringe the intellectual property rights of others. The electronics industry is characterized by vigorous protection and pursuit of intellectual property rights or positions, which have resulted in significant and often protracted and expensive litigation. In the event of a successful claim of infringement against us and our failure or inability to license the infringed technology, our business and operating results could be adversely affected. Any litigation or claims, whether or not valid, could result in substantial costs and diversion of our resources. An adverse result from intellectual property litigation could force us to do one or more of the following: </p>

<ul>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:0in;margin-right:0in;margin-bottom:6.0pt; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"' align="left">cease selling, incorporating or using products or services that incorporate the challenged intellectual property; </p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:0in;margin-right:0in;margin-bottom:6.0pt; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"' align="left">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</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:0in;margin-right:0in;margin-bottom:6.0pt; tab-stops:list .75in;font-size:10.0pt;font-family:"Times New Roman"' align="left"><Font style='font:7.0pt "Times New Roman"'>
&nbsp;</Font>redesign products or services that incorporate the disputed technology.</p>

  </li>
</ul>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>If we are forced to take any of the foregoing actions, we could face substantial costs and shipment delays and our business could be seriously harmed. Although we carry general liability insurance, our insurance may not cover potential claims of this type or be adequate to indemnify us for all liability that may be imposed. </p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>&nbsp;</p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;font-weight:normal'>In addition, it is possible that our customers or end users may seek indemnity from us in the event that our products are found or alleged to infringe the intellectual property rights of others. Any such claim for indemnity could result in substantial expenses to us that could harm our operating results. </p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Our HSS
technology is subject to government regulation, which could lead to
unanticipated expense or litigation. </Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>Our HyperSonic sound technology emits ultrasonic
vibrations, and as such is regulated by the Food and Drug Administration. In
the event of certain unanticipated defects in an HSS product, a customer or we
may be required to comply with FDA requirements to remedy the defect and/or
notify consumers of the problem. This could lead to unanticipated expense, and
possible product liability litigation against a customer or us. Any regulatory
impediment to full commercialization of our HSS technology, or any of our other
technologies, could adversely affect our results of operations.<br>
&nbsp;</Font></p>

 <Font style='font-size:10.0pt; font-family:Symbol' size="2">

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 <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman">

  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2">

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</font>

</font>


 </font></font></font>

</font></font></font></font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

</font>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:12.0pt;page-break-after:
avoid; margin-left:0in; margin-right:0in; margin-top:0in'><b><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>We may face personal injury and other liability
claims that harm our reputation and adversely affect our sales and financial
condition.</Font></b></p>

<p style='margin:1 0in; font-size:12.0pt;font-family:Times;color:black;page-break-after:
avoid; '><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Some of our
products are capable of sufficient acoustic output to cause damage to human
hearing or human health if used improperly, such as when the products are used
at close ranges or for long periods of exposure.&nbsp;&nbsp;A person injured in connection with the use of our products may
bring legal action against us to recover damages on the basis of theories
including personal injury, negligent design, dangerous product or inadequate
warning.&nbsp;&nbsp;We may also be subject to
lawsuits involving allegations of misuse of our products.&nbsp;&nbsp;Our product liability insurance coverage may
be insufficient to pay all such claims.&nbsp;Product liability insurance may become too costly for us or may become
unavailable for us in the future.&nbsp;&nbsp;We
may not have sufficient resources to satisfy any product liability claims not
covered by insurance which would materially and adversely affect our financial
position.&nbsp;&nbsp;Significant litigation could
also result in a diversion of management&#146;s attention and resources, and
negative publicity.</Font></p>

<p style='margin:1 0in; font-size:12.0pt;font-family:Times;color:black;page-break-after:
avoid; '>&nbsp;</p>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-bottom:1;page-break-after:
avoid; margin-top:1'><b><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>We may not be successful in obtaining the
necessary licenses required for us to sell some of our products abroad. </Font></b></p>

</font>

 <Font style='font-size:10.0pt;font-family:Symbol'>

<Font style='font-size:10.0pt;font-family:Symbol'>

 <Font style='color:windowtext'>
  <Font style='color:windowtext' face="Times New Roman" size="2">

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'>&nbsp;</p>

</font></font>
  <Font style='color:windowtext' size="2" face="Times New Roman">

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Licenses for the export of certain of our products may be required from government agencies in accordance with various statutory authorities, including, for example, the Trading with the Enemy Act of 1917, the Arms Export Control Act of 1976, the Export Administration Act of 1979, or the International Emergency Economic Powers Act, as well as their implementing regulations and executive orders.</FONT></p>

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'>&nbsp;</p>

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the case of certain agreements involving equipment or services controlled under the International Traffic in Arms Regulations (ITAR) and sold at specified dollar volumes, the U.S. Department of State must notify Congress at least 15 to 30 days, depending on the intended overseas destination, prior to authorizing these sales. During that time, Congress may take action to block the proposed sale. Based on our current product lines, we do not anticipate the congressional notification requirement to have an immediate impact; however, as our product lines expand, this notification requirement could impact our ability to sell certain controlled products or services in the international market.</FONT></p>

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'>&nbsp;</p>

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The need for export licenses and, when required, Congressional notification, can introduce a period of delay in our ability to consummate international transactions. Because issuance of an export license is wholly within the discretion of the controlling U.S. government agency, it is possible that, in some circumstances, we may not be able to obtain the necessary licenses for some potential transactions. </FONT></p>

</font><Font style='font-family:Symbol; color:windowtext'>
  <Font style='color:windowtext' face="Times New Roman" size="2">

<p style='font-family:Times;color:black;margin-bottom:1;margin-top:1'>&nbsp;</p>

</font></font>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 32 -</FONT></P>
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<p style='margin:1 0in;font-size:12.0pt;font-family:"Times New Roman";color:black'><b><Font style='font-size:10.0pt'>Our operations could be harmed by
factors including political instability, natural disasters, fluctuations in
currency exchange rates and changes in regulations that govern international
transactions.</Font></b></p>

<p style='margin:1 0in;font-size:12.0pt;font-family:"Times New Roman";color:black'><Font style='font-size:10.0pt'>&nbsp;</Font></p>

<p style='margin:1 0in;font-size:12.0pt;font-family:"Times New Roman";color:black'><Font style='font-size:10.0pt'>We
expect to sell or 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:</Font></p>

<ul>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>changes in tariff regulations;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>political instability, war, terrorism and other political risks;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>foreign currency exchange rate fluctuations;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>establishing and maintaining relationships with local distributors and dealers;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>lengthy shipping times and accounts receivable payment cycles;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>import and export licensing requirements;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and regulatory requirements;</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>greater difficulty in safeguarding intellectual property than in the U.S.; and</p>

  </li>
  <li>

<p style='font-size:12.0pt;font-family:"Times New Roman";color:black;tab-stops:.1in .2in .3in .4in list .5in left 313.9pt decimal 375.8pt left 408.2pt decimal 6.4in;font-size:10.0pt; margin-right:0in; margin-top:0in; margin-bottom:3pt'>difficulty in staffing and managing geographically diverse operations.</p>

  </li>
</ul>

<p style='margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><Font style='font-size:10.0pt'>These
and other risks may preclude or curtail international sales or increase the
relative price of our products compared to those manufactured in other countries,
reducing the demand for our products.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<Font style='font-size:10.0pt'>&nbsp;</Font></p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'>Commercialization of our proprietary sound technologies
depends on collaborations with other companies. If we are not able to maintain
or find collaborators and strategic alliance relationships in the future, we
may not be able to develop our proprietary sound technologies and products. </p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>An
important part of our strategy is to establish business relationships with
leading participants in various segments of the electronics, government and
sound reproduction markets to assist us in producing, distributing, marketing
and selling products that include our proprietary sound technologies. </Font></p>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman">

  <Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2">

<Font style='font-size:10.0pt; font-family:Symbol' size="2">

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>Our success will therefore depend on our ability
to maintain or enter into new strategic arrangements with partners on
commercially reasonable terms. If we fail to enter into such strategic
arrangements with third parties, our financial condition, </Font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>results of operations, cash flows and business
prospects will be adversely affected. Any future relationships may require us to
share control over our development, manufacturing and marketing programs or to
relinquish rights to certain versions of our sound and other technologies.</Font></font></p>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

</font></font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><b><Font style='font-size:10.0pt;font-family:"Times New Roman"'>We are dependent on
third party manufacturers. </Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:widow-orphan lines-together;
page-break-after:avoid'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>We do not have the capacity to manufacture all
of our products internally and we are therefore dependent on third party manufacturers.&nbsp;&nbsp;At present, we manufacture NeoPlanar and
SoundCluster internally only in small quantities and would need to outsource
our manufacturing if sales of these products were to increase significantly.&nbsp;&nbsp;In addition, we established a manufacturing
relationship with Pemstar, Inc. in fiscal 2004 to manufacture our LRAD and HSS
products.&nbsp;&nbsp;We do not have a formal written agreement with Pemstar. Pemstar,
or any other 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.&nbsp;&nbsp;Failure to maintain quality
contract manufacturing could reduce future revenues, adversely affecting
financial condition and results of operations.</Font></p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'><Font style='color:black'>&nbsp;</Font></p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'><Font style='color:black'>We rely on
outside suppliers to provide a large number of components incorporated in our
products.</Font></p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'><Font style='color:black'>&nbsp;</Font></p>

<p style='margin:0in;font-size:10.0pt;font-family:"Times New Roman";font-weight:bold;'><Font style='color:black;font-weight:
normal'>Our products have a large number of components produced by outside
suppliers.&nbsp;&nbsp;In addition, for certain of
these items, we qualify only a single source, which can magnify the risk of
shortages and decrease our ability to negotiate with our suppliers on the basis
of price.&nbsp;&nbsp;In particular, we depend on
our HSS piezo-film supplier to provide expertise and materials used in our
proprietary HSS emitters.&nbsp;&nbsp;If shortages
occur, or if we experience quality problems with suppliers, then our production
schedules could be significantly delayed or costs significantly increased,
which would have a material adverse effect on our business, liquidity, results
of operation and financial position.</Font></p>

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<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:"Times New Roman";color:black;'><b><Font style='font-size:10.0pt'>Our contracts and subcontracts that are funded by the
U.S. government or foreign governments are subject to government regulations
and audits and other requirements.</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><b><Font style='font-size:10.0pt;font-family:"Times New Roman";layout-grid-mode:line'>&nbsp;</Font></b></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
Government contracts require compliance with various
contract provisions and procurement regulations. The adoption of new or
modified procurement regulations could have a material adverse effect on our
business, financial condition or results of operations or increase the costs of
competing for or performing government contracts. If we violate any of these
regulations, then we may be subject to termination of these contracts,
imposition of fines or exclusion from government contracting and
government-approved subcontracting for some specific time period. In addition,
our contract and subcontract costs and revenues may be subject to adjustment as
a result of audits by government auditors. </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman";
layout-grid-mode:line'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>
<Font style='font-size:10.0pt;font-family:"Times New Roman"; font-weight:700'>
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. </Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
Our Government Group business has involved and is
expected in the future to involve providing products and services under contracts
or subcontracts with U.S. federal, state, local and foreign government
agencies. Obtaining contracts and subcontracts from government agencies is
challenging, and contracts often include provisions that are not standard in
private commercial transactions. For example, government contracts may: </Font></p>
<ul>
  <li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
include provisions that allow the government agency to terminate the contract without penalty under some circumstances;&nbsp;&nbsp;</p>
  </font><Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line'>
  <li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
be subject to purchasing decisions of agencies that are subject to political influence;&nbsp;&nbsp;</p>
  </li>
  <li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
contain onerous procurement procedures; and&nbsp;&nbsp;</p>
  </li>
  <li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
be subject to cancellation if government funding becomes unavailable.</p>
  </li>
</ul>
<p>
Securing government contracts can be a protracted
process involving competitive bidding. In many cases, unsuccessful bidders may
challenge contract awards, which can lead to increased costs, delays and
possible loss of the contract for the winning bidder.</p>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2"><b><p style="margin-top: 1; margin-bottom: 1">
If our key employees do
not continue to work for us, our business will be harmed because competition
for replacements is intense. </b></p>
<p>Our
performance is substantially dependent on the performance of our executive
officers and key technical employees, including Elwood G. Norris, our Chairman,
and Kalani Jones, our President and Chief Operating Officer. We are dependent
on our ability to retain and motivate high quality personnel, especially highly
skilled technical personnel. Our future success and growth also depends on our
continuing ability to identify, hire, train and retain other highly qualified
technical, managerial and sales personnel. Competition for such personnel is
intense, and we may not be able to attract, assimilate or retain other highly
qualified technical, managerial or sales personnel in the future. The inability
to attract and retain the necessary technical, managerial or sales personnel
could cause our business, operating results or financial condition to suffer. </p>
<p style="margin-top: 1; margin-bottom: 1">We may not address
successfully the problems encountered in connection with any potential future
acquisitions. <br>
&nbsp;</p>
<p style="margin-top: 1; margin-bottom: 1">

 <Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

 <Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman; layout-grid-mode:line' face="Times New Roman" size="2">
We expect to continue to consider opportunities to acquire or make investments
in other technologies, products and businesses that could enhance our
capabilities, complement our current products or expand the breadth of our
markets or customer base. We have limited experience in acquiring other
businesses and technologies. Potential and completed acquisitions and strategic
investments involve numerous risks, including:
</font>
</font></p>
</font>
<ul>
<li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
problems assimilating the purchased technologies, products or business operations;</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
problems maintaining uniform standards, procedures, controls and policies;&nbsp;&nbsp;</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
unanticipated costs associated with the acquisition;</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
diversion of management&#146;s attention from our core business;</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
adverse effects on existing business relationships with suppliers and customers;</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
risks associated with entering new markets in which we have no or limited prior experience;</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
potential loss of key employees of acquired businesses; and</p>
</font><li>
<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
increased legal and accounting costs as a result of the newly adopted rules and regulations related to the Sarbanes-Oxley Act of 2002.</font></p>
</ul>
 <Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman; layout-grid-mode:line' face="Times New Roman" size="2">
If we fail to properly evaluate and execute acquisitions and strategic
investments, our management team may be distracted from our day-to-day
operations, our business may be disrupted and our operating results may suffer.
In addition, if we finance acquisitions by issuing equity or convertible debt
securities, our stockholders would be diluted.
</font>

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 <p>
 <Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman; layout-grid-mode:line' face="Times New Roman" size="2"><b>
We are subject to
increased costs as a result of newly adopted accounting and SEC regulations.</b></Font></p>
<Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman; layout-grid-mode:line' face="Times New Roman" size="2">
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management will
be required by the end of fiscal 2005 to perform an evaluation of our internal
controls 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.
</font>
 <Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman; layout-grid-mode:line' face="Times New Roman" size="2">
In designing and evaluating our internal controls 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 controls can
be designed to provide absolute assurance of effectiveness and any material
failure of internal controls 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 controls over financial reporting would have a negative
impact on our reputation and business.<br>
&nbsp;</Font><Font style='font-size:10.0pt; font-family:Symbol' size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2"><Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol' size="2"><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt;font-family:"Times New Roman"; layout-grid-mode:line'><Font style='font-size:10.0pt; font-family:Symbol' size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'><Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt; color:windowtext; font-fam









ily:Symbol' face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2"><Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt; font-family:Symbol; layout-grid-mode:line' size="2"><Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt;font-family:"Times New Roman"; layout-grid-mode:line; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roma









n" size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt;font-family:"Times New Roman"'></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2"><Font style='font-size:10.0pt;font-family:"Times New Roman"; layout-grid-mode:line; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2"><Font style='font-size:10.0pt; color:windowtext; font-family:Symbol' face="Times New Roman" size="2"><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2"><Font style='font-siz









e:10.0pt;font-family:"Times New Roman"; color:windowtext' size="2" face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; layout-grid-mode:line; color:windowtext' size="2" face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"></font></font></font></font></font></font></font></font></font></font></font></font><Font style='font-size:10.0pt; color:windowtext' face="Times New Roman"><p style="margin-top: 1; margin-bottom: 1"><b>Changes in
stock option accounting rules may adversely impact our reported operating
results prepared in accordance with generally accepted accounting principles,
our stock price and our competitiveness in the employee marketplace.<br>
&nbsp;</b></p>

 </font>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman">

<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">Technology companies in general and our company
in particular have a history of depending upon and using broad based employee
stock option programs to hire, incentivize and retain employees in a
competitive marketplace. Any changes requiring that we record compensation
expense in the statement of operations for employee stock options using the
fair value method could have a significant negative effect on our reported
results. On March 31, 2004, the Financial Accounting Standards Board (FASB)
issued an Exposure Draft, Share-Based Payment: an amendment of FASB Statements
No. 123 and 95, which would require a company to recognize, as an expense, the
fair value of stock options and other stock-based compensation to employees.
The Exposure Draft set an effective date for public companies of fiscal years
beginning after December 15, 2004. Currently, we do not recognize compensation
expense for stock options, other than to non-employees or upon extensions of
time for certain terminated employees related to black-out periods. Such a
change would result in lower reported earnings, which may negatively impact our
future stock price. In addition, such a change 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.<br>
&nbsp;</p>

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</font>

</font></font></font></font></font></font></font></font></font></font></font>

<p style="margin-top: 1; margin-bottom: 1"><b>We may
issue preferred stock in the future, and the terms of the preferred stock may
reduce the value of your common stock.<br>
&nbsp;</b></p>

 </font>

<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">We are authorized to issue up to 5,000,000
shares of preferred stock in one or more series. Our board of directors may
determine the terms of future preferred stock offerings without further action
by our stockholders. If we issue additional preferred stock, it could affect
your rights or reduce the value of your common stock. In particular, specific
rights granted to future holders of preferred stock could be used to restrict
our ability to merge with or sell our assets to a third party. These terms may
include voting rights, preferences as to dividends and liquidation, conversion
and redemption rights, and sinking fund provisions.<br>
&nbsp;</p>


 </font>


<font size="2" face="Times New Roman">

</font>

<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1"><b>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.<br>
&nbsp;</b></p>

 </font>

<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">

<p style="margin-top: 1; margin-bottom: 1">As a result of the CEFF or other
financings, we may issue additional shares of common stock without further
action by our shareholders. Moreover, although the issuance of our common stock
under the CEFF 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 CEFF, 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 CEFF increases, to a
maximum of 3,684,782 shares we may issue without shareholder approval. Drawing
down on the CEFF 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.<br>
&nbsp;</p>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 35 -</FONT></P>
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<BR>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Our Series D and
Series E Preferred Stock  financings may result in dilution to our common stockholders.&nbsp;&nbsp;The
holders of Series D and Series E  Preferred Stock have a liquidation preference over
holders of our common stock,  and will receive more common shares on conversion if the
market price of our  common stock declines.</b></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dilution of the per
share value of our common  shares could result from the conversion of the outstanding
Series D and Series  E Preferred Stock.</FONT></P>


<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
<p style="margin-top: 1; margin-bottom: 1">The holders of our outstanding shares of Series
D Preferred Stock may convert these shares into shares of our common stock at a
conversion price equal to the lower of $4.50 or 90% of volume-weighted average
price of our common stock for the five trading days prior to conversion. The
conversion rate cannot however be lower than $2.00. The $2.00 floor price may
however be adjusted downward if we sell securities for less than an effective
price of $2.00 per share. As of September 30, 2004, the outstanding 50,000
shares of Series D Preferred Stock were convertible into an aggregate of 127,222
common shares. In addition, the Series D Preferred Stock purchasers received
warrants to purchase 2.2 common shares for each share of Series D Preferred
Stock purchased.&nbsp;&nbsp;The exercise price of
the warrants was initially $4.50 per share, but was reduced to $3.01 per share
as a result of anti-dilution provisions in the warrants. The exercise price for
warrants on 495,880 common shares will be subject to further reduction if we
sell securities for less than an effective price of $3.01 per share. </p>
<p>The holders of our outstanding shares of Series
E Preferred Stock may convert these shares into shares of our common stock at a
conversion price equal to the lower of $3.25 or 90% of volume-weighted average
price of our common stock for the five trading days prior to conversion.&nbsp;&nbsp;The conversion rate cannot however be lower
than $2.00. As of September 30, 2004, the 233,250 outstanding shares of Series
E Preferred Stock were convertible into an aggregate of 786,473 common shares.
In addition, the Series E Preferred Stock purchasers received warrants to
purchase 1.5 shares of common stock for each share of Series D Preferred Stock
purchased.&nbsp;&nbsp;The exercise price of the
warrant is $3.25 per share, but is subject to reduction if we sell securities
for less than the effective price of $3.25 per share.</p>


<p>In the event of a sale or liquidation of our company, or in the event of
certain mergers where our company is not the surviving company, the holders of
Series D and Series E Preferred Stock will be entitled to a liquidation preference
equal to their original purchase price plus an accretion of 6% per annum, in
preference to any payments on liquidation to be made to the common stockholders.&nbsp;&nbsp;As of September 30, 2004, the
amount of this liquidation preference was $3,128,500.</p>

<p>Holders of our common stock could experience substantial dilution from the conversion of the Series D and Series E Preferred Stock and exercise of the related warrants. As a result of the floating conversion price, the holders of Series D and Series E Preferred Stock will receive more common shares on conversion if the price of our common shares declines beyond specific levels.&nbsp;&nbsp;To the extent that the Series D or Series E stockholders convert and then sell their common shares, the common stock price may decrease due to the additional shares in the market.&nbsp;This could allow the Series D or Series E stockholders to receive greater amounts of common stock, the sales of which would further depress the stock price.&nbsp;&nbsp;Furthermore, the significant downward pressure on the trading price of our common stock as Series D and Series E Preferred Stock and related warrant holders convert or exercise these securities and sell the common shares received could encourage short sales by the holders of









 Series D and Series E Preferred Stock and the related warrants, or other stockholders. This would place further downward pressure on the trading price of our common stock.&nbsp;&nbsp;Even the mere perception of eventual sales of common shares issued on the conversion of the Series D and Series E Preferred Stock or exercise of the related warrants could lead to a decline in the trading price of our common stock.</p>
<p><b>Our stock price is volatile and may continue to be volatile in the future.</b></p>
<p>Our common stock trades
on the NASDAQ SmallCap Market. The market price of our common stock has
fluctuated significantly to date. In the future, the market price of our common
stock could be subject to significant fluctuations due to general market
conditions and in response to quarter-to-quarter variations in:</p>

<blockquote>
  <ul>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'><Font style='font:7.0pt "Times New Roman"'>
&nbsp;</Font><Font style='font-size:10.0pt;'>our anticipated or actual operating results; </p>

    </font><Font style='font-size:10.0pt;font-family:Symbol'>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'>developments concerning our sound reproduction technologies; </p>

    </li>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'>technological innovations or setbacks by us or our competitors; </p>

    </li>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'>conditions in the consumer electronics market; </p>

    </li>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'>announcements of merger or acquisition transactions;</p>

    </li>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'>changes in personnel within our company; and </p>

    </li>
    <li>

<p style='font-size:12.0pt;font-family:Times;color:black;margin-top:4.0pt;margin-right:0in;margin-bottom:0in; margin-bottom:.0001pt;tab-stops:list 48.0pt;font-size:10.0pt;font-family:"Times New Roman"'>other events or factors and general economic and market conditions.</p>

    </li>
  </ul>
</blockquote>

</font>
  <Font style='font-size:10.0pt;'>

<p>The stock market in recent years has experienced
extreme price and volume fluctuations that have affected the market price of
many technology companies, and that have often been unrelated or
disproportionate to the operating performance of companies. </p>
</font>
</font>

</font>

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<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>
<Font style='font-family:"Times New Roman"; font-weight:700'>
<a name="item 7a">Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.</a></Font></p>

</b>

</font>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Market risk
represents  the risk of loss that may impact our financial position, results of
operations  or cash flows due to adverse changes in market prices, including interest
rate  risk and other relevant market rate or price risks. We do not use derivative
financial instruments in our investment portfolio.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">We are currently
exposed  to some market risk through interest rates, related to our investment of
current cash and cash equivalents. Based on our balance of cash and cash  equivalents of
$4.2 million at September 30, 2004, a change of one percent in  interest rate would cause
a change in interest income of $42,000. The risk is  not considered material and we
manage such risk by continuing to evaluate the  best investment rates available for
short-term high quality investments.</FONT></P>

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<b>

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<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-family:"Times New Roman"'>
<a name="item 8">Item 8. Financial Statements and Supplementary Data.</a></Font></p>

</font></b>

</font>

</font>
</font>
  </font></font></font>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The financial
statements  required by this item begin on page F-1 with the index to financial
statements  followed by the financial statements.</FONT></P>

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<b>

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<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-family:"Times New Roman"'>
<a name="item 9">Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.</a></Font></p>

</font></b>

</font>

</font>
</font>
  </font></font></font>
<p>None</p>

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<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-family:"Times New Roman"'>
<a name="item 9a">Item 9A. Controls and Procedures.</a></Font></p>

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We
maintain disclosure controls and procedures designed to ensure that material
information related to us, including our consolidated subsidiaries, is
recorded, processed, summarized and reported within the time periods specified
in the SEC rules and forms.

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<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of the end of the period covered by this report, we carried out an evaluation  under the
supervision and with the participation of management, including our  co-principal
executive officers and principal financial officer, of the  effectiveness of the design
and operation of our disclosure controls and  procedures (as defined in Rules&nbsp;13a-15(e)&nbsp;or&nbsp;15d-15(e)&nbsp;under
the Securities Exchange Act of 1934). Based upon that evaluation, our  co-principal
executive officers and principal financial officer concluded, as  of the date of such
evaluation, that, except  as set forth below, the design and operation of such
disclosure controls and procedures were effective. In connection with the  preparation of
our proxy statement for our 2005 annual meeting of stockholders,  we determined that we
had failed to disclose in our Form 10-K/A filed January  28, 2005, one late filing
required under Section 16 of the Exchange Act by an  executive officer. The report was
initially identified as late, but due to a  miscommunication with our outside counsel,
the report was incorrectly identified  as timely immediately prior to filing. We have
taken steps to improve our  tracking of and disclosure relating to Section 16 filings by
our executive  officers, directors and significant beneficial owners.  </FONT></TD>
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<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
significant changes were made in our internal controls over financial reporting  (as
defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during our  most recent
fiscal quarter that has materially affected, or is reasonably  likely to materially
affect, our internal control over financial reporting. </FONT></TD>
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<i>L</i><Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2"><i>imitations.</i>
Our management, including our co-principal executive officers and principal
financial officer, does not expect that our disclosure controls or internal
controls over financial reporting will prevent all errors or all instances&nbsp;&nbsp;of
fraud. A control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that the control system's objectives
will be met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within our company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and any design may not
succeed in achieving its stated goals under all potential future conditions.
Over time, controls may become inadequate because of changes in conditions or
deterioration in the degree of compliance with policies or procedures. Because
of the inherent limitation of a cost-effective control system, misstatements due
to error or fraud may occur and not be detected</Font>.</font></font></font><Font style='font-size:10.0pt;font-family:"Times New Roman"'><br>
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<a name="item 9b">Item 9B. Other Information.</a></Font></p>

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On December 23, 2004, we sold
to accredited investors for cash in a private offering an aggregate of
$2,000,000 of unsecured subordinated promissory notes due December 31, 2006.&nbsp;
Interest on these notes accrues at the rate of 8% per year and is due and
payable quarterly in arrears.&nbsp; We are required to use 40% of the net proceeds of
any future equity financing to prepay these notes, including any amounts we
raise pursuant to our Committed Equity Financing Facility, or CEFF.&nbsp; We may also
prepay these notes in our discretion at any time without penalty after June 30,
2005. </p>
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<p class="Normal">In connection with the issuance
of these notes, each purchaser was granted a warrant to purchase 7,500 shares of
our common stock until December 31, 2009 for each $100,000 of notes purchased
(prorated for amounts less than $100,000) such that we issued in the aggregate
warrants exercisable for an aggregate of 150,000 shares of our common stock.&nbsp;
The exercise price of the warrants was $9.28 per share for purchasers who were
directors, officers, employees or consultants of our company, or affiliates of
such persons, and $8.60 per share for other purchasers.&nbsp; Warrants exercisable
for 75,000 shares were issued at each such exercise price.&nbsp; </p>
<p class="Normal">The holders of these warrants
are entitled to be included on any registration statement we file after the
registration statement for the CEFF, subject to customary exceptions and
cut-back rights.</p>
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<p class="Normal">A trust affiliated with Elwood
G. Norris, our Chairman and the beneficial owner of 19.5% of our common stock
before the financing, purchased a note in the principal amount of $500,000 and
received a warrant exercisable for 37,500 shares with an exercise price of $9.28
per share. </p>
<p class="Normal">The securities were offered and
sold without registration under the Securities Act of 1933, in reliance upon the
exemption provided by Section 4(2) of the Securities Act, and Regulation D, Rule
506 thereunder.&nbsp; The securities may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirements of the Securities Act.&nbsp; Appropriate legends have been placed on the
notes and the warrants, and appropriate legends will be placed on the common
stock issued upon exercise of the warrants which are not subject to an effective
registration statement for their resale.&nbsp; We sold these securities without an
underwriter.</p>
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<p class="Normal">The foregoing disclosure is
made in lieu of disclosure under Item 1.01 and Item 3.02 on Form 8-K.</p>
<p class="Normal">On December 22, 2004, we
granted inducement stock options to certain of our new employees.&nbsp; These options
were granted without stockholder approval to 6 new non-executive employees as an
inducement material to the individuals' entering into employment with our
company, and the issuances were approved by our Compensation Committee pursuant
to NASDAQ Marketplace Rule 4350(i)(1)(A)(iv).&nbsp; The options are exercisable for
an aggregate of 76,500 shares of common stock with an exercise price of $10.06
per share.&nbsp; Each option has a five year term and generally vests 25% on the first
anniversary of the grant date and then quarterly thereafter for the next 12
quarters, subject to continued employment and other conditions.&nbsp; The foregoing
disclosure is made in lieu of disclosure under Item 1.01 on Form 8-K.</p>
<p class="Normal">On November 16, 2004, we
granted to Carl Gruenler, our Vice President of Government and Force Protection
Systems Group, a five-year stock option under our 2002 Stock Option Plan, to
purchase 75,000 shares of common stock at an exercise price of $6.70 per share.&nbsp;
The option vests over four years, with 25% of the shares vesting on the first
anniversary of the date of grant, and the balance vesting in equal quarterly
installments thereafter.&nbsp; This disclosure is made in lieu of disclosure in
Item 1.01 of Form 8-K.</p>
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<p style='margin:0in;font-family:"Times New Roman";color:black'><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
On September 9, 2004, Bruce Ehlers, formerly our Vice President, Engineering,
separated from our company. We agreed to pay Mr. Ehlers severance in the amount
of $12,917, representing one month of base salary. We also agreed that Mr.
Ehlers could exercise the vested portion of his stock option, representing 9,375
shares of common stock, until thirty days after Mr. Ehlers is permitted to sell
the underlying shares under the terms of our insider trading policy. In exchange
for these benefits, Mr. Ehlers executed a general release of claims. The
foregoing disclosure is made in lieu of disclosure under Item 1.01 on Form 8-K.</FONT></p>

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<h1  style='margin:0in;text-align:center;font-size:14.0pt;font-family:"Times New Roman";color:black;font-weight:bold;'><Font style='font-family:Times;font-family:"Times New Roman"'>PART
III</Font>
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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 10. Directors
and Executive Officers of the Registrant. </B></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The directors and
executive officers, their ages, positions held and duration as director as of January 21,
2005, are as follows:</FONT></P>

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     <TD ALIGN="LEFT"><U><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Name</b></FONT></U></TD>
     <TD ALIGN="CENTER"><U><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Age</b></FONT></U></TD>
     <TD ALIGN="CENTER"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Position<BR><U>and Offices</U></b></FONT></TD>
     <TD ALIGN="CENTER"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Director<BR><U>Since</U></b></FONT></TD></TR>

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<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Elwood G. Norris</FONT></TD>
     <TD WIDTH="20%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">66</FONT></TD>
     <TD WIDTH="36%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Chairman and Director</FONT></TD>
     <TD WIDTH="24%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">1980</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Richard M. Wagner (1)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">59</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Director</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">1986</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">David J. Carter (1)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">56</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Director</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">1998</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Daniel Hunter (1)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">54</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Director</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2001</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Kalani Jones</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">42</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">President, Chief Operating Officer and Director</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2004</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Michael A. Russell</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">58</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Chief Financial Officer</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">n/a</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Carl Gruenler</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">51</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Vice President of Government and Force Protection Systems Group</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">n/a</FONT></TD></TR>
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<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Member
of Audit Committee, Compensation Committee and Nominating and Governance Committee.</FONT></TD>
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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The terms of all
directors will expire at the next annual meeting of stockholders, or when their successors
are elected and qualified. Directors are elected each year, and all directors serve
one-year terms. Officers serve at the pleasure of the board of directors. There are no
arrangements or understandings between us and any other person pursuant to which he was or
is to be selected as a director, executive officer or nominee. We have however entered
into employment agreements with our chairman and certain of our named executive officers
described in Part III, Item 11 below under the heading &#147;Employment Agreements.&#148;</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Biographical
Information </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Biographical
information on Mr. Norris, Mr. Jones, Mr. Russell, and Mr. Gruenler is contained in Part
I, Item 1 above under the heading &#147;Executive  Officers.&#148;</FONT></P>

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<P ALIGN="LEFT"><FONT SIZE="2"><B>Richard M. Wagner</B> was
appointed as a director in 1986 and served as Secretary from February 1994 to March 1999.
Since 1986, Mr. Wagner has been President and CEO of Eidon Inc., a San Diego based
company involved in the manufacturing and distribution of liquid mineral supplements.
Eidon Inc. is the parent company of The Mortgage Company, a residential and commercial
mortgage brokerage firm. Mr. Wagner obtained a B.S. in Business in 1968 and an M.S. in
Finance in 1974 from the San Diego State University.</FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>David J. Carter</B>
was appointed as a director in September 1998. From January 1999 to January 2000, he was
Vice President of Copyright Clearance Center, a copyright licensing service. From 1983
until April 1998, he was employed by AT&amp;T, a provider of local, long distance,
Internet and transaction-based voice and data services, with his last position as General
Manager and Product Development Vice President. He previously served in other positions at
AT&amp;T including Business Development Vice President and Consumer Products Marketing
Vice President. Prior to his employment with AT&amp;T, he served as a Marketing Research
Consultant and Managing Consultant &#151; Marketing and Business Strategy for General
Electric Company, a diversified technology, media and financial services company. His
career has included technical positions at Temple Barker &amp; Sloane, Inc., a management
consulting firm, Decision Research Corp., a marketing research company, and Johnson &amp; Johnson, a manufacturer of health care products and
a provider of related services for the consumer, pharmaceutical and medical devices and
diagnostics markets. He obtained a B.A. in Mathematics in 1970 and a M.S. in Mathematical
Statistics in 1973 from the University of Massachusetts.</FONT></P>

<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Daniel Hunter</B>
was appointed as a director in May 2001. Mr. Hunter has been a licensed certified public
accountant for the past twenty-five years. He obtained his accounting degree from the
University of Utah in 1975. For the past twenty years, Mr. Hunter has operated his own law
offices specializing in business and tax law. He obtained his Juris Doctor degree from the
University of Seattle in 1978.</FONT>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Audit Committee and
Audit Committee Financial Expert </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">We have a separately
designated standing audit committee established in accordance with section 3(a)(58)(A) of
the Exchange Act. The members of the audit committee are Messrs. Wagner (chair), Carter
and Hunter. The board of directors has determined that Daniel Hunter is an &#147;audit
committee financial expert&#148; and &#147;independent&#148; as defined under applicable
SEC and NASDAQ rules. The board&#146;s affirmative determination was based, among other
things, upon his over 25 years as a certified public accountant.</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Section 16(a)
Beneficial Ownership Reporting Compliance </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Section 16(a) of the
Exchange Act requires our officers, directors and persons who own more than 10% of any
class of our securities registered under Section 12(g) of the Exchange Act to file reports
of ownership and changes in ownership with the SEC. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish us with copies of all Section
16(a) forms they file.</FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Based solely on a
review of copies of such reports furnished to us and written representations that no other
reports were required during the fiscal year ended September 30, 2004, we believe that all
persons subject to the reporting requirements pursuant to Section 16(a) filed the required
reports on a timely basis with the SEC, except that Bruce Ehlers filed late his
Form 3 report disclosing no securities held.</FONT>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Code of Business
Conduct and Ethics </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">We have adopted a
&#147;Code of Business Conduct and Ethics,&#148; a code of ethics that applies to all
employees, including our executive officers. A copy of the Code of Business Conduct and
Ethics is posted on our Internet site at www.atcsd.com. In the event we make any
amendments to, or grant any waivers of, a provision of the Code of Business Conduct and
Ethics that applies to the principal executive officer, principal financial officer, or
principal accounting officer that requires disclosure under applicable SEC rules, we
intend to disclose such amendment or waiver and the reasons therefor on a Form 8-K or on
our next periodic report.</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 11. Executive
Compensation. </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Compensation of
Directors </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">No direct or indirect
remuneration was paid or became payable by us to the directors in their capacities as
directors or committee members during fiscal 2004 other than in the form of reimbursement
of expenses of attending directors&#146; or committee meetings. Our directors have
received in the past, and may receive in the future, stock option grants. We currently
have no standard arrangements pursuant to which our directors are compensated for services
provided as a director or committee member. During fiscal 2005, the Compensation Committee
will be reevaluating our director compensation program.</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Summary Compensation
Table </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">There is shown below information
concerning the compensation of each person who served as our Chief Executive Officer
(&#147;CEO&#148;) during the fiscal year ended September 30, 2004, our two most highly
compensated executive officers other than the CEO that were serving at September 30, 2004
and an additional individual that served as an executive officer during the fiscal year
ended September 30, 2004 but was no longer serving at September 30, 2004 (each a
&#147;named executive officer&#148;). None of our other executive officers serving at the
end of the fiscal year ended September 30, 2004 earned more than $100,000 in salary and
bonus in such year.</FONT></P>

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<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 40 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

</font></font>
<P ALIGN=CENTER><FONT face="Times New Roman" SIZE="2" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Summary
Compensation Table</b></FONT> </P>


<font style="font-size: 10.0pt; font-family: Symbol; color: windowtext; layout-grid-mode: line" face="Times New Roman" size="2">



<!-- MARKER FORMAT-SHEET="Center Bold" -->
 </font>
<P ALIGN=CENTER><U><FONT SIZE="2" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Annual Compensation</b></FONT> </U> </P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Name and<BR>Principal Position</b></FONT></TD>

<font style="font-size: 10.0pt; font-family: Symbol; color: windowtext; layout-grid-mode: line" face="Times New Roman" size="2">



     <TD ALIGN="LEFT"></TD>
     </font>
     <TD ALIGN="CENTER"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Fiscal<BR>Year</b></FONT></TD>



<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext' face="Times New Roman">

     <TD ALIGN="RIGHT"></TD>
     </font>
     <TD ALIGN="RIGHT"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Salary</b></FONT></TD>

<font style="font-size: 10.0pt; font-family: Symbol; color: windowtext; layout-grid-mode: line" face="Times New Roman" size="2">



     <TD ALIGN="RIGHT"></TD>
     </font>
     <TD ALIGN="RIGHT"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Bonus</b></FONT></TD>



<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext' face="Times New Roman">

     <TD ALIGN="RIGHT"></TD>
     </font>
     <TD ALIGN="RIGHT"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Other Annual<BR>Compensation</b></FONT></TD>

<font style="font-size: 10.0pt; font-family: Symbol; color: windowtext; layout-grid-mode: line" face="Times New Roman" size="2">



     <TD ALIGN="RIGHT"></TD>
     </font>
     <TD ALIGN="RIGHT"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Long Term<BR>Compensation<BR>Securities<BR>Underlying<BR>Options (#)</b></FONT></TD>



<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext' face="Times New Roman">

     <TD ALIGN="RIGHT"></TD>
     </font>
     <TD ALIGN="RIGHT"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>All Other<BR>Compensation</b></FONT></TD>



<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext' face="Times New Roman">

     <TD ALIGN="RIGHT"></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Elwood G. Norris,</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2004</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$200,000</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,385</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Chairman</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2003</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$132,308</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">100,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$2,054</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(1)</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2002</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$124,615</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,800</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="14">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Kalani Jones</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2004</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$179,808</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">125,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,636</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">President/COO</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2003</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$8,077</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">75,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD COLSPAN="14">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Carl Gruenler</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2004</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$146,846</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$11,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$15,404</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(2)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">130,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,286</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(1)</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Vice President</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2003</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$21,260</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">20,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="14">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Bruce Ehlers</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2004</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$159,792</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(3)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">100,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,252</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Former Vice President</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Represents
matching 401(k) contributions. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Represents
moving expenses. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Excludes
$12,917 earned after September 30, 2004.  See &#147;Employment Arrangements&#148; below. </FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">No named executive
officer received any form of non-cash compensation from us in the fiscal years ended
September 30, 2004, 2003, or 2002, or  currently receives any such compensation, in
excess of 10% of the total amount of annual salary and bonus reported for the named
executive officer  above.</FONT></P>


<BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Option Grants </B></FONT>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shown below is
further information on grants of stock options in fiscal 2004 to the named executive
officers reflected in the Summary Compensation  Table shown above for fiscal 2004.</FONT></P>

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<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 41 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Option Grants for
Fiscal Year Ended September 30, 2004 </B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM" ALIGN="CENTER">
     <TD ALIGN="CENTER" COLSPAN="14"></TD>

</font>



</font>

     <TD ALIGN="CENTER" COLSPAN="5"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Potential Realizable<BR> Value at Assumed<BR> Annual Rates of<BR>
     Stock Price<BR> Appreciation for<BR> <U>Option Term (2)</U></b></FONT></TD></TR>
<TR VALIGN="BOTTOM" ALIGN="CENTER">
     <TD ALIGN="CENTER"><FONT SIZE="-1" face="Times New Roman" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Name</b></FONT></TD>



     <TD ALIGN="CENTER">



<Font style='font-size: 10.0pt; font-family: Times New Roman; layout-grid-mode: line; color: windowtext' face="Times New Roman">

     <b>&nbsp;</b>

</font>



     </TD>



     <TD ALIGN="CENTER" COLSPAN="3"><FONT face="Times New Roman" SIZE="-1" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Number of<BR> Options<BR> Granted (1)</b></FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="3"><FONT face="Times New Roman" SIZE="-1" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Percent of<BR> Total Options<BR> Granted to<BR> Employees in<BR> Fiscal Year</b></FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="3"><FONT face="Times New Roman" SIZE="-1" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Exercise<BR> Price</b></FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="3"><FONT face="Times New Roman" SIZE="-1" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>Expiration<BR> Date</b></FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="3"><FONT face="Times New Roman" SIZE="-1" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>5%</b></FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="2"><FONT face="Times New Roman" SIZE="-1" style="font-size: 10.0pt; layout-grid-mode: line; color: windowtext"><b>10%</b></FONT></TD></TR>



<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext' face="Times New Roman">

<font style="font-size: 10.0pt; font-family: Symbol; color: windowtext; layout-grid-mode: line" face="Times New Roman" size="2">



<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD WIDTH="22%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Elwood G. Norris</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$-&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$-&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="19">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Kalani Jones</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">25,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2.3%</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$5.75&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">10/17/08&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$39,715&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$87,760&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">100,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">9.3%</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$6.88&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">5/20/09&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$190,082&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$420,030&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD COLSPAN="19">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Carl Gruenler</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">55,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">5.1%</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$5.39&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">11/18/08&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$81,904&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$180,985&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">75,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">7.0%</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$6.88&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">5/20/09&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$142,561&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$315,023&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="19">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Bruce Ehlers</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">75,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">7.0%</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$4.61&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">10/29/08&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$95,524&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$211,084&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">25,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">2.3%</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$6.88&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">5/20/09&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$47,520&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$105,008&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> These
options were granted under our 2002 Stock Option Plan. These options have an exercise
price that was equal to or greater than the fair  market value on the date of grant. Such
options vest according to terms of option agreement, with vesting being contingent upon
continued  service with our company. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Potential
gains are net of exercise price, but before taxes associated with exercise. These amounts
represent certain assumed rates of  appreciation only, in accordance with the SEC&#146;s
rules. Actual gains, if any, on stock option exercises are dependent on the future
performance  of the common stock, overall market conditions and the option holder&#146;s
continued employment through the vesting period. The amounts reflected in  this table may
not necessarily be achieved. </FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Center Bold" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Aggregated Option
Exercises and Fiscal Year-End Values </B></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TD COLSPAN="2" ALIGN="CENTER"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"></TD>
     <TD></TD>
     <TD COLSPAN="5" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Number of Unexercised<BR>Options Held At<BR>September 30, 2004</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="5" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Value of Unexercised<BR>In-The-Money Options At<BR>September 30, 2004 (1)</B></FONT></TD>
     <TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="2" ALIGN="RIGHT"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"></TD>
     <TD></TD>
     <TD COLSPAN="5" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="5" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Name</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Shares<BR>Acquired<BR>on Exercise</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Value<BR>Realized</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Exercisable</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unexercisable</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Exercisable</B></FONT></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unexercisable</B></FONT></TD>
     <TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="BLACK" SIZE="1"></TD>
     <TD></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Elwood G. Norris</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">162,500</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">12,500</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">374,216</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">28,352</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Kalani Jones</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">28,125</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">171,875</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Carl Gruenler</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">28,125</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">121,875</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">7,425</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">12,375</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Bruce Ehlers</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">9,375</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">10,688</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Based
on the closing price reported on the Nasdaq SmallCap Market on September 30, 2004 of
$5.75 per share.</FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="PublicEase Pg Break w/ Number" -->
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 42 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<p>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">We do not have any
stock appreciation rights plans in effect and we have no long-term incentive plans, as
those terms are defined in SEC regulations. During the fiscal year ended September 30,
2004, we did not adjust or amend the exercise price of stock options awarded to the named
executive officers. We have no defined benefit or actuarial plans covering any named
executive officer.</FONT>

<!-- MARKER FORMAT-SHEET="Left Bold" -->
</p>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Employment
Arrangements </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Mr. Elwood G.
Norris </B>&#150; Effective September 1, 1997, we entered into a three year employment
contract with Mr. Norris, for his services as Chief Technology Officer. The three-year
term expired on August 31, 2000, but the agreement remains in effect until one party gives
thirty days advance notice of termination to the other. Mr. Norris now serves as Chairman
under the term of this agreement. The agreement, as amended by the Compensation Committee,
provides for a base salary to $16,667 per month. The agreement provides that Mr. Norris
will participate in bonus, benefit and other incentives at the discretion of the Board of
Directors. Mr. Norris has agreed not to disclose trade secrets and has agreed to assign
certain inventions to us during employment. We are also obligated to pay Mr. Norris
certain royalties. See Item 13 &#151; &#147;Certain Relationships and Related
Transactions&#148; below.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Mr. Kalani Jones
</B>&#150; We entered into a letter agreement dated as of August 28, 2003, as amended on
October 20, 2003, under which Mr. Jones was employed as our Senior Vice President of
Operations. Mr. Jones has since been promoted to President and Chief Operating Officer.
The letter agreement provides for an annual base salary of $140,000, a 30% annual
performance bonus to be determined by the Compensation Committee and the Board of
Directors, and the grant of an option to purchase 75,000 shares of our common stock, which
option vests quarterly over a two year period beginning six months after the date of
employment. Mr. Jones subsequently received additional option grants. See &#147;Option
Grants for Fiscal Year Ended September 30, 2004.&#148; Mr. Jones&#146; current annual base
salary, as increased by the Compensation Committee, is $220,000 Mr. Jones employment is
terminable at-will by us or by Mr. Jones for any reason, with or without notice.</FONT></P>

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</font>



</font>

<P ALIGN="LEFT"><FONT SIZE="2" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line"><b>Mr. Gruenler</b>
</FONT><FONT SIZE="2" face="Times New Roman" style="font-size: 10.0pt; color: windowtext; layout-grid-mode: line; font-weight: normal"> &#150; We
entered into a letter agreement which was amended on July 30, 2003, under which Mr.
Gruenler was employed as our Vice President of Military Operations. Mr. Gruenler is
currently our Vice President of Government and Force Protection Systems Group. The letter
agreement provides for an annual base salary of $110,000, a 10% annual performance
bonus, and the grant of an option to purchase 20,000 shares of our common stock, which
option vests quarterly over a two year period. Mr. Gruenler subsequently received an
additional option grant. See &#147;Option Grants for Fiscal Year Ended September 30,
2004.&#148; Mr. Gruenler&#146;s current annual base salary is $185,000 Mr. Gruenler
employment is terminable at-will by us or by Mr. Gruenler for any reason, with or
without notice.</FONT></P>



<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext' face="Times New Roman">

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Mr. Ehlers</B> &#150; On
September 9, 2004, Bruce Ehlers, formerly our Vice President, Engineering, separated from
our company. We agreed to pay Mr. Ehlers severance in the amount of $12,917, representing
one month of base salary. We also agreed that Mr. Ehlers could exercise the vested portion
of his stock option, representing 9,375 shares of common stock, until thirty days after
Mr. Ehlers is permitted to sell the underlying shares under the terms of our insider
trading policy. In exchange for these benefits, Mr. Ehlers executed a general release of
claims.</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Compensation
Committee Interlocks and Insider Participation </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Messrs. Wagner, Hunter
and Carter served on the Compensation Committee during fiscal 2004. Mr. Wagner served as
our Secretary from February 1994 to March 1999. No executive officer of our company served
as a member of a compensation committee, or a board of directors performing equivalent
functions, of any entity that had one or more of its executive officers serving as a
member of our company&#146;s Compensation Committee.</FONT></P>

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<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 43 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item  12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters.</B></FONT>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The following table
sets forth certain information regarding the ownership of our common stock as of December
31, 2004 by: (i)&nbsp;each director; (ii)&nbsp;each of the named executive officers;
(iii)&nbsp;all our executive officers and directors as a group; and (iv)&nbsp;all those
known by us to be beneficial owners of more than five percent of our common stock.</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT SIZE="-1"><B>Title of Class</B></FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="5"><FONT SIZE="-1"><B>Name and Address of<BR>Beneficial Owner</B></FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="2"><FONT SIZE="-1"><B>Amount &amp; Nature of<BR>Beneficial Ownership (1)</B></FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" COLSPAN="2"><FONT SIZE="-1"><B>Percent<BR>of Class (1)</B></FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="22%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Elwood G. Norris<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%"  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%"  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="1%"  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="19%"  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">3,966,515</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(2)</FONT></TD>
     <TD WIDTH="3%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="14%"  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">19.6</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Kalani Jones<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">65,625</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(3)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">--</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Carl Gruenler<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">48,375</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(4)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">*</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Bruce Ehlers<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">9,375</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(5)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">*</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Richard M. Wagner<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">105,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(6)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">*</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">David J. Carter<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">78,750</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(7)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">*</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Common Stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Daniel Hunter<BR>
13114 Evening Creek Drive South<BR>
San Diego, California 92128</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">118,000</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(8)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">*</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">All directors &amp; executive officers<BR>
As a group (7 persons)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">4,382,265</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">(9)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">21.4</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">%</FONT></TD></TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Less
than 1%. </FONT></TD>
</TR>
</TABLE>

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<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 44 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Beneficial
ownership is determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to  securities. Except as otherwise indicated
below, this table is based on information supplied by officers, directors and principal
stockholders.  The inclusion in this table of such shares does not constitute an
admission that the named stockholder is a direct or indirect beneficial owner  of, or
receives the economic benefit of, such shares. Percentage of class is based on 19,851,319
shares of common stock outstanding on December  31, 2004. Except as otherwise stated
below, each of the named persons has sole voting and investment power with respect to the
shares shown  (subject to community property laws). </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
3,629,015 shares held by a family trust for which Mr. Norris serves as trustee, 162,500
shares issuable upon exercise of a warrant held  by such trust, and 175,000 shares
issuable upon the exercise of outstanding stock options within 60 days of December 31,
2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Consists
of 65,625 shares issuable upon the exercise of outstanding stock options within 60 days
of December 31, 2004. </FONT></TD>
</TR>
</TABLE>
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<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
1,500 shares held by spouse and 46,875 shares issuable upon the exercise of outstanding
stock options within 60 days of December 31, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Consists
of 9,375 shares issuable upon the exercise of outstanding stock options within 60 days of
December 31, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
60,000 shares issuable upon the exercise of outstanding stock options within 60 days of
December 31, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
55,000 shares issuable upon the exercise of outstanding stock options within 60 days of
December 31, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
44,500 shares held by spouse, 6,000 shares by Profit Sharing Trust and 50,000 shares
issuable upon the exercise of outstanding stock  options within 60 days of December 31,
2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(9)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
452,500 shares issuable upon the exercise of outstanding stock options within 60 days of
December 31, 2004 and 162,500 shares issuable  upon exercise of warrants. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Other Voting Stock </B></FONT></P>


<!-- MARKER FORMAT-SHEET="Left Italic" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>Preferred Stock </I></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The following
security ownership information is set forth as of January 21, 2005, with respect to
certain persons or groups known by us to be  beneficial owners of more than 5% of any
outstanding series of our Preferred Stock.  On January 18, 2005, we gave notice to all
holders of Series D  and Series E Preferred Stock that we had elected to convert the
shares of Series D and Series E Preferred Stock to common stock.  The notice of
conversion was effective immediately for the Series D Preferred Stock, and resulted in
all 50,000 issued and outstanding shares of Series D Preferred  Stock converting into an
aggregate of 129,259 shares of common stock. The notice of conversion for the Series E
Preferred Stock will be effective on  February 1, 2005, and it is anticipated that on
that date, all 233,250 issued and outstanding shares of Series E Preferred Stock will
convert into an  aggregate of 801,306 shares of common stock.  See also Part II, Item 13
below for additional information.</FONT></P>

<!-- MARKER FORMAT-SHEET="PublicEase Pg Break w/ Number" -->
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 45 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<P ALIGN=CENTER><FONT SIZE="2"><B><U>Series E Preferred
Stock</U></B></FONT> </P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER" WIDTH="18%"><FONT SIZE="-1"><B>Title of Class</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="5%">&nbsp;</TD>
     <TD ALIGN="CENTER" WIDTH="36%"><FONT SIZE="-1"><B>Name and address of Beneficial Owner</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="11%">&nbsp;</TD>
     <TD ALIGN="CENTER" WIDTH="11%"><FONT SIZE="-1"><B>Amount and<BR> Nature of<BR> Beneficial<BR> Ownership<BR>Series E (1)</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="6%">&nbsp;</TD>
     <TD ALIGN="CENTER" WIDTH="9%"><FONT SIZE="-1"><B>Percent of<BR> Class<BR> Series E (1)</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="4%">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD WIDTH="18%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Series E Preferred Stock</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="36%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Granite Capital LP<BR> 126 East 56th Street Flr. 25<BR> New York, NY 10022</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">25,000&nbsp;(2)</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">10.7%</FONT></TD>
     <TD WIDTH="4%" ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT" WIDTH="18%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Series E Preferred Stock</FONT></TD>
     <TD ALIGN="LEFT" WIDTH="5%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="36%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Granite Capital II LP<BR> 126 East 56th Street Flr. 25<BR> New York, NY 10022</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="11%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="11%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">25,000&nbsp;(2)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="6%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">10.7%</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="4%">&nbsp;</TD></TR>
</TABLE>
<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER" WIDTH="18%"><FONT SIZE="-1"><B>Title of Class</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="5%">&nbsp;</TD>
     <TD ALIGN="CENTER" WIDTH="36%"><FONT SIZE="-1"><B>Name and address of Beneficial Owner</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="11%">&nbsp;</TD>
     <TD ALIGN="CENTER" WIDTH="11%"><FONT SIZE="-1"><B>Amount and<BR> Nature of<BR> Beneficial<BR> Ownership<BR>Series E (1)</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="6%">&nbsp;</TD>
     <TD ALIGN="CENTER" WIDTH="9%"><FONT SIZE="-1"><B>Percent of<BR> Class<BR> Series E (1)</B></FONT><HR ALIGN="LEFT" COLOR="#000000" NOSHADE></TD>
     <TD ALIGN="CENTER" WIDTH="4%">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT" WIDTH="18%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Series E Preferred Stock</FONT></TD>
     <TD ALIGN="LEFT" WIDTH="5%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="36%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Canusa Trading Ltd.<BR> PO Box HM 279<BR> Hamilton HMAX, Bermuda</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="11%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="11%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">50,000&nbsp;(3)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="6%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">21.4%</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="4%">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="18%">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT" WIDTH="18%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Series E Preferred Stock</FONT></TD>
     <TD ALIGN="LEFT" WIDTH="5%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="36%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">K. Tucker Anderson<BR> 61 Above All Rd.<BR> Warren, CT 06754-1710</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="11%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="11%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">25,000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="6%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">10.7%</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="4%">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="18%">&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT" WIDTH="18%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Series E Preferred Stock</FONT></TD>
     <TD ALIGN="LEFT" WIDTH="5%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="36%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Leonard M. Teninbaum Keogh Account<BR> 1900 St. James Place Ste. 150<BR> Houston,
     TX 77056</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="11%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="11%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">42,500&nbsp;(4)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="6%">&nbsp;</TD>
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">18.2%</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="4%">&nbsp;</TD></TR>
</TABLE>


<BR>


<!-- MARKER FORMAT-SHEET="Para Hang" -->
<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Represents
number of shares of Series E Preferred Stock, held as of January 21, 2004. At such date
an aggregate of 233,250 shares of Series E  Preferred Stock were issued and outstanding,
which are expected to convert on February 1, 2005 into an aggregate of 801,306 shares of
common stock. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes
22,500 shares of Series E Preferred Stock held by Granite Capital LP, which are expected
to convert on February 1, 2005 into 77,296 shares  of common stock, and 2,500 shares of
Series E Preferred Stock held by Granite Capital II LP, which are expected to convert on
February 1, 2005 into  8,589 shares of common stock. Granite Capital LLC is the general
partner of each of Granite Capital LP and Granite Capital II LP. Mr. Walter F.  Harrison,
III and Lewis M. Eisenberg are co-managing members of Granite Capital LLC, and are
believed by us to have shared voting and investment  power with respect to the Series E
Preferred Stock held. Granite Capital LP and Granite Capital II LP disclaim beneficial
ownership in these  securities except to the extent of such person&#146;s pecuniary interest
in these securities and disclaim membership in a group with any other entity or  person
within the meaning of Rule 13d-5(b)(1) under the Securities Exchange Act of 1934. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Mr.
W.A. Manuel is President of Canusa Trading Ltd., and is believed by us to have sole
voting and investment power with respect to the Series E  Preferred Stock held, which are
expected to convert on February 1, 2005 into 171,769 shares of common stock. </FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="PublicEase Pg Break w/ Number" -->
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 46 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Mr.
Leonard M. Teninbaum is trustee of Leonard M. Teninbaum Keogh Account, and is believed by
us to have sole voting and investment power with  respect to the Series E Preferred Stock
held, which are expected to convert on February 1, 2005 into 146,004 shares of common
stock. </FONT></TD>
</TR>
</TABLE>
<BR>



<!-- MARKER FORMAT-SHEET="Left Bold" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Equity Incentive
Plans </B></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certain information
concerning our equity incentive plans is contained in Part II, Item 5 above under the
heading &#147;Equity Compensation and Plan  Information.&#148;</FONT></P>

<!-- MARKER FORMAT-SHEET="Left Bold" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 13. Certain
Relationships and Related Transactions. </B></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Under the
terms of an Assignment of Technology Agreement dated March 2, 1993 and an
Addendum Agreement dated December 2, 1996 we are
obligated to pay Elwood G. Norris, our  Chairman, a 2% royalty on net sales from certain
of our technologies, of which only HSS is a current offering of our company. The royalty
obligation  continues until at least March 1, 2007, and for any longer period during
which we sell products or license technologies subject to any patent  assigned to us by
Mr. Norris. No royalties were paid or recorded under this agreement in the fiscal years
ended September 30, 2004, 2003 or 2002, as  these royalties were immaterial and were
waived by Mr. Norris. We may owe royalties in future periods based on actual sales or
technology revenues.</FONT></P>

<!-- MARKER FORMAT-SHEET="PublicEase Pg Break w/ Number" -->
<BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mark Norris,
the son of Elwood G. Norris, is a full-time non-executive employee of our
company. In his role as a Mechanical Engineer, Mark Norris was paid $89,923 in
salary for the fiscal year ended September 30, 2004. Mr. Norris currently holds
a fully vested  stock
option for 15,000 common shares exercisable until May 2008 at $3.30 per share.&nbsp; No other family member of
any executive officer,  director or 5% stockholder received compensation of more than
$60,000 during the year ended September 30, 2004.</FONT>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">In December 2004, a
family trust affiliated with Mr. Elwood G. Norris purchased from our company an unsecured
subordinated promissory note in the  principal amount of $500,000.  Such purchase was in
connection with a private offering of an aggregate of $2,000,000 of such notes.  The
notes are  due December 31, 2006, and interest accrues at the rate of 8% per year and is
due and payable quarterly in arrears.  See Part II, Item 7,  &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources&#148; for more information on  this financing.  In connection with the
issuance of these notes, each purchaser, including Mr. Norris&#146; trust, was granted a
warrant to purchase 7,500  shares of our common stock for each $100,000 of notes
purchased (prorated for amounts less than $100,000), exercisable until December 31, 2009.
The  exercise price of the warrants was $9.28 per share for purchasers who were
directors, officers, employees or consultants of our company, or  affiliates of such
persons, and $8.60 per share for other purchasers.  Mr. Norris&#146; trust therefore received
a warrant exercisable for 37,500 shares  with an exercise price of $9.28 per share.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Canusa Trading Ltd.,
a significant owner of our Series E Preferred Stock, also purchased an unsecured
subordinated promissory note from our company  in the principal amount of $300,000 in the
December 2004 note and warrant financing, and received a warrant to purchase 22,500
shares at an exercise  price of $8.60 per share.</FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Effective as of
January 18, 2005, we gave notice to all holders of Series D Preferred Stock that we had
elected to convert the shares of Series D  Preferred Stock to common stock, such that all
50,000 issued and outstanding shares of Series D Preferred Stock converted into an
aggregate of  129,259 shares of common stock.  Certain significant owners of our then
outstanding shares of Series D Preferred Stock received shares of common  stock as
follows: Ehrens Family Trust (5,000 shares of Series D Preferred Stock converted into
12,926 shares of common stock), Granite Capital LP  (35,263 shares of Series D Preferred
Stock converted into 91,161 shares of common stock), and Granite Capital II LP (4,737
shares of Series D  Preferred Stock converted into 12,246 shares of common stock).</FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">On January 18, 2005,
we gave notice to all holders of Series E Preferred Stock that we had elected to convert
the shares of Series E Preferred Stock  to common stock.  The notice of conversion for
the Series E Preferred Stock will be effective on February 1, 2005, and it is anticipated
that on that  date, all 233,250 issued and outstanding shares of Series E Preferred Stock
will convert into an aggregate of 801,306 shares of common stock.  Certain significant
owners of our outstanding shares of Series E Preferred Stock are expected to receive
shares of common stock as follows: Granite  Capital LP (22,500 shares of Series E
Preferred Stock will convert into 77,296 shares of common stock), Granite Capital II LP
(2,500 shares of Series  E Preferred Stock will convert into 8,589 shares of common
stock), Canusa Trading Ltd. (50,000 shares of Series E Preferred Stock will convert into
171,769 shares of common stock), K. Tucker Anderson (25,000 shares of Series E Preferred
Stock will convert into 85,885 shares of common stock),  Leonard M. Teninbaum Keogh
Account (42,500 shares of Series E Preferred Stock will convert into 146,004 shares of
common stock).</FONT></P>

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<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 47 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 14. Principal
Accounting Fees and Services. </B></FONT>


<!-- MARKER FORMAT-SHEET="Left Bold" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Principal Accountant
Audit Fees and Services Fees </B></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The following table
describes fees for professional audit services rendered by BDO Seidman, LLP, our
principal independent registered public  accounting firm, for the audit of our annual
financial statements for the years ended September 30, 2004 and September 30, 2003 and
fees billed for  other services rendered by BDO Seidman, LLP during those periods.</FONT></P>


<div align="center">
  <center>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="893" border="0" style="border-collapse: collapse" bordercolor="#111111">
<TR VALIGN="TOP">
     <TD ALIGN="LEFT" width="429">
     <FONT SIZE="-1" FACE="Times New Roman, Times, Serif"><B>Type of Fee</B></FONT></TD>
     <TD ALIGN="RIGHT" width="76">
     <FONT SIZE="-1" FACE="Times New Roman, Times, Serif"><B>2004</B>&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="75">
     <FONT SIZE="-1" FACE="Times New Roman, Times, Serif"><B>2003</B>&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="309"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3" width="667"><HR ALIGN="LEFT" COLOR="#000000" NOSHADE>
</TD>
     </TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD WIDTH="429" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Audit Fees (1)</FONT></TD>
     <TD WIDTH="76" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$112,555&nbsp;</FONT></TD>
     <TD WIDTH="75" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$93,013&nbsp;</FONT></TD>
     <TD WIDTH="309" ALIGN="RIGHT"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT" width="429"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Audit Related Fees (2)</FONT></TD>
     <TD ALIGN="RIGHT" width="76"><font face="Times New Roman, Times, Serif" size="-1">3,000&nbsp;</font></TD>
     <TD ALIGN="RIGHT" width="75"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">29,700&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="309"></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT" width="429"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Tax Fees (3)</FONT></TD>
     <TD ALIGN="RIGHT" width="76"><font face="Times New Roman, Times, Serif" size="-1">6,013&nbsp;</font></TD>
     <TD ALIGN="RIGHT" width="75"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="309"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT" width="429"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">All Other Fees
      (4)</FONT></TD>
     <TD ALIGN="RIGHT" width="76" style="border-bottom-style: solid; border-bottom-width: 1"><font face="Times New Roman, Times, Serif" size="-1">3,000&nbsp;</font></TD>
     <TD ALIGN="RIGHT" width="75" style="border-bottom-style: solid; border-bottom-width: 1"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">-&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="309"></TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT" width="429"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Total</FONT></TD>
     <TD ALIGN="RIGHT" width="76" style="border-top-style: solid; border-top-width: 1"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$124,568&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="75" style="border-top-style: solid; border-top-width: 1"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$122,713&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" width="309"></TD></TR>
</TABLE>
  </center>
</div>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang" -->
<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Audit
Fees include the aggregate fees paid by us during the fiscal year indicated for
professional services rendered by BDO Seidman, LLP for the  audit of our annual financial
statements and review of financial statements included in our Forms 10-Q. </FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Hang" -->
<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Audit
Related Fees include the aggregate fees paid by us during the fiscal year indicated for
assurance and related services by BDO Seidman, LLP  that are reasonably related to the
performance of the audit or review of our financial statements and not included in Audit
Fees. Also included in  Audit Related Fees are fees for accounting advice. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Tax
Fees include the aggregate fees paid by us during the fiscal year indicated for
professional services rendered by BDO Seidman, LLP for tax  compliance, tax advice and
tax planning. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> All
Other Fees include the aggregate fees paid by us during the fiscal year indicated
for products and services provided by BDO Seidman,  LLP, other than the services reported
above.  There were no such fees paid to BDO Seidman, LLP during the year ended September
30, 2003. </FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Left Bold" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Audit Committee
Pre-Approval Policies and Procedures </B></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">All audit and
non-audit services are pre-approved by the Audit Committee, which considers, among other
things, the possible effect of the performance  of such services on the auditors&#146;
independence. The Audit Committee pre-approves the annual engagement of the principal
independent registered public  accounting firm, including the performance of the annual
audit and quarterly reviews for the subsequent fiscal year, and pre-approves specific
engagements for tax services performed by such firm.  The Audit Committee has also
established pre-approval policies and procedures for certain  enumerated audit and audit
related services performed pursuant to the annual engagement agreement, including such
firm&#146;s attendance at and  participation at board and committee meetings; services of such
firm associated with SEC registration statements, periodic reports and other  documents
filed with the SEC or other documents issued in connection with securities offerings,
such as comfort letters and consents; such firm&#146;s  assistance in responding to any SEC
comments letters; and consultations with such firm as to the accounting or disclosure
treatment of transactions  or events and/or the actual or potential impact of final or
proposed rules, standards or interpretations by the SEC, Public Company Accounting
Oversight Board (PCAOB), Financial Accounting Standards Board (FASB), or other regulatory
or standard-setting bodies.  The Audit Committee is  informed of each service performed
pursuant to its pre-approval policies and procedures.</FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The Audit Committee
has considered the role of BDO Seidman, LLP in providing services to us for the fiscal
year ended September 30, 2004 and has  concluded that such services are compatible with
such firm&#146;s independence.</FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 48 -</FONT></P>
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<BR>

<p align="center">

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 <font face="Times New Roman"><b><Font style='layout-grid-mode: line; color: windowtext' size="3">PART IV

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 15. Exhibits
and Financial Statement Schedules. </B></FONT></P>


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<TD WIDTH="4%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(a)</FONT></TD>
<TD WIDTH="96%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> The
following documents are filed as part of this report: </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Financial Statements: </B></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD WIDTH="88%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Report of Independent Registered Public Accounting Firm</FONT></TD>
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-2</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Balance Sheets as of September 30, 2004 and 2003</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-3</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Statements of Operations for the Years Ended September 30, 2004, 2003 and 2002</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-4</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Statements of Stockholders&#146; Equity (Deficit) for the Years Ended September 30, 2004, 2003 and 2002</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-5</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Statements of Cash Flows for the Years Ended September 30, 2004, 2003 and 2002</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-6</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Summary of Accounting Policies</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-7&nbsp;-&nbsp;F-14</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Notes to Financial Statements</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-14&nbsp;-&nbsp;F-31</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD></TR>
<TR BGCOLOR="#D5EAFF" VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">Schedule II - Valuation and Qualifying Accounts</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">F-32</FONT></TD></TR>
</TABLE>
<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Exhibit Index: </B></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>3.  Articles of
Incorporation and Bylaws</B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
of Incorporation of American Technology Corporation (Delaware) dated  March 1, 1992.
Filed as Exhibit 2.1 on Form 10-SB effective August 1, 1994.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment
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&nbsp;31, 1997, dated May 13, 1997.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corrected
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.3</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corrected
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.4</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corrected
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.5</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
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.</FONT></TD>
</TR>
</TABLE>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 49 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.6</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
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.</FONT></TD>
</TR>
</TABLE>
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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.7</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
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.</FONT></TD>
</TR>
</TABLE>
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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Restated
Bylaws of American Technology Corporation. Filed as Exhibit 4.9 on  Form S-3 filed on
January 24, 2005.</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4.  Instruments
Defining the Rights of SecurityHolders</B></FONT></P>

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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Specimen
Common Stock Certificate. Filed as Exhibit 4.10 on Form S-3 filed on  January 24, 2005.</FONT></TD>
</TR>
</TABLE>
<BR>


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<BR>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>10.  Material
Contracts</B></FONT></P>

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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Royalty
Agreement between ATC and Elwood G. Norris dated September 3,  1985.&nbsp;&nbsp;Filed as
Exhibit 6.2 on Form 10-SB effective August 1, 1994.+ </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Assignment
of Technology Agreement between ATC and Elwood G. Norris dated  March 2, 1992. Filed as
Exhibit 6.3 on Form 10-SB effective August 1, 1994.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.2.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Addendum
Agreement to Assignment of Technology Agreement between ATC and  Elwood G. Norris dated
December 2, 1996. Filed as Exhibit 10.3.1 on Form 10-KSB for year  ended September 30,
1996, dated December 13, 1996.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.3</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amended
and Restated Sublease Agreement between ATC and Smiths Industries  Aerospace &amp; Defense
Systems, Inc. as amended, dated September 1,  2000.&nbsp;&nbsp;Filed as Exhibit 10.6.1 on
Form 10-K for the year ended September 30,  2000, dated October 29, 2000.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.3.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First
Amendment to Amended and Restated Sublease Agreement, dated January 1,  2004.&nbsp;&nbsp;Filed
as Exhibit 10.1 on Form 10-Q for the quarter ended March 31, 2004,  dated May 5, 2004.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.4</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement dated as of September 1, 1997 between ATC and Elwood G.  Norris. Filed as
Exhibit 10.16 on Form 10-KSB for year ended September 30, 1997, dated  December 1, 1997.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.5</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1997
Stock Option Plan as adopted on January 23, 1998. Filed as Exhibit 10.1 on  Form S-8 dated
July 27, 1998.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.5.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Incentive Stock Option Agreement under 1997 Stock Option Plan.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.5.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Non-Statutory Stock Option Agreement under 1997 Stock Option Plan.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.6</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002
Stock Option Plan.&nbsp;&nbsp;Filed as Exhibit 99.1 on Form S-8 dated  November 18,
2002.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.6.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Option Grant Notice and Stock Option Agreement under 2002  Stock Option Plan.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.7</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Purchase Warrant exercisable until September 30, 2006 granted to  accredited
investors for an aggregate of 1,012,500 common shares (individual warrants  differ as to
holder, number of shares and issuance date).&nbsp;&nbsp;Filed as Exhibit 4.12  on Form
8-K dated October 12, 2001.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.8</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Series
D Stock and Warrant Purchase Agreement dated May 3,  2002.&nbsp;&nbsp;Filed as Exhibit
10.1 on Form 10-Q for the quarter ended March 31, 2002,  dated May 15, 2002.</FONT></TD>
</TR>
</TABLE>

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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.8.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment
No. 1 to Series D Preferred Stock and Warrant Purchase Agreement  dated July 3, 2002.&nbsp;&nbsp;Filed
as Exhibit 10.3 on Form 10-Q for the quarter ended  June 30, 2002, dated August 14, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.9</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Purchase Warrant exercisable until March 31, 2007 granted to  investors for an
aggregate of 517,880 common shares (individual warrants differ as to  holder, number of
shares and issuance date). Filed as Exhibit 10.2 on Form 10-Q for the  quarter ended
March 31, 2002, dated May 15, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.10</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of 8% Senior Secured Promissory Note due December 31, 2003 aggregating  $1,500,000
granted to accredited investors (individual notes differed as to holder and  amount).
Filed as Exhibit 4.1 on Form 8-K dated October 7, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.10.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Amendment to 8% Senior Secured Promissory Note. Filed as Exhibit  4.6 on Form 8-K
dated March 6, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.11</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Security Agreement. Filed as Exhibit 4.2 on Form 8-K dated October 7,  2002.</FONT></TD>
</TR>
</TABLE>
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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.12</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">License
Agreement between ATC and Harman International Industries, Inc. dated  August 24, 2001.
Portions of this exhibit (indicated by asterisks) have been omitted  pursuant to a
request for confidential treatment pursuant to Rule 24b-2 of the Securities  Exchange Act
of 1934. Filed as Exhibit 10.19 on Form 10-K for the year ended September 30,  2002,
dated December 23, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.13</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Series
E Preferred Stock and Warrant Purchase Agreement dated February 28,  2003. Filed as
Exhibit 4.1 on Form 8-K filed on March 6, 2003. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.14</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Purchase Warrant exercisable until December 31, 2007 granted to  accredited
investors for an aggregate of 514,875 common shares (individual warrants differ  as to
holder, number of shares and issuance date).&nbsp;&nbsp;Filed as Exhibit 4.3 on Form  8-K
dated March 6, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.15</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
letter of James M. Irish dated January 27, 2003. Filed as Exhibit  10.5 on Form 10-Q for
the quarter ended March 31, 2003, dated May 15, 2003.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.16</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities
Purchase Agreement dated July 11, 2003. Filed as Exhibit 4.1 on  Form 8-K dated July 17,
2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.17</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration
Rights Agreement dated July 11, 2003. Filed as Exhibit 4.2 on  Form 8-K dated July 17,
2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.18</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Common Stock Warrant exercisable until July 10, 2007 granted to  accredited investors
for an aggregate of 454,547 common shares (individual warrants differ  as to holder,
number of shares and issuance date). Filed as Exhibit 4.3 on Form 8-K dated  July 17,
2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.19</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">License
and Remarketer Agreement between ATC and General Dynamics Armament  and Technical
Products, Inc. dated February 14, 2003. Filed as Exhibit 10.27 on Form 10-K  for the year
ended September 30, 2003, dated December 29, 2003. Portions of this exhibit  (indicated
by asterisks) have been omitted pursuant to a request for confidential  treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.20</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">License
and Remarketer Agreement between ATC and Bath Iron Works Corporation  dated February 13,
2003. Filed as Exhibit 10.28.1 on Form 10-K for the year ended  September 30, 2003, dated
December 29, 2003. Portions of this exhibit (indicated by  asterisks) have been omitted
pursuant to a request for confidential treatment pursuant to  Rule 24b-2 of the
Securities Exchange Act of 1934.</FONT></TD>
</TR>
</TABLE>

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<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 51 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.21</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Assignment
of License and Remarketer Agreement from Bath Iron Works  Corporation to General Dynamics
Armament and Technical Products, Inc., dated September 23,  2003. Filed as Exhibit
10.28.2 on Form 10-K for the year ended September 30, 2003, dated  December 29, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.22</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Kalani Jones dated August 28, 2003, as amended. Filed  as Exhibit 10.29 on
Form 10-K for the year ended September 30, 2003, dated December 29,  2003.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.23</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Carl Gruenler, as amended. Filed as Exhibit 10.30 on  Form 10-K for the year
ended September 30, 2003, dated December 29, 2003.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.24</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Inducement Grant Notice and Inducement Stock Option Agreement. Filed  as Exhibit 4.1
on Form 8-K dated September 28, 2004.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.25</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Table
of Inducement Grants.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.26</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Special Stock Option.&nbsp;&nbsp;Filed as Exhibit 99.2 on Form S-8 dated  November 18,
2002.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.27</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Michael Russell. Filed as Exhibit 10.1 on Form 10-Q  for the quarter ended
June 30, 2004, dated August 4, 2004.+ </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.28</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Inducement
Grant Notice and Inducement Stock Option Agreement of Michael  Russell.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.29</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Joseph A. Zerucha.&nbsp;&nbsp;Filed as Exhibit 10.2  on Form 10-Q for the
quarter ended December 31, 2003, dated February 12, 2004.+&nbsp; </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.30</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Separation
Agreement of Joseph A. Zerucha.&nbsp;&nbsp;Filed as Exhibit 10.2  on Form 10-Q for the
Form 10-Q for the quarter ended June 30, 2004, dated August 4, 2004.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.31</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Bruce Ehlers.&nbsp;&nbsp;Filed as Exhibit 10.1 on  Form 10-Q for the quarter
ended December 31, 2003, dated February 12, 2004.+ </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.32</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Release
Agreement of Bruce Ehlers.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.33</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Special
Stock Option with Elwood Norris dated November 13, 2000.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.34</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Special
Stock Option with David Carter dated November 13, 2000.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.35</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Special
Stock Option with Richard Wagner dated November 13, 2000.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.36</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Common
Stock Purchase Agreement dated December 14, 2004 with Kingsbridge  Capital Limited. Filed
as Exhibit 10.1 on Form 8-K filed December 17, 2004.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.37</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration
Rights Agreement dated December 14, 2004 with Kingsbridge  Capital Limited. Filed as
Exhibit 10.2 on Form 8-K filed December 17, 2004.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.38</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Warrant
dated December 14, 2004 in favor of Kingsbridge Capital Limited.  Filed as Exhibit 4.1 to
Form 8-K filed December 17, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>




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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.39</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Promissory
Note and Warrant Purchase Agreement dated December 23, 2004 with  the purchasers
described therein. *</FONT></TD>
</TR>
</TABLE>

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<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 52 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.40</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Unsecured Subordinated Promissory Note. *</FONT></TD>
</TR>
</TABLE>
<br>
<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.41</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Warrant. *</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>23 Consents of
Experts and Council </B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">23.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Consent
of BDO Seidman, LLP. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>24 Power of Attorney </B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Power
of Attorney. Reference is made to the signature page of Form 10-K for the year ended
September 30, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Certifications </B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
of Elwood G. Norris, Co-Principal Executive Officer, pursuant to  Rule 13a-14(a) or
15d-14(a) of the Securities and Exchange Act of 1934, as adopted  pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
of Kalani Jones, Co-Principal Executive Officer, pursuant to  Rule 13a-14(a) or 15d-14(a)
of the Securities and Exchange Act of 1934, as adopted  pursuant to Section&nbsp;302 of
the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31.3</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
of Michael A. Russell, Principal Financial Officer, pursuant to  Rule 13a-14(a) or
15d-14(a) of the Securities and Exchange Act of 1934, as adopted  pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">32.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to  Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002, executed by Elwood G. Norris and  Kalani Jones, Co-Principal
Executive Officers, and Michael A. Russell, Principal Financial  Officer.</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">* Previously filed
with Form 10-K for the year ended September 30, 2004.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">+&nbsp;&nbsp;Management
contract or compensatory plan or arrangement. &nbsp;</FONT></P>



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<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">- 53 -</FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=BLACK NOSHADE>
<BR>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt; font-family:"Times New Roman";font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</p>

</font></font><DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Index to Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<DIV>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
</DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV align=left>
<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Report of Independent Registered Public Accounting Firm</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-2</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance Sheets as of September 30, 2004 and 2003</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-3</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statements of Operations for the Years Ended</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September 30, 2004, 2003 and 2002</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-4</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statements of Stockholders&#146; Equity (Deficit) for the Years Ended</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September 30, 2004, 2003 and 2002</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-5</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statements of Cash Flows for the Years Ended</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September 30, 2004, 2003 and 2002</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-6</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Summary of Accounting Policies</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-7 - F-14</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notes to Financial Statements</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-14- F-31</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD vAlign=top align=left width="66%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Schedule II - Valuation and Qualifying Accounts</FONT></DIV></TD>
<TD vAlign=top align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  F-32</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD vAlign=top align=left width="66%">&nbsp;</TD>
<TD vAlign=top align=left width="10%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=right><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-1</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">&nbsp;</TD></TR></TABLE></DIV>
<DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Report of Independent Registered Public Accounting Firm</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<DIV>
<HR align=center width="100%" color=#000000 noShade SIZE=4>
<BR></DIV></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">To the Stockholders and Board of Directors<BR></FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">American Technology Corporation<BR></FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">San Diego, California</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">We have audited the accompanying balance sheets of American Technology Corporation as of September 30, 2004 and 2003, and the related statements of operations, stockholders&#146; equity (deficit) and cash flows for each of the three years in the period ended September 30, 2004. We have also audited the schedules listed in the accompanying index. These financial statements and schedules are the responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these financial statements based on our audits.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that our audits provide a reasonable basis for our opinion.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Technology Corporation at September 30, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2004 in conformity with accounting principles generally accepted in the United States of America.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Also, in our opinion, the schedules present fairly, in all material respects, the information set forth therein.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">/s/ BDO SEIDMAN, LLP</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Costa Mesa, California</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">November
  10, 2004, except for Note 14 as to which the date is December 23, 2004.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV valign="top"></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%" colSpan=3>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-2</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">&nbsp;
</TD></TR></TABLE></DIV>
<DIV>
  <TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" style="border-width:0; ">
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="99%" colSpan=8>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation </STRONG></FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
</TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="99%" colSpan=8>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">BALANCE SHEETS</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
</TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">September 30,</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2003</FONT></DIV></TD>
</TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>ASSETS</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Current Assets:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Cash</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">4,178,968&nbsp; </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,850,358
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Trade accounts receivable, less allowance of </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$25,000 and $25,000 for doubtful accounts</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">926,747
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">184,162
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Inventories, net</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">651,095
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">408,944
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Prepaid expenses and other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">156,419
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">33,849
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Total current assets</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,913,229
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">10,477,313
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Equipment</STRONG></FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">, net</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">453,355
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">200,262
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Patents</STRONG></FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">, net</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,278,707
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-right-style:none; border-right-width:medium" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,066,796
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="2%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Total assets</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">7,645,291&nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">11,744,371&nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>LIABILITIES AND STOCKHOLDERS' EQUITY</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Current Liabilities:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Accounts payable</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,300,075
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">604,343
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Accrued liabilities:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Payroll and related</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">302,706
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">463,788
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deferred revenue</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">322,344
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">276,708
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Warranty reserve</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">331,917
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">319,500
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Legal Settlements</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">150,000
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">292,500
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">22,236
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">26,349
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Capital lease short-term portion</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">10,967
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,915
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: medium none #000000; " vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Total current liabilities</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none #000000; " width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #000000; " vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #000000; " vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,440,245
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none #000000; " vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #000000; " vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #000000; " vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,993,103
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Long-Term Liabilities:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none #ffffff; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Capital lease long-term portion</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">12,131
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">23,097
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Total liabilities</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,452,376
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,016,200&nbsp; </FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Commitments and contingencies</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Stockholders' equity</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Preferred stock, $0.00001 par value; 5,000,000 shares authorized:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Series D Preferred stock 250,000 shares designated: 50,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">issued and outstanding each year, respectively. Liquidation</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">preference of $572,500 and $542,000, respectively.</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">-
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">-
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Series E Preferred stock 350,000 shares designated: 233,250 and 263,250</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">issued and outstanding, respectively. Liquidation preference</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">of $2,556,000 and $2,725,000, respectively.</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock, $0.00001 par value; 50,000,000 shares authorized;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">19,808,819 and 19,342,657 shares issued and outstanding respectively.</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">198
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">193
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Additional paid-in capital</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">47,520,207
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">46,095,032
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Accumulated deficit</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(42,327,493)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(36,367,057)</FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Total stockholders' equity</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,192,915&nbsp; </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,728,171
  &nbsp;</FONT></DIV></TD>
</TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Total liabilities and stockholders' equity</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">7,645,291
  &nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">11,744,371&nbsp; </FONT></DIV></TD>
</TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
</TR></TABLE>
<DIV valign="top"></DIV></DIV>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<DIV>&nbsp;</DIV>
</font>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%" colSpan=3>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  <p align="center">
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">
See accompanying
summary of accounting policies and notes to financial statements.<br>
&nbsp;</DIV></TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-3</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">&nbsp;
</TD></TR></TABLE></DIV>
<DIV><BR>&nbsp;</DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="99%" colSpan=11>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation </STRONG></FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="99%" colSpan=11>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">STATEMENTS OF OPERATIONS</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Years Ended September 30,</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="11%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Revenues:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Product sales</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,581,936 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,070,645 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">649,020 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Related party product sales</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">44,077 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Contract and license </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">170,613 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">244,781 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">317,655 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Total revenues</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,752,549 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,315,426 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,010,752 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Cost of revenues</FONT></DIV></TD>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>

</font>
</font>



</font>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
</font>



</font>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,469,821 </FONT></DIV></TD>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>

</font>
</font>



</font>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
</font>



</font>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,544,077 </FONT></DIV></TD>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>

</font>
</font>



</font>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
</font>



</font>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">683,844 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Gross profit (loss)</STRONG></FONT></DIV></TD>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>

</font>
</font>



</font>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
</font>



</font>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,282,728 </FONT></DIV></TD>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>

</font>
</font>



</font>
<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
</font>



</font>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(228,651</FONT></DIV></TD>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal; layout-grid-mode:line'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%" align="left" valign="bottom">



  <Font style='font-size:10.0pt; color:windowtext' face="Times New Roman">
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal; layout-grid-mode:line'>
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV>
</font>



</font></TD>

</font>
</font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal; layout-grid-mode:line'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
</font>



<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">326,908 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Operating expenses:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Selling, general and administrative</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,309,547 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">4,863,711 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,046,537 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Research and development</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,988,784 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,493,351 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,622,063 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Loss on sales of asset</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(24,513</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(11,500</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Loss on impairment of equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">32,192 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Total operating expenses</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">8,298,331 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">7,332,549 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">6,689,292 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Loss from operations</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(6,015,603</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(7,561,200</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(6,362,384</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Other income (expense):</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Interest income</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">58,056 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">23,293 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">15,596 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Interest expense</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(2,889</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(686,639</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(1,872,544</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(2,467</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(800</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Total other income (expense)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">55,167 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(665,813</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(1,857,748</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Net loss</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,960,436</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,227,013</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,220,132</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Dividend requirements on convertible preferred stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,365,349 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,409,228 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">282,912 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Net loss available to common stockholders </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(7,325,785</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(10,636,241</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,503,044</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Net loss per share of common stock - basic and diluted</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.37</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.67</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.60</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Average weighted number of common shares outstanding</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">19,603,265 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">15,857,569 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">14,193,508 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
<DIV valign="top"></DIV></DIV>
<DIV>&nbsp;</DIV>

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  See accompanying
  summary of accounting policies and notes to financial statements.</font></font></font></p>



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<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-4</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
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</div>
</font></font></font></font><DIV><TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="83%" colSpan=25>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="83%" colSpan=25>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Statements of Stockholders' Equity (Deficit) </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="27%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="6%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="84%" colSpan=26>
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Years Ended September 30, 2004, 2003 and 2002 </FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="27%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="55%" colSpan=23>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Convertible Preferred Stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="27%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="13%" colSpan=5>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Series B </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="13%" colSpan=5>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Series C </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="13%" colSpan=5>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Series D </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="13%" colSpan=5>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Series E</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="27%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Shares </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Amount </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Shares </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Amount </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Shares </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Amount </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Shares </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="6%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Amount </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2001 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">168,860 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">10,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">

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<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV>
</font>
</font>
</font>



</font></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of common stock: </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Upon exercise of stock options </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">For compensation and services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 130,000 options granted for services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">
  Value assigned to 100,000 warrants granted for services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 30,000 options, granted to consultant </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Debt discount on 12% Convertible Notes </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series B preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(168,860</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(2</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of Series D preferred stock, net of offering costs of $78,752 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">235,400 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deemed dividends and accretion on convertible preferred stock of $282,912 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss for the year </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">10,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">235,400 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of Series E preferred stock, net of offering costs of $176,225 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">343,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of common stock: </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Upon exercise of stock options </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">For compensation and services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">For cash at $5.50 per share, net of offering costs of $545,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series C preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(10,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series D preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(185,400</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(2</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series E preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(80,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Exercise of warrants </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Legal settlement at $5.85 per share </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of 12% convertible subordinated notes </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of stock options and warrants for services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deemed dividends and accretion on convertible preferred stock of $2,409,228 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss for the year </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">263,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of common stock: </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Upon exercise of stock options </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Legal settlement and royalty buyout at $4.96 per share</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series E preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(30,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Exercise of warrants </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 28,438 options issued on termination </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deemed dividends and accretion on convertible preferred stock of $1,365,349 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss for the year </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="27%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">233,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="5%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="27%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="5%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
<DIV valign="top">&nbsp;</DIV>
<DIV>
  <p align="center"><BR>
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

  <Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">
  See accompanying
  summary of accounting policies and notes to financial statements.</font></font></font></font></p>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-5a&nbsp;</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">&nbsp;</TD></TR></TABLE>&nbsp;<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="99%" colSpan=18>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="99%" colSpan=18>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Statements of Stockholders' Equity (Deficit) </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="32%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="32%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="100%" colSpan=19>
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Years Ended September 30, 2004, 2003 and 2002 </FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="32%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="32%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="65%" colSpan=16>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common Stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="32%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="10%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Shares </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="10%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Amount </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="10%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Additional Paid-in Capital </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="10%" colSpan=2>
<DIV align=center><font size="2">Accumulated<br>
  Deficit</font><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"> </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="10%" colSpan=2>
<DIV align=center>
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman; font-weight:normal' face="Times New Roman" size="2">

  <FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Total Stockholders' Equity (Deficit) </FONT>
</font>
</font>



</DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2001 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">13,704,139 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">137 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">22,913,268 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(19,919,912</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,993,495 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of common stock: </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Upon exercise of stock options </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">6,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">18,750 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">18,750 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">For compensation and services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">74,129 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">304,920 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">304,921 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 130,000 options granted for services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">256,135 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">256,135 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 100,000 warrants granted for services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">218,803 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">218,803 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 30,000 options, granted to consultant </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">42,898 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">42,898 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Debt discount on 12% Convertible Notes </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,225,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,225,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series B preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">566,958 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">6 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(4</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of Series D preferred stock, net of offering costs of $78,752 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,275,246 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,275,248 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deemed dividends and accretion on convertible preferred stock of $282,912 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss for the year </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,220,132</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,220,132</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">14,351,476 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">144 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">27,255,016 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(28,140,044</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(884,882</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of Series E preferred stock, net of offering costs of $176,225 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,256,272 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,256,275 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of common stock: </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Upon exercise of stock options </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">408,951 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">4 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,614,223 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,614,227 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">For compensation and services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">109,844 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">410,815 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">410,816 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">For cash at $5.50 per share, net of offering costs of $545,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,818,180 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">18 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,454,982 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,455,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series C preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">41,130 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series D preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">695,266 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">7 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series E preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">253,294 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(3</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Exercise of warrants </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">347,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">903,718 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">903,721 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Legal settlement at $5.85 per share </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">100,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">584,999 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">585,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of 12% convertible subordinated notes </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,217,516 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">12 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,435,020 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,435,032 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of stock options and warrants for services </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">179,995 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">179,995 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deemed dividends and accretion on convertible preferred stock of $2,409,228 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss for the year </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,227,013</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,227,013</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">19,342,657 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">193 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">46,095,032 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(36,367,057</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,728,171 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of common stock: </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Upon exercise of stock options </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">292,573 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,061,314 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,061,317 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Legal settlement and royalty buyout at $4.96 per share</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">247,999 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">248,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Conversion of Series E preferred stock </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">98,589 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(1</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Exercise of warrants </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">25,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Value assigned to 28,438 options issued on termination </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">65,863 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">65,863 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Deemed dividends and accretion on convertible preferred stock of $1,365,349 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss for the year </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,960,436</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,960,436</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="32%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Balance, September 30, 2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">19,808,819 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">198 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">47,520,207 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(42,327,493</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,192,915 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="32%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
<DIV valign="top"></DIV></DIV></DIV>
<p align="center">
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<Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">
See accompanying
summary of accounting policies and notes to financial statements.<br>
&nbsp;</font></font></font></font></DIV>
</font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-5</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">&nbsp;
</TD></TR></TABLE></DIV>
<DIV>&nbsp;</DIV>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<DIV><BR>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">

<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="99%" colSpan=11>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation </STRONG></FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="99%" colSpan=11>&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="98%" colSpan=10>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">STATEMENTS OF CASH FLOWS</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Years Ended September 30,</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="11%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Increase (Decrease) in Cash</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Operating Activities:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net loss </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,960,436</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,227,013</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,220,132</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Adjustments to reconcile net loss to net cash</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">used in operations:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Depreciation and amortization</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">239,948 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">549,612 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">737,248 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Allowance for doubtful accounts</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">4,809 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Warranty provision</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">101,671 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">313,187 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Inventory obsolescense</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">90,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Gain on sale of asset</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(11,500</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued for services and compensation</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">410,816 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">304,920 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Options and warrants granted for services</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">179,995 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">517,836 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Options granted for compensation</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">65,863 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,486,701 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued for legal settlement</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">585,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Write-off of abandoned patents</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">37,798 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">58,138 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Write down for asset held for sale</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">32,192 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Amortization of debt discount</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">405,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,620,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Changes in assets and liabilities:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Trade accounts receivable</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(742,585</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(77,485</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">6,098 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Inventories</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(332,151</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(272,063</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">60,132 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Prepaid expenses and other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(122,570</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(13,719</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">47,030 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Accounts payable</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">695,732 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(12,188</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">411,756 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Warranty reserve</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(89,254</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">-</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">-</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Accrued liabilities</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(14,059</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">696,680 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">256,996 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net cash used in operating activities</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(6,030,043</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,457,369</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(2,692,585</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Investing Activities:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Purchase of equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(395,932</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(108,246</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(84,080</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Patent costs paid</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(346,818</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(112,007</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(305,418</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from sales of equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">11,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net cash used in investing activities</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(742,750</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(220,253</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(377,998</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Financing Activities:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from issuance of preferred stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,432,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,354,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from issuance of common stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">10,000,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Offering costs paid </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(721,225</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(78,752</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Payments on capital lease</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(9,914</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,963</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,066</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from issuance of convertible promissory notes</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,225,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from exercise of common stock warrants</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">221,876 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from issuance of senior secured promissory notes</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">500,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,500,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Payments on senior secured promissory notes</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(318,155</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Proceeds from exercise of stock options</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,061,317 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,614,227 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">18,750 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net cash provided by financing activities</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,101,403 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">13,720,260 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">5,010,932 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Net increase (decrease) in cash</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(5,671,390</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">8,042,638 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,940,349 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Cash, beginning of year</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,850,358 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,807,720 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,354,072 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Cash, end of year</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">4,178,968 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">9,850,358 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">3,294,421 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
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  <p align="center">
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  See accompanying
  summary of accounting policies and notes to financial statements.</font></font></font></font></p>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-6</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">&nbsp;
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
</DIV></TD></TR></TABLE><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>ORGANIZATION AND BUSINESS </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">American Technology Corporation (the &#147;Company&#148;), a Delaware corporation, is engaged in design, development and commercialization of sound, acoustic and other technologies. The Company produces products based on its HyperSonic Sound (HSS), Long Range Acoustic Device (LRAD), NeoPlanar and other sound technologies.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#146;s principal markets for its proprietary sound reproduction technologies and products are in North America, Europe and Asia.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>LIQUIDITY AND MANAGEMENT&#146;S PLAN</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  The Company incurred net
losses of $5,960,436, $8,227,013, and $8,220,013 and negative cash flow from
operations of $6,030,043, $5,457,369, and $4,179,286 in the years ended
September 30, 2004, 2003 and 2002, respectively.&nbsp; The Company had working
capital of $3,472,984 and cash on hand of $4,178,968 at September 30, 2004.&nbsp; In
December 2004, the Company received a firm order for $4,500,000 in LRAD products
and $400,000 in ancillary products which the Company is providing on a
value-added reseller basis.&nbsp; The order calls for deliveries in December 2004 and
January 2005 and customary payment terms (see Note 14 below).&nbsp; Also in December
2004, the Company sold for cash in a private offering an aggregate of $2,000,000
of unsecured subordinated promissory notes due December 31, 2006.&nbsp; In connection
with the financing, the Company also issued five-year warrants to purchase an
aggregate of 150,000 shares, 75,000 of which have an exercise price of $9.28 per
share, and 75,000 of which have an exercise price of $8.60 per share.&nbsp; An
officer, director and significant stockholder purchased a note in the principal
amount of $500,000 and received a warrant exercisable for 37,500 shares with an
exercise price of $9.28 per share.<p class="Normal">The Company historically has
financed its operations primarily through the sale of preferred stock, exercise
of stock options, sale of notes, proceeds from the sale of investment securities
and margins from product sales and licensing.&nbsp; Management expects to incur
additional operating losses in fiscal 2005 as a result of expenditures for
research and development and marketing costs for sound products.&nbsp; The timing and
amounts of these expenditures and the extent of the Company&#146;s operating losses
will depend on future product sales levels and other factors, some of which are
beyond management&#146;s control.&nbsp; Based on the Company&#146;s cash position, and assuming
currently planned expenditures and level of operations, management believes the
Company will have sufficient capital resources for the next twelve months.&nbsp;
Management believes increased product sales will provide additional operating
funds.&nbsp; If required, management has significant flexibility to adjust the level
of research and development and selling and administrative expenses based on the
availability of resources.&nbsp; The Company also may have available funds from a
Committed Equity Financing Facility (see Note 14 below).  </FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #ff0000; FONT-FAMILY: Times New Roman">&nbsp;</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  &nbsp;<br>
&nbsp;</DIV>
<DIV>
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<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-7</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=3>
&nbsp;</DIV>
</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>USE OF ESTIMATES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions (e.g. reserves for accounts receivable and inventory, patent realizability and warranty reserves) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#146;s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#146;s cash is placed in quality money market accounts with major financial institutions. This investment policy limits the Company&#146;s exposure to concentrations of credit risk. Such deposit accounts at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concentration of credit risk with respect to the trade accounts receivable are limited due to the wide variety of customers and markets that comprise the Company&#146;s customer base, as well as their dispersion across many different geographic areas. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that the trade accounts receivable credit risk exposure is limited. Generally, the Company does not require collateral or other security to support customer receivables.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>FAIR VALUE OF FINANCIAL INSTRUMENTS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The carrying amounts of cash and cash equivalents, accounts receivables, accounts payable and accrued liabilities approximate fair values due to the short-term maturities of these instruments. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>ALLOWANCE FOR DOUBTFUL ACCOUNTS </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company&#146;s customers to make required payments. The Company considers the following factors when determining if collection of a fee is reasonably assured: customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment terms. If the Company has no previous experience with the customer, the Company may obtain reports from various credit organizations to ensure that the customer has a history of paying its creditors. The Company may also request financial information, including financial statements or other documents (e.g., bank statements) to ensure that the customer has the means of making payment. If these factors do not indicate colle









ction is reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon receipt of cash. If the financial condition of the Company&#146;s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.</FONT></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-8</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
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<DIV>CONTRACT MANUFACTURER</font><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'><br>
  T<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; font-weight:normal; layout-grid-mode:line; color:windowtext" face="Times New Roman" size="2">he
  Company is reliant on one contract manufacturer for production of HSS and LRAD
  products on a turnkey basis. The Company is currently in the process of
  negotiating a formal agreement with this contract manufacturer. This
  manufacturing relationship has no specified term and the Company could be
  materially impacted if it ceased doing business with this contract
  manufacturer and was unable to establish other production in a timely manner.
  At September 30, 2004 the Company had $530,970 of accounts payable to this
  contract manufacturer.<br>
&nbsp;</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  During fiscal 2004 the Company shipped materials to this contract
  manufacturer, booked an amount due from contract manufacturer and relieved
  inventory of $523,080. The Company did not recognize any revenue on these
  transactions. At September 30, 2004 the remaining balance due from the contract manufacturer, for shipments made to them, was $393,636. The contract manufacturer used these materials to build products for the Company. </FONT>
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  <FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  The above due from contract manufacturer of $393,636 has been netted against
  the payable to the contract manufacturer of $530,970, and the net is included
  in accounts payable.</FONT></font></font></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>INVENTORIES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  Inventories are valued at the lower of cost or net realizable value. Cost is
  determined on a first-in, first-out basis. The Company has inventory reserves
  for estimated obsolescence or unmarketable inventory which is equal to the
  difference between the cost of inventory and the estimated market value based
  upon assumptions about future demand and market conditions. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>EQUIPMENT AND DEPRECIATION</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment is stated at cost. Depreciation is computed over the estimated useful lives of three to five years using the straight-line method. Upon retirement or disposition of equipment, the related cost and accumulated depreciation or amortization are removed and the gain or loss is recorded. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>INTANGIBLES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective as of the beginning of fiscal 2003, the company fully adopted Statement of Financial Accounting Standards No. 141 (FAS 141), &#147;Business Combinations,&#148; and Statement of Financial Accounting Standards No. 142 (FAS 142), &#147;Goodwill and Other Intangible Assets.&#148; The provisions of FAS 141 (1) require that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, (2) provide specific criteria for the initial recognition and measurement of intangible assets apart from goodwill, and (3) require that unamortized negative goodwill be written off immediately as an extraordinary gain instead of being deferred and amortized. FAS 141 also requires that, upon adoption of FAS 142, the Company reclassify the carrying amounts of certain intangible assets into or out o









f goodwill, based on certain criteria. The adoption of FAS 142 did not have a material effect on the Company&#146;s financial position or results of operations.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FAS 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their initial recognition. The provisions of FAS 142; (1) prohibit the amortization of goodwill and indefinite-lived intangible assets, (2) require that goodwill and indefinite-lived intangible assets be reviewed periodically to determine if they may be impaired, (3) require that reporting units be identified for the purpose of assessing potential impairments of goodwill, and (4) remove the forty-year limitation on the amortization period of intangible assets that have finite lives.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchased technology is carried at cost, and was amortized over three years. Patents are carried at cost and, when granted, are amortized over their estimated useful lives
  which has been estimated to be 15 years. The carrying value of patents is periodically reviewed and impairments, if any, are recognized when the expected future benefit to be derived from an individual intangible asset is less than its carrying value. The Company wrote off $37,798, $-0- and $58,138 of previously capitalized patent costs during the years ended September 30, 2004, 2003 and 2002, respectively.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>LEASES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Leases entered into are classified as either capital or operating leases. At the time a capital lease is entered into, an asset is recorded together with its related long-term obligation to reflect the purchase and financing. At September 30, 2004, the Company had recorded $10,967 in short-term and $12,131 in long-term capital lease obligations.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>GUARANTEES AND INDEMNIFICATIONS </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation ("FIN") No. 45 "Guarantor's Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others -- an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FIN 34." The following is a summary of the Company's agreements that the Company has determined are within the scope of FIN No. 45:</FONT></DIV>
<DIV>
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<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-9</FONT></TD>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">The Company provides a one year warranty for most of its products. See &#147;Warranty Reserves.&#148;</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Under its bylaws, the Company has agreed to indemnify its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer or director's lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. However, the Company has a directors and officers&#146; liability insurance policy that limits its exposure and enables it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal and has no liabilities recorded for these agreements as of September 30, 2004.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">The Company enters into indemnification provisions under (i) its agreements with other companies in its ordinary course of business, typically with business partners, contractors, customers and landlords and (ii) its agreements with investors. Under these provisions the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities or, in some cases, as a result of the indemnified party's activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company









 believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2004. </FONT><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>REVENUE RECOGNITION</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company derives its revenue primarily from two sources: (i) component and product sale revenues and associated engineering and installation (&#147;Product Sales&#148;) and (ii) contract and license fee revenue. Component and Product Sales revenues are recognized in the periods that products are shipped to customers, FOB shipping point or destination, when a signed contract exists, the fee is fixed and determinable, collection of resulting receivables is probable and there are no remaining obligations on the part of the Company. Revenues from engineering contracts are recognized based on milestones or completion of the contracted services. Revenues from ongoing per unit license fees are earned based on units shipped incorporating the Company&#146;s patented proprietary technologies and are recognized in the period when









 the ultimate customer accepts the product and collectibility is reasonably assured. Revenues from up-front license and other fees and annual license fees are generally recognized ratably over the specified term of the particular license or agreement. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>SHIPPING AND HANDLING COSTS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amounts paid by customers for shipping and handling are included in product revenues. Actual shipping and handling costs are included in product cost of revenues. Shipping and handling costs were $211,502, $62,810 and $67,850 for the fiscal years ended September 30, 2004, 2003 and 2002, respectively.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>ADVERTISING</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advertising costs are charged to expenses as incurred. The Company expensed $69,893, $8,695 and $-0- for the years ended September 2004, 2003 and 2002, respectively.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>RESEARCH AND DEVELOPMENT COSTS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research and development costs are expensed as incurred.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>WARRANTY RESERVES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company warrants its products to be free from defects in materials and workmanship for a period of one year from the date of purchase, depending on the product. The warranty is generally a limited warranty, and in some instances imposes certain shipping costs on the customer. The Company currently provides direct warranty service. Some agreements with OEM customers require certain quantities of product be made available for use as warranty replacements. International market warranties are generally similar to the U.S. market. </FONT></DIV>
<DIV><BR></DIV>
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<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-10</FONT></TD>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. Factors affecting warranty reserve levels include the number of units sold and anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period. See Note 8 for additional information regarding warranties.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>INTEREST EXPENSE</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interest expense includes interest expense, redemption premiums and non-cash amortization of debt discount. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>INCOME TAXES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company accounts for income taxes under Statement of Financial Accounting Standards (&#147;SFAS&#148;) No. 109. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. A valuation allowance is recorded by the Company to the extent it is more likely than not that a deferred tax asset will not be realized.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>COMPREHENSIVE INCOME</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company follows the provisions of SFAS No. 130, Reporting Comprehensive Income. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. There were no differences between net loss and comprehensive loss for any of the periods presented.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>IMPAIRMENT OF LONG-LIVED ASSETS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Long-lived assets and identifiable intangibles held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized and measured using the asset&#146;s fair value. The Company wrote off $37,798, $-0- and $58,138 of patent costs during the years ended September 30, 2004, 2003 and 2002, respectively.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>SEGMENT INFORMATION</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the fourth quarter of fiscal 2003, the Company organized operations into two segments by the end-user markets they serve. The Business Products and Licensing Group (Business Group) licenses and markets HSS and NeoPlanar sound products to companies that employ audio in consumer, commercial and professional applications. The Government and Force Protection Systems Group (Government Group) markets LRAD, NeoPlanar, SoundCluster and HSS sound products to government and military customers and to the growing force protection and commercial security markets. See Note 13.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>NET LOSS PER SHARE</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basic earnings (loss) per share includes no dilution and is computed by dividing income (loss) available to common stockholders, after deduction for cumulative imputed and accreted dividends, by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution of securities that could share in the earnings of an entity. The Company&#146;s losses for the years presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, warrants and convertible preferred stock exercisable into 5,197,557 shares of common stock were outstanding at September 30, 2004. Stock options, warrants and convertible preferred stock and notes exercisable into </FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Tim









es New Roman">4,999,522 shares of common stock were outstanding at September 30, 2003 and stock options, warrants and convertible preferred stock exercisable into 5,462,166 shares of common stock were outstanding at September 30, 2002. These securities were not included in the computation of diluted earnings (loss) per share because of the losses but could potentially dilute earnings (loss) per share in future periods.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-11</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV>
</TD></TR></TABLE></DIV>
<DIV>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss available to common stockholders was increased during fiscal 2004, 2003 and 2002 in computing net loss per share by imputed deemed dividends based on the value of warrants issued in connection with convertible preferred stock (see Note 5). The net loss available to common stockholders was also increased in fiscal 2004, 2003 and 2002 by an additional deemed dividend computed from a discount provision in convertible preferred stock (see Note 5). Such imputed deemed dividends are not included in the Company&#146;s stockholders&#146; equity as the Company has an accumulated deficit
  and therefore is reflected as an increase and a related decrease to additional
  paid in capital. Amounts are included in net loss available to common stockholders. The imputed deemed dividends are not contractual obligations of the Company to pay such imputed dividends.<br>
&nbsp;</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The provisions of each of the Company&#146;s series of preferred stock provided for a 6% per annum accretion in the conversion value (similar to a dividend).
  Such accretions are not included in the company's stockholders' equity as the
  company has an accumulated deficit and therefore is reflected as an increase
  and a related decrease to additional paid in capital. These amounts increase the net loss available to common stockholders. Net loss available to common stockholders is computed as follows:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2,004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2,003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2,002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(5,960,436</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(8,227,013</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(8,220,132</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Imputed deemed dividends on Series D and E</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">warrants issued with preferred stock [note 5]</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(448,572</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(538,070</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(91,492</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Imputed deemed dividends on Series D and E</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">preferred stock [note 5]</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(736,449</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,683,500</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(104,444</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accretion on preferred stock at 6% stated rate [note 5]:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series B preferred stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
- -</TD>
</font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
- -</TD>
</font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(16,932</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series C preferred stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
&nbsp;</TD>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
- -</TD>
</font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(6,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(12,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D preferred stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(30,171</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(65,844</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(58,044</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series E preferred stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(150,157</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(115,814</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
&nbsp;</TD>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
- -</TD>
</font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss available to common stockholders</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(7,325,785</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(10,636,241</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(8,503,044</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>STOCK-BASED COMPENSATION</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In December 2002, the FASB issued FAS No. 148, &#147;Accounting for Stock-Based Compensation &#151; Transition and Disclosure&#148;, which amended FAS No. 123, &#147;Accounting for Stock-Based Compensation.&#148; The new standard provides alternative methods of transition for a voluntary change to the fair market value based method for accounting for stock-based employee compensation. Additionally, the statement amends the disclosure requirements of FAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. This statement is effective for the Company&#146;s financial statements for the fiscal year ended September 30, 2003 and the Company adopted the disclosure requir









ements effective October 1, 2002.&nbsp; In compliance with FAS No. 148, the Company has elected to continue to follow the intrinsic value method in accounting for its stock-based employee compensation plan as defined by APB No. 25. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2004, 2003 and 2002, respectively: dividend yield of zero percent for all years; expected volatility of 57 to 75 percent in 2004, 68 to 84&nbsp;percent in 2003 and 63&nbsp;percent in 2002; risk-free interest rates of 1.83 to 6.72&nbsp;percent; and expected lives of 2.21 to 5&nbsp;years.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting periods. The Company's pro forma information follows:</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-12</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV>
</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2004</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2003</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2002</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss available to common stockholders</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(7,325,785</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(10,636,241</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,503,044</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Plus: Stock-based employee compensation </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">expense included in reported net loss</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">65,863 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="73%" colSpan=5>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Less: Total stock-based employee compensation expense</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">determined using fair value based method</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(940,111</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(972,896</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(933,704</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pro forma net loss available to common stockholders</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(8,200,033</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(11,609,137</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(9,436,748</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss per common share - basic</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and diluted - pro forma</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.42</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.73</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.66</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss per common share - basic</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and diluted - as reported</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.37</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.67</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">(0.60</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>COMMON STOCK ISSUED FOR SERVICES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=justify><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company records compensation expense for common stock issued for services based on the estimated fair market value. Estimated fair market value is determined based on the quoted
  closing stock price on the day prior to the date of issuance.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>STATEMENT OF CASH FLOWS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less, when purchased, to be cash equivalents.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>RECENT ACCOUNTING PRONOUNCEMENTS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In December 2003, the FASB issued FIN&nbsp;46-R, &#147;Consolidation of Variable Interest Entities&nbsp;&#151; an interpretation of ARB&nbsp;51&nbsp;(revised December 2003)&#148;, which replaces FIN&nbsp;46.&nbsp; FIN&nbsp;46-R incorporates certain modifications to FIN 46 adopted by the FASB subsequent to the issuance of FIN&nbsp;46, including modifications of the scope of FIN&nbsp;46.&nbsp; For all non-special purpose entities (&#147;SPE&#148;) created prior to February&nbsp;1, 2003, public entities will be required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March&nbsp;15, 2004.&nbsp; For all entities (regardless of whether the entity is an SPE) that were created subsequent to January&nbsp;31, 2003, public entities are already required to apply the provisions of FIN 46, and








should continue doing so unless they elect to adopt the provisions of Fin 46-R early as of the first interim or annual reporting period ending after December&nbsp;15, 2003.&nbsp; If they do not elect to adopt FIN&nbsp;46-R early, public entities would be required to apply FIN&nbsp;46-R to those post-January&nbsp;31, 2003 entities as of the end of the first interim or annual reporting period ending after March&nbsp;15, 2004. The adoption of FIN 46-R for non-SPEs did not have a material impact on the Company&#146;s financial position, results of operations or cash flows. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March 2004, the Emerging Issues Task Force (&#147;EITF&#148;) reached a consensus on Issue No. 03-1, &#147;The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.&#148; EITF 03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity securities accounted for under SFAS No. 115, &#147;Accounting for Certain Investments in Debt and Equity Securities,&#148; and SFAS No. 124, &#147;Accounting for Certain Investments Held by Not-for-Profit Organizations,&#148; and non-marketable equity securities accounted for under the cost method. The EITF developed a basic three-step model to evaluate whether an investment is other-than-temporarily impaired. On September 30, 2004, the FASB approved the issuance of FASB Staff Position (FSP) EITF 03-1-1, which delays th









e effective date until additional guidance is issued for the application of the recognition and measurement provisions of EITF 03-1 to investments in securities that are impaired. The Company does not expect the adoption of EITF 03-1 to have a material effect on its consolidated financial position, results of operations or cash flows.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-13</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Summary of Accounting Policies </STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV>
</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  December 2004, the Financial Accounting Standards Board (FASB) issued
  Financial Accounting Standard (FAS) 123(R), &#147;Share Based Payment&#148;, Statement
  123(R) is effective for public companies at the beginning of the first interim
  or annual period after June 15, 2005. This statement eliminates the ability to
  account for share-based compensation using the intrinsic value-based method
  under APB Opinion No. 25, &#147;Accounting for Stock Issued to Employees.&#148;
  Statement 123(R) would require the Company to calculate equity-based
  compensation expense for stock options and employee stock purchase plan rights
  granted to employees based on the fair value of the equity instrument at the
  time of grant. Currently, the Company discloses the pro forma net income
  (loss) and the related pro forma income (loss) per share information in
  accordance with FAS 123 and FAS 148, &#147;Accounting for Stock-Based Compensation
  Costs-Transition and Disclosure.&#148; The Company has not evaluated the impact
  that Statement 123(R) will have on its financial position and results of
  operations.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>RECLASSIFICATIONS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Where necessary, prior year&#146;s information has been reclassified to conform with the fiscal 2004 statement presentation.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>1. INVENTORIES</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inventories consisted of the following at September 30, </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finished goods</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">342,647 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13,690 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Work in process</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">182,638 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raw materials</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">418,448 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">232,616 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">761,095 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">428,944 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reserve for obsolescence</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(110,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(20,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">651,095 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">408,944 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=left>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2004, $79,036 of raw materials and $355,879 of finished goods were located </FONT>
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

  <Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal'>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

  <FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">at the Company&#146;s contract manufacturer in San Jose, California.</FONT></font></font></font><br>
&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is reliant on one supplier for film for its HSS product and is making efforts to obtain alternative suppliers to reduce its reliance thereon. The Company could be materially impacted if it loses its current film supplier and is unable to find an alternative supplier.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2. EQUIPMENT</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment consisted of the following at September 30, </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Machinery and equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">604,994 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">571,927 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Office furniture and equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">816,714 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">480,536 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Leasehold improvements</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">225,178 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">198,491 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,646,886 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,250,954 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accumulated depreciation</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,193,531</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,050,692</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">453,355 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">200,262 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included in office furniture and equipment for the years ended September 30, 2004 and 2003, respectively are $335,691 and $208,817 for purchased software, which is amortized over three years. The unamortized portion of software for the years ended September 30, 2004 and 2003, respectively, are $177,930 and $97,731, respectively.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR>
  <Font style='font-size:10.0pt; color:windowtext; font-family:Symbol' face="Times New Roman" size="2">
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">

<DIV>
<TABLE id=PGBRK0 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-14</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR0 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  <strong>N</strong></font><strong><Font style='color:windowtext' face="Times New Roman" size="3">otes
  to the Financial Statements</font></strong><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><HR align=center width="100%" color=#000000 noShade SIZE=2>
</DIV>
</TD></TR></TABLE></DIV>
<DIV><BR></font>
</font>



  </DIV>
</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Depreciation expense, excluding amortization of software, was $96,164, $130,916 and $211,474 for the years ended September 30, 2004, 2003 and 2002, respectively. Amortization of purchased software was $46,675, $26,488 and $43,216 for the years ended September 30, 2004, 2003 and 2002, respectively.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>3. INTANGIBLES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Purchased Technology</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In April 2000, the Company acquired all rights to certain loudspeaker technology. The purchase price consisted of $300,000 cash plus 200,000 shares of common stock. The 200,000 shares of common stock were issued in June 2000 and were valued at $962,500. The Company was obligated to pay up to an additional 159,843 shares of common stock contingent upon the achievement of certain performance milestones relating to gross revenues from the purchased technology. During fiscal 2002 the Company issued 50,000 shares of the contingent common stock, recording compensation expense of $210,000 at an estimated fair market value of $4.20 per share, and during fiscal 2003 issued the balance of 109,844 shares of the contingent common stock, recording compensation expense of $410,816. Two principals involved with the purchased technology








were employed under three year agreements, which terminated on February 15, 2003. </FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchased technology consisted of the following at September 30, </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1,262,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1,262,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accumulated amortization</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,262,500</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,262,500</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net purchased technology</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Patents consisted of the following at September 30, </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,578,578 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,287,058 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accumulated amortization</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(299,871</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(220,262</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net patent</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,278,707 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,066,796 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<p>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; font-weight:normal; layout-grid-mode:line' face="Times New Roman" size="2">

<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
Aggregate amortization expense for the Company&#146;s intangible assets are
summarized as follows:</FONT></font></p>
  <DIV><BR>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Purchased technology</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">315,636 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">420,828 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Patents</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">97,109 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">79,544 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">61,730 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">97,109 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">395,180 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">482,558 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE>
<DIV valign="top">
  <Font style='font-size:10.0pt; color:windowtext; font-family:Symbol' face="Times New Roman" size="2">
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">

<DIV>
<TABLE id=PGBRK1 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-15</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR1 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  <strong>N</strong></font><strong><Font style='color:windowtext' face="Times New Roman" size="3">otes
  to the Financial Statements</font></strong><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><HR align=center width="100%" color=#000000 noShade SIZE=2>
</DIV>
</TD></TR></TABLE></DIV>
<DIV><BR></font>
</font>



  </DIV>
    </DIV></DIV>
<p>
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In addition to amortization, the Company wrote off $37,798, $-0- and $58,138 of patent costs during the years ended September 30, 2004, 2003 and 2002, respectively.</FONT></font></p>

<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" style="border-left-width: 0; border-right-width: 0">
<TR>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="73%" colSpan=5>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Estimated Amortization Expense Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
&nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">105,239 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">105,239 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2007</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">105,239 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2008</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">105,239 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2009</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">105,239 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thereafter</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">752,512 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>4. INCOME TAXES</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income taxes consisted of the following:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deferred (benefit)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Federal</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,033,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,801,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,053,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">State</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(359,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(494,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(362,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,392,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3,295,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,415,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Change in valuation allowance</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,392,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,295,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,415,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV>
</font>



</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT>
</font>



</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="100%" colSpan=11>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A reconciliation of income taxes at the federal statutory rate of 34% to the effective tax rate is as follows:</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income taxes (benefit) computed at the</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">federal statutory rate</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,027,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,797,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,795,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tax effect of change in valuation allowance</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,392,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,019,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,415,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nondeductible
  expenses,</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">interest expense and other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">30,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">306,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">957,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">State income taxes (benefit), net of federal tax benefit</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(358,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(494,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(493,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(37,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(34,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(84,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV>
</font>



</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT>
</font>



</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The types of temporary differences between the tax basis of assets and liabilities and their approximate tax effects that give rise to a significant portion of the net deferred tax asset (liability) at September 30, 2004 and 2003 are as follows:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" style="border-right-width: 0">
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Deferred tax assets:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net operating loss carryforwards</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14,982,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12,382,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research and development credit</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">228,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">220,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">176,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Patents</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">59,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">47,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchased technology</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">93,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accruals and other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">365,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">294,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Allowances</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">46,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross deferred tax asset</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,830,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13,222,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Less valuation allowance</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(15,830,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-right-style:none; border-right-width:medium" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(13,222,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
</font>



<Font style='font-size:10.0pt;layout-grid-mode:line; color:windowtext'>

<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></font>



</TD>
</font>



<Font style='font-size:10.0pt;layout-grid-mode:line; color:windowtext'>

<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">-&nbsp;</TD>
</font>



<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext'>

<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium solid #ffffff; ; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  <Font style='font-size:10.0pt; color:windowtext; font-family:Symbol' face="Times New Roman" size="2">
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">

<DIV>
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<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-16</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR2 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
</font>
<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  <strong>N</strong></font><strong><Font style='color:windowtext' face="Times New Roman" size="3">otes
  to the Financial Statements</font></strong><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><HR align=center width="100%" color=#000000 noShade SIZE=2>
</DIV>
</TD></TR></TABLE></DIV>
<DIV><BR></font>
</font>



  </DIV>
</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The utilization of the net operating loss carryforwards and research and experimental credits could be substantially limited due to restrictions imposed under federal and state laws upon a change of ownership. The amount of the limitation, if any, has not been determined at this time.</FONT></DIV>
<DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A valuation allowance has been recorded to offset the net deferred tax asset as management has been unable to determine that it is more likely than not that the deferred tax asset will be realized.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2004, the Company, for federal income tax purposes, has net operating loss carryforwards of approximately $37,400,000, which expire through 2025 of which certain amounts are subject to limitations under the Internal Revenue Code of 1986, as amended.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>5. CAPITAL STOCK</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Common Stock</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In July 2003 the Company obtained gross proceeds of $10,000,000 from an offering of common stock and warrants. The offering included 1,818,180 shares of common stock at a purchase price of $5.50 per share and warrants to purchase 454,547 shares of common stock with an exercise price of $6.75 per share. The warrants are exercisable until July 10, 2007. The warrants contain certain antidilution
  rights if the Company sells common stock equivalents, as defined, below $6.75.
  Offering costs were $545,000. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Preferred Stock</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is authorized to issue 5,000,000 shares of preferred stock, $0.00001 par value, without any action by the stockholders. The board of directors has the authority to divide any and all shares of preferred stock into series and to fix and determine the relative rights and preferences of the preferred stock, such as the designation of series and the number of shares constituting such series, dividend rights, redemption and sinking fund provisions, liquidation and dissolution preferences, conversion or exchange rights and voting rights, if any. Issuance of preferred stock by the board of directors could result in such shares having dividend and or liquidation preferences senior to the rights of the holders of common stock and could dilute the voting rights of the holders of common stock.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-17</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following is a summary of the terms of the preferred stock series outstanding during the three fiscal years ended September 30, 2004.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV align=center>
<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD vAlign=bottom align=left width="11%">&nbsp;</TD>
<TD vAlign=bottom align=left width="11%">&nbsp;</TD>
<TD vAlign=bottom align=left width="11%">&nbsp;</TD>
<TD vAlign=bottom align=left width="12%">&nbsp;</TD>
<TD vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD vAlign=bottom align=left width="23%">&nbsp;</TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="12%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Number of </STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="23%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=bottom align=left width="11%">&nbsp;</TD>
<TD vAlign=bottom align=middle width="12%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Shares</STRONG></FONT></DIV></TD>
<TD vAlign=bottom align=middle width="1%">&nbsp;</TD>
<TD vAlign=top align=middle width="23%">&nbsp;</TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Preferred</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Issuance</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Aggregate</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="12%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Authorized/</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="1%">&nbsp;</TD>
<TD vAlign=top align=middle width="23%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Series</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Date</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Purchase Price</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="12%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Issued</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="23%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Terms</STRONG></FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series B issued at $10.00 per share</FONT></DIV></TD>
<TD vAlign=top align=middle width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December 1998 and January 1999</FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2,500,000 </FONT></DIV></TD>
<TD vAlign=top align=right width="12%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000/250,000</FONT></DIV></TD>
<TD vAlign=top align=right width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD vAlign=top align=left width="23%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchase price plus 6% accretion convertible at lower of $5.00 per share or 92% of market but not less than $3.50 per share. Callable at market price of $12.00 per share. Automatic conversion to common stock on November 30, 2001.</FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series C issued at $20.00 per share</FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 2000</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$6,000,000 </FONT></DIV></TD>
<TD vAlign=top align=right width="12%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">300,000/300,000</FONT></DIV></TD>
<TD vAlign=top align=right width="1%">&nbsp;</TD>
<TD vAlign=top align=left width="23%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchase price plus 6% accretion convertible at lower of $8.00 per share or 92% of market but not less than $5.75 per share. Callable at market price of $20.00 per share. Automatic conversion to common stock on March 31, 2003.</FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series D issued at $10.00 per share</FONT></DIV></TD>
<TD vAlign=top align=middle width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">May 2002</FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2,354,000 </FONT></DIV></TD>
<TD vAlign=top align=right width="12%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000/235,400</FONT></DIV></TD>
<TD vAlign=top align=right width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD vAlign=top align=left width="23%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchase price plus 6% accretion convertible at lower of $4.50 per share or 90% of market but not less than $2.00 per share, subject to antidilution
  adjustment. Callable at market price of $9.50 per share. Automatic conversion
  to common stock on March 31, 2006.</FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series E issued at $10.00 per share</FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 2003</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$3,432,500 </FONT></DIV></TD>
<TD vAlign=top align=right width="12%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">350,000/343,250</FONT></DIV></TD>
<TD vAlign=top align=right width="1%">&nbsp;</TD>
<TD vAlign=top align=left width="23%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchase price plus 6% accretion convertible at lower of $3.25 per share or 90% of market but not less than $2.00 per share, subject to antidilution adjustment. Callable at market price of $9.50 per share. Automatic conversion to common stock on December
  31, 2006.</FONT></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The above preferred shares were sold for cash except that $1,000,000 of the Series E Stock purchase price resulted from the conversion of Senior Notes. In connection with the Series C Stock financing, the Company issued a warrant to purchase 75,000 shares of common stock at $11.00 per share until March 31, 2005 as a placement fee. The value assigned to the warrant issued as a placement fee was $468,783.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2004 all of the Series B and Series C Stock had been converted into common stock. At September 30, 2004 the remaining 50,000 shares of Series D Stock would have been convertible into 127,222 shares of common stock and the remaining 233,250 shares of Series E Stock would have been convertible into 786,473 shares of common stock.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
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F-18</FONT></TD>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
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<BR></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company granted warrants with each issuance of preferred stock. The cash proceeds of the preferred stock were allocated prorata between the relative fair values of the preferred stock and warrants at issuance using the Black Scholes valuation model for valuing the warrants. After allocating the proceeds between </FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the preferred stock and warrant, an effective conversion price was calculated for the convertible preferred stock to determine the beneficial conversion discount for each share. The value of the beneficial conversion discount and the value of the warrants is recorded as a deemed dividend and accreted over the conversion </FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">period of the preferred st









ock. The following table summarizes values assigned as a deemed dividend for the value of the warrants and the beneficial conversion feature on each preferred stock issuance.</FONT></DIV>
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<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="13%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="22%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Deemed Dividend</STRONG></FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="13%">&nbsp;</TD>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Value </STRONG></FONT></DIV></TD>
<TD vAlign=bottom align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Value Of</STRONG></FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="13%">&nbsp;</TD>
<TD vAlign=bottom align=left width="11%">&nbsp;</TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Warrant</STRONG></FONT></DIV></TD>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Warrant</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Assigned</STRONG></FONT></DIV></TD>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Beneficial</STRONG></FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Preferred</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="13%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Issuance</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Number </STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Exercise </STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Expiration</STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>To </STRONG></FONT></DIV></TD>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Conversion </STRONG></FONT></DIV></TD></TR>
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<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Series</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="13%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Date</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Of Warrants</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Price</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Date</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Warrants</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Discount</STRONG></FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=middle width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series B</FONT></DIV></TD>
<TD vAlign=bottom align=middle width="13%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December 1998 and January 1999</FONT></DIV></TD>
<TD vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000</FONT></DIV></TD>
<TD vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$6.00 </FONT></DIV></TD>
<TD vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11/30/2001</FONT></DIV></TD>
<TD vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$595,000 </FONT></DIV></TD>
<TD vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$656,000 </FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series C</FONT></DIV></TD>
<TD vAlign=top align=middle width="13%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 2000</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">300,000</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$11.00 </FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3/31/2003</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1,478,000 </FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2,509,000 </FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series D </FONT></DIV></TD>
<TD vAlign=top align=middle width="13%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">May 2002</FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">517,880</FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$3.01 </FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3/31/2007</FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1,029,519 </FONT></DIV></TD>
<TD vAlign=top align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$994,310 </FONT></DIV></TD></TR>
<TR>
<TD vAlign=top align=middle width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6% Series E </FONT></DIV></TD>
<TD vAlign=top align=middle width="13%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 2003</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">514,875</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$3.25 </FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12/31/2007</FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$755,500 </FONT></DIV></TD>
<TD vAlign=top align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2,677,000 </FONT></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Series D warrants were originally exercisable at $4.50 per common share and valued at $871,000. The Series E financing resulted in a repricing of the Series D Warrants to $3.01 per common share and an additional $158,519 was assigned to the warrant value. The Series D Warrants were valued using the Black-Scholes model with a dividend yield of zero percent; expected volatility of 78 percent; risk free interest rate of 4.94 percent; and an expected life of five years. The Series E Warrants were valued using the Black-Scholes model with a dividend yield of zero percent; expected volatility of 76.5 percent; risk free interest rate of 4.0 percent; and an expected life of five years.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table summarizes information about the deemed dividend activity commencing in May 2002.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-19</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
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</FONT></TD></TR></TABLE></DIV>
<DIV>
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<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
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<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%" bgcolor="#FFFFFF">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="43%" colSpan=11>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Number</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Balance</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Series D</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Series E</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>of</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Preferred</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Series D</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Preferred</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Series E</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Deemed</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Shares</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Warrants</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Shares</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Warrants</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Dividend</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D Issued in May 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">235,400 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">517,880 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,865,310 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fiscal 2002 accretion</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(195,936</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Balance September 30, 2002</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">235,400 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">517,880 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,669,374 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series E Issued in February 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">343,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">514,875 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,432,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additional deemed dividend</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">on D warrant repricing</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">158,519 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deemed dividend on</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">warrants exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(22,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(120,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(215,904</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deemed dividend on </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">preferred stock converted</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(185,400</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(80,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,324,224</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accretion on outstanding</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D and E warrants</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  -</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(322,166</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accretion on outstanding</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D and E Preferred Stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>



<Font style='font-size:10.0pt;layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>



</font>



</font>



<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>



</font>



<Font style='font-size:10.0pt; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>



</font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>



</font>



<Font style='font-size:10.0pt; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
- -</TD>



</font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>



</font>



<Font style='font-size:10.0pt; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
- -</TD>



</font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman">

<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(359,276</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Balance September 30, 2003</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">495,880 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">263,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">394,875 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,038,823 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deemed dividend on</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">warrants exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(30,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(44,630</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deemed dividend on </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">preferred stock converted</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(30,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(192,699</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accretion on outstanding</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D and E warrants</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(403,942</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accretion on outstanding</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D and E Preferred Stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  -</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(543,750</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Balance September 30, 2004</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">495,880 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">233,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">364,875 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,853,802 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deemed dividend accretion fiscal 2004:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D and E Warrants</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(448,572</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series D and E Preferred Stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(736,449</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR>



<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' size="2" face="Times New Roman">

<DIV>&nbsp;</DIV>
<DIV>
<TABLE id=PGBRK4 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB4 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-20</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR4 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<p>
<BR></DIV></TD></TR></TABLE></DIV>
</font>



</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Stock Purchase Warrants</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A summary of the status of outstanding stock purchase warrants outstanding as of September 30, 2002, 2003 and 2004 and the changes during the years then ended is presented below:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Average</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Purchase </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Number</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Price</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares purchasable under outstanding warrants at October 1, 2001</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,115,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.87 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants issued</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,230,380 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.26 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants expired</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(240,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.00 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares purchasable under outstanding warrants at September 30, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,105,380 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.85 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants issued</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,019,422 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.83 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(347,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.60 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants expired</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(350,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.71 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares purchasable under outstanding warrants at September 30, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,427,802 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.85 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(25,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.00 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock purchase warrants expired</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(50,000</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.00 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares purchasable under outstanding warrants at September 30, 2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,352,802 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.74 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-21</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2004, the following stock purchase warrants were outstanding arising from offerings and other transactions, each exercisable into one common share:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV align=center>
<TABLE cellSpacing=0 cellPadding=0 width="61%" style="border-left-width: 0">
<TR>
<TD vAlign=bottom align=middle width="5%" style="border-bottom-style: none; border-bottom-width: medium">
&nbsp;</TD>
<TD vAlign=bottom align=middle width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=middle width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center>&nbsp;</DIV></TD>
<TD vAlign=bottom align=middle width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Exercise</STRONG></FONT></DIV></TD>
<TD vAlign=bottom align=middle width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center>&nbsp;</DIV></TD>
<TD vAlign=bottom align=middle width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Expiration</STRONG></FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none black; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=middle width="5%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid black; ; border-left-style:none; border-left-width:medium" vAlign=bottom align=middle width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Number</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Price</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=middle width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Date</STRONG></FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%" style="border-top-style: none; border-top-width: medium">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75,000 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="7%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$11.00 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="10%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 31, 2005</FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">812,500 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2.00 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September 30, 2006</FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">495,880 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="7%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$3.01 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="10%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 31, 2007</FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">454,547 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$6.75 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">July 10, 2007</FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100,000 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="7%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$4.25 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="10%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September 30, 2007</FONT></DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%" style="border-bottom-style: none; border-bottom-width: medium">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">364,875 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$3.25 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=right width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December 31, 2007</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: thin solid #000000; ; border-left-style:none; border-left-width:medium" vAlign=bottom align=left width="5%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="7%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$3.63 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="10%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">April 8, 2008</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none black; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-left-style:none; border-left-width:medium" vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,352,802 </FONT></DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%" style="border-top-style: none; border-top-width: medium">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD vAlign=bottom align=left width="5%">
&nbsp;</TD>
<TD vAlign=bottom align=left width="5%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="7%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD vAlign=bottom align=left width="10%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The $3.01 warrants, the $3.25 warrants and the $6.75 warrants contain certain antidilution rights if the Company sells securities for less than the exercise price.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>6. BENEFIT PLANS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>2002 Stock Option Plan</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company has a Stock Option Plan, expiring September 30, 2012, reserving the issuance of 2,350,000 shares of common stock ("2002 Plan"). The options issued under the 2002 Plan may, in the discretion of the Board, be either Incentive Stock Options or Nonstatutory Stock Options. The 2002 Plan provides for grants to employees, directors or consultants, in the discretion of the Board of Directors, of options to purchase common stock of the Company at a price not less than the fair market value of the shares on the date of grant. In the case of a significant stockholder, the option price of shares subject to Incentive Stock Options will not be less than 110 percent of the fair market value of the shares on the date of grant. Any options granted under the 2002 Plan must be exercised within either five or ten years of the dat









e they were granted (five years in the case of an Incentive Stock Option to a significant stockholder). </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of September 30, 2004, there were options outstanding covering 1,268,498 shares of common stock under the 2002 Plan. Shares subject to options under the 1997 Plan or the 2002 Plan that expire, are cancelled or are terminated without being exercised, become available for future grants under the 2002 Plan. Accordingly, there were
  284,928 shares available for future option grants under the 2002 Plan at September 30, 2004.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>1997 Stock Option Plan </U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#146;s 1997 Stock Option Plan (&#147;1997 Plan&#148;) reserved for issuance 1,000,000 shares of the Company&#146;s common stock. The Board terminated the 1997 Plan with respect to new grants on August 1, 2002. The 1997 Plan remains in effect for grants prior to that date. Any options granted under the 1997 Plan must be exercised within ten years of the date they were granted (five years in the case of a significant stockholder). As of September 30, 2004, there were options outstanding covering 384,000 shares of common stock under this Plan.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Other Employee Stock Options</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During fiscal year ended September 30, 2004 the Company granted options to purchase 147,000 shares of common stock, exercisable at prices ranging from $5.92 to $6.14 per share, outside the above plans as inducements to employment to new employees. During the fiscal year ended September 30, 2002, the Company granted to two employees options to purchase an aggregate of 200,000 shares of common stock, exercisable at $4.50 per share until April 25, 2006. As of September 30, 2004 there were options remaining outstanding covering 187,000 shares of common stock from grants outside the 1997 and 2002 Plans.</FONT></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-22</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>1997 Employee Stock Compensation Plan (&#147;ESC&#148;)</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective March 10, 1997, the Company adopted the 1997 Employee Stock Compensation Plan ("ESC Plan"), which was amended on February 22, 2000 to reserve for issuance of an aggregate of 650,000 shares of common stock. The ESC Plan expired March 9, 2002. The Plan provided for compensation awards of the Company&#146;s common stock to non-executive employees (as defined), at the discretion of the ESC Plan committee. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During fiscal 2002, the Company issued 24,129 shares of common stock under the ESC Plan and recorded general and administrative expense of $94,920 for awards valued at the estimated fair market value ranging from $2.29 to $4.12 per common share. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Non-Cash Compensation Expense</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During the fiscal year ended September 30, 2004 the Company recorded non-cash compensation expense of $65,863 for the extension of certain option exercise periods to former employees on an aggregate of 28,438 shares of common stock. For the fiscal year ended September 30, 2003, the Company recorded non-cash compensation expense of $25,597 for the granting of options to purchase 13,000 shares of common stock under its stock options plans to non-employees. For the fiscal year ended September 30, 2002, the Company recorded non-cash compensation expense of $115,199 for the granting of options to purchase 55,000 shares of common stock under its stock options plans to non-employees.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In October 2001, the Company granted options to purchase a total of 110,000 shares of common stock to a consultant under the 1997 Plan in conjunction with related development and manufacturing agreements. The stock options include options to purchase 65,000 shares of common stock, which vest upon completion of certain project milestones. The Company has estimated the period required to complete the specified milestones each reporting period and recorded consulting expense based on the market price of the Company&#146;s stock and the estimated percentage of the work completed. Consulting expense was adjusted each reporting period until vesting occurs. The Company recorded consulting expense of $87,179 for the Black Scholes value of milestone options for 30,000 shares vested in fiscal 2002 and consulting expense of $47,782








for the Black Scholes value of 10,000 milestone options vested in fiscal 2003. As of September 30, 2004 there remain stock options to purchase 25,000 shares that are non-vested due to unmet project milestones. In addition there were options to purchase 45,000 shares of common stock that vested based on the consultant meeting certain performance criteria. The Company records consulting expense at each vesting date. The Company recorded consulting expense of $96,655 for the Black Scholes value of performance options for 45,000 shares vested during the year ended September 30, 2002.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On September 30, 2002 the Company granted a warrant exercisable for 100,000 common shares at $4.25 per share to a consultant for consulting services. The Company recorded non-cash consulting expense of $218,803 for the value of this warrant.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April 8, 2003 the Company granted a warrant exercisable for 50,000 common shares at $3.63 per share to a consultant for consulting services. The Company recorded non-cash consulting expense of $106,616 for the value of this warrant.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Stock Option Summary Information</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A summary of the status of the Company&#146;s stock option plans as of September 30, 2004, 2003 and 2002 and the changes during the years ended on those dates is presented below:</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-23</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
&nbsp;</DIV></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" style="border-collapse: collapse" bordercolor="#111111">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Weighted</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Number </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="10%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Average</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fiscal 2002:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="10%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding October 1, 2001</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,338,200 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.23 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Granted</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">510,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.97 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Canceled/expired</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(382,775</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.17 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<tr>
  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercised</FONT></DIV></TD>

</font>
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<TD style="BORDER-BOTTOM: #ffffff solid" width="2%">&nbsp;</TD>

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<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

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<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>

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  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>

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  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

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  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

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  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>

</font>
  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(6,250</FONT></DIV></TD>

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  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>

</font>
  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>

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  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.00 </FONT></DIV></TD>

</font>
  </font>



  <Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal'>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>
  </font>



</tr>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding September 30, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,459,175 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.97 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="56%" colSpan=5>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercisable at September 30, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,090,575 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.93 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="78%" colSpan=11>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted average fair value of options granted during the year</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.37 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fiscal 2003:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding October 1, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,459,175 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.97 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Granted</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">979,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.96 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Canceled/expired</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(416,950</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.86 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(408,951</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.95 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding September 30, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,612,274 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.00 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="56%" colSpan=5>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercisable at September 30, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">998,722 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.79 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="78%" colSpan=11>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted average fair value of options granted during the year</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.78 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fiscal 2004:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding October 1, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,612,274 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.00 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Granted</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,073,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.80 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Canceled/expired</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  (553,703</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.63 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercised</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(292,573</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.49 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="56%" colSpan=5 bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding September 30, 2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  1,839,498 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.68 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="56%" colSpan=5>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercisable at September 30, 2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">&nbsp;</TD>



</font>



</font>



<Font style='font-size:10.0pt;layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
  916,884</DIV></TD>



</font></font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman">



<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext'>

<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.60 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="78%" colSpan=11>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted average fair value of options granted during the year</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.37 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="100%" colSpan=17>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table summarizes information about stock options outstanding at September 30, 2004:<br>
&nbsp;</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

<Font style='font-size:10.0pt; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted </FONT></DIV>

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</TD>

</font>
<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

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<FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Average </FONT>

</font>



</TD>
</font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Range of </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Remaining</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Average </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Average</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercise</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Number </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contractual</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercise </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Number </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercise</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prices</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Life</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Price </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercisable </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Price</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2.50-$4.00</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">824,998 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.46 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.18 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">706,821 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.16 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$4.01-$5.50</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">434,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
  3.98 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.90 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">172,063 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.67 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$5.51-$7.00</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">441,700 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.62 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.49 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18,450 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.06 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$7.01-$9.03</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">138,800 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.50 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.19 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19,550 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="9%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.72 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$2.50-$9.03</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,839,498 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.27 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.68 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">916,884 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="9%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.60 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="9%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Employee Benefit - 401K Plan</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On January 1, 1998, the Company established a 401(k) plan covering its employees. The plan originated service effectively in June 1998. Matching contributions are made on behalf of all participants at the discretion of the Board of Directors. During the fiscal years ended September 30, 2004, 2003 and 2002, the Company made matching contributions of approximately $28,385, $18,675 and $20,151 respectively.</FONT></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-24</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>7. COMMITMENTS AND CONTINGENCIES</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Facility Leases</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#146;s executive offices, research and development and operational facilities in San Diego, California, are occupied under a sublease agreement that commenced in January 2004 and expires in July 2006. The Company currently occupies approximately 15,000 square feet of office, laboratory, production and warehouse space in these premises with aggregate monthly payments of approximately $18,000, exclusive of utilities and costs.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company rents on a monthly basis office space utilized for development and production of its NeoPlanar technology in Carson City, Nevada. The Company occupies approximately 2,200 square feet with a monthly payment of approximately $1,200 excluding utilities.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#146;s east coast office for its Government Group is located in Topsham, Maine. The Company has a month to month lease effective, October 1, 2004, for 600 square feet of office space with a monthly payment of $919.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Other Operating Leases</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In addition to the facility lease, the Company has one automobile lease obligation expiring in May 2006. The Company also has two business equipment leases expiring in January 2009. These leases are reported as operating leases within the financial statements. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total operating lease expense, including facilities, automobile and business equipment leases, recorded by the Company for the years ended September 30, 2004, 2003 and 2002 was $345,330, $206,084 and $197,358, respectively. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The obligations under all operating leases are as follows:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ending September 30:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">237,262 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">196,832 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2007</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,657 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2008</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,657 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2009</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,352 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Employment Agreements</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company has no employment agreements with executive officers or other employees providing future benefits or severance arrangements. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Commission and Bonus Plans</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company has established a sales commission plan, which was approved by the Compensation Committee of the Board of Directors and provides cash incentives to certain of the Company&#146;s sales employees based on revenues recognized, provided that revenues are greater than a minimum specified amount. In fiscal 2004, the Company recorded $95,500 of commission expense based on revenues of the Government Group. Because the minimum level was not achieved, no commissions were earned on revenues of the Business Group.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain of the Company&#146;s employees, in accordance with their terms of employment, may earn a cash bonus based on the overall financial performance of the Company. Based on the Company&#146;s overall performance, no bonuses were earned for fiscal 2004.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-25</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Litigation</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In September 2003, the Company filed a complaint against eSOUNDideas, Inc., in the Superior Court of California, County of San Diego, alleging breach of contract and seeking a declaratory judgment to the effect that a License, Purchase and Marketing Agreement dated September 28, 2000 (the &#147;ESI License Agreement&#148;) with eSOUNDideas, a California partnership, was properly terminated in May 2003. The principals of eSOUNDideas are Greg O. Endsley and Douglas J. Paschall. The principals also founded a corporation, eSOUNDideas, Inc., which purported to assume the contractual obligations of eSOUNDideas. The Company amended the complaint in November 2003 to include eSOUNDideas (the general partnership), Mr. Endsley and Mr. Paschall as defendants. For convenience, the following discussion refers to eSOUNDideas and eSOUNDi









deas, Inc. collectively as &#147;ESI.&#148; In November 2003, the Company filed complaints in the Superior Court of California, County of San Diego, against Mr. Endsley and Mr. Paschall seeking declaratory judgments that options granted to each of Mr. Endsley and Mr. Paschall in April 2001 were terminated in October 2002.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The ESI License Agreement formerly appointed ESI as an exclusive distributor of HSS products specifically targeted to the point of sale/purchase, kiosk and display, and the event, trade show and exhibit markets in North America for five years. In June 2002, the Company and ESI purported to enter into an amendment to the ESI License Agreement, extending the term to ten years commencing on the first delivery of a commercial HSS product to an end user, and eliminating minimum purchase requirements for the first three years. The Company believes the amendment was invalid as it was given in consideration for a large order from ESI, which was later withdrawn by ESI due to a dispute over the payment and delivery terms of such order. In May 2003, the Company gave notice to ESI of termination of the ESI License Agreement. The Comp









any based its termination on its belief that ESI had failed to fulfill certain covenants contained in the ESI License Agreement related to efforts and resources required to maximize the distribution and sales of HSS products in its product categories. Under the terms of the ESI License Agreement, the termination was effective immediately, but ESI had sixty days to cure conditions giving rise to termination and reinstate the agreement. ESI did not tender a cure within such sixty day period.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The three cases were consolidated upon motion by the defendants and order of the court. The defendants filed a cross-action in the consolidated action alleging fraud, breach of contract in connection with the ESI License Agreement and the options, breach of the implied covenant of good faith and fair dealing, intentional interference with contract, negligent interference with contract, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, defamation, and violation of California Business and Professions Code &#167;17200.&nbsp; The Company filed its answer to the second amended cross-complaint in August 2004.&nbsp; Discovery is ongoing.&nbsp; Trial has been set for May 2005.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company intends to vigorously pursue its complaint against the defendants in this case and to vigorously challenge the defendant&#146;s cross complaint.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Related to the Company&#146;s April 2000 purchase of the NeoPlanar speaker technology, the Company was in dispute with a predecessor owner of the technology regarding a minimum film royalty. In March 2004 the Company settled this matter for a payment of $25,000 and the issuance of 50,000 shares of common stock, which included a buyout of all future royalties.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In February 2004, the Company gave notice of termination of two licensing and sales agreements with General Dynamics Armament and Technical Products, Inc. (GD-ATP), originally entered into in February 2003. GD-ATP was the original licensee under one agreement, and took assignment of the rights of Bath Iron Works Corporation, another subsidiary of General Dynamics Corporation, under the other agreement. The agreements gave GD-ATP the right to purchase, market and resell NeoPlanar and HIDA (High Intensity Directional Acoustics) products and components with exclusive rights for specified applications to certain government customers, including the Department of Defense, Department of Homeland Security and certain Federal, State and local agencies. GD-ATP disputed the Company&#146;s right to terminate the agreements and demand









ed arbitration. In April 2004 the Company announced that it and GD-ATP had mutually agreed to resolve their disputes in an amicable manner, and to dismiss the arbitration proceedings. GD-ATP and the Company agreed that neither was liable to the other and that no party engaged in any wrongdoing. The resolution resulted in the termination of the two agreements, and in the Company assuming GD-ATP&#146;s role in servicing certain LRAD customers previously serviced by GD-ATP.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-26</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In August 2003 the Company reached an agreement and in September 2003 the Company settled litigation related to the termination of an outside contract manufacturer, Horizon Sports Technologies, Inc. d/b/a HST. As part of the settlement the Company aquired raw materials and equipment for production valued at approximately $145,000. The Company paid settlement costs of $313,000 and recorded additional settlement costs for the $585,000 value assigned to 100,000 shares of common stock issued to HST. As part of the settlement, HST also entered into a nonexclusive royalty-bearing license to manufacture and sell speakers based on the Company&#146;s Stratified Field technology and PureBass subwoofer technology and the Company transferred to HST tooling valued at approximately $43,000. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company may at times be involved in litigation in the ordinary course of business. The Company will also, from time to time, when appropriate in management&#146;s estimation, record adequate reserves in the Company&#146;s financial statements for pending litigation. Except as set forth above, there are no pending material legal proceedings to which the Company is a party or to which any of its property is subject.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><U>Royalties</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is obligated to pay a $2.50 per unit royalty to an officer/director on one electronic component for its HSS product. The Company is also obligated to pay an officer/director a 2% royalty on net sales from certain of its technologies, of which only HSS is a current offering of the Company. The royalty obligation continues until at least March 1, 2007, and for any longer period during which the Company sells products or licenses technologies subject to any patent assigned to it by the officer/director. No royalties were paid under this agreement in the fiscal years ended September 30, 2004, 2003 or 2002, as such royalties were waived by the officer and director. The Company may owe royalties in future periods based on actual sales or technology revenues.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>8. </STRONG></FONT><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>WARRANTY RESERVE</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%" colSpan=4>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Details of the estimated warranty liability are as follows:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fiscal Year Ending September 30:</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beginning balance</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">319,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,313 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warranty provision</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">101,671 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">313,187 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warranty deductions</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(89,254</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ending balance</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">331,917 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">319,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>9. EQUIPMENT UNDER CAPITAL LEASE</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On October 1, 2001, the Company entered into a capital lease obligation for the purchase of a&nbsp;phone system. The lease expires September 11, 2006 and bears interest at 10.1%, with monthly principal and interest payments of $1,067. Future minimum lease payments and the present value of the minimum lease payments under the noncancelable lease obligation as of September 30, 2004 are as follows:</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-27</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ending September 30:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12,806 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12,806 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25,612 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total future minimum lease payments</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25,612 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Less amounts representing interest</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,514</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Present value of minimum lease payments</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23,098 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Less current maturities</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(10,967</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="85%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total long-term obligations</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: black double" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12,131 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="85%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2004, there was property and equipment under capital lease obligations with a total cost of $50,041 and accumulated amortization of $36,697.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>10. MAJOR CUSTOMERS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the fiscal year ended September 30, 2004, revenues from two customers, both of which are in the Government Group, accounted for 47% and 11% of revenues with no other single customer accounting for more than 10% of revenues. For the fiscal year ended September 30, 2003, revenues from one individual customer in the Government Group accounted for 24% of total revenue. For the fiscal year ended September 30, 2002, revenues from a customer in the Government Group accounted for 19% of total revenue, and two customers in the Business Group accounted for 12% and 11% of total revenue.
  <br>
&nbsp;</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2004, accounts receivable from three individual customers accounted for 52%, 19% and 13% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. At September 30, 2003, accounts receivable from three individual customers accounted for 53%, 18% and 12% of the accounts receivable balance.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>11. SUPPLIER AGREEMENTS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is reliant on one contract manufacturer for production of HSS and LRAD products on a turnkey basis. The Company is currently in the process of negotiating a formal agreement with this contract manufacturer. This manufacturing relationship has no specified term and the Company could be materially impacted if it ceased doing business with this contract manufacturer and was unable to establish other production in a timely manner. At September 30, 2004 the Company had $530,970 of accounts payable to this contract manufacturer. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During fiscal 2004 the Company shipped materials to this contract manufacturer, booked an amount due from contract manufacturer and relieved inventory of $523,080. The Company did not recognize any revenue on these transactions. At September 30, 2004 the remaining balance due from contract manufacturer, for shipments made to them, was $393,636. The contract manufacturer used these materials to build products for the Company.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>12. RELATED PARTY TRANSACTIONS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April 19, 2002, the Company offered to stockholders and employees the opportunity to purchase limited edition NeoPlanar Speaker Systems with Purebass Subwoofers. During fiscal 2002 a total of 45 systems were sold for cash receipts of $44,077.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3>&nbsp;<FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-28</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<BR></DIV></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>13. BUSINESS SEGMENT DATA</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is engaged in design, development and commercialization of sound, acoustic and other technologies. In the fourth quarter of fiscal 2003 the Company organized operations into two segments by the end-user markets they serve. The Company&#146;s reportable segments are strategic business units that sell the Company&#146;s products to distinct distribution channels. The Business Products and Licensing Group (Business Group) licenses and markets HSS and NeoPlanar sound products to companies that employ audio in consumer, commercial and professional applications. The Government and Force Protection Systems Group (Government Group) markets LRAD, NeoPlanar, Sound Cluster and HSS sound products to government and military customers and to the expanding force protection and commercial security markets. The segments are ma









naged separately because each segment requires different selling and marketing strategies as the class of customers within each segment is different.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company does not allocate operating expenses or assets between its two reportable segments. Accordingly the measure of profit for each reportable segment is based on gross profit. Although the segments became separately managed only in the last quarter of fiscal 2003, the Company has segmented historical operations for comparable customers for comparison.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" style="border-collapse: collapse" bordercolor="#111111">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenues:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2 bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2 bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2 bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Business Group</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">933,373 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">861,091 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">922,542 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Government Group</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,819,176 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">454,335 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">88,210 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,752,549 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,315,426 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,010,752 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross Profit (Loss):</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Business Group</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(534,174</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(501,748</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">256,779 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Government Group</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,816,902 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">273,097 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">70,129 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,282,728 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(228,651</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">326,908 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table summarizes revenues by geographic region. Revenues are attributed to countries based on location of customer. There were no material foreign sales in fiscal 2002.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" height="104" style="border-collapse: collapse" bordercolor="#111111">
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="71%" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Year Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="12%" colSpan=2 height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=middle width="11%" colSpan=2 height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%" height="20">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenues:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1" height="20">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">United States</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,675,088 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,167,120 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" height="20">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" bgcolor="#CBDBD1" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">77,461 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=left width="1%" bgcolor="#CBDBD1" height="20">&nbsp;</TD>
<TD style="BORDER-BOTTOM: 1px solid; " vAlign=bottom align=right width="11%" bgcolor="#CBDBD1" height="20">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">148,306 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1" height="20">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="71%" height="24">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%" height="24">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%" height="24">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%" height="24">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,752,549 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="2%" height="24">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=left width="1%" height="24">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium double black; ; border-top-style:solid; border-top-width:1" vAlign=bottom align=right width="11%" height="24">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,315,426 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff solid" vAlign=bottom align=left width="1%" height="24">&nbsp;</TD></TR></TABLE></DIV>
<DIV>&nbsp;</DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>14. SUBSEQUENT EVENTS</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>

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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
  On December 13,
  2004, the Company received a firm order from ADS, Inc. for $4.5 million in
  LRAD products for use by the U.S. Army 3rd Infantry Division, Fort Stewart,
  Georgia.&nbsp; The order also includes $0.4 million in ancillary products
  which the Company is providing on a value-added reseller basis along with the LRAD units.&nbsp; The
  order calls for deliveries in December 2004 and January 2005 and customary
  payment terms.</font></font></font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><p>&nbsp;</DIV>
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<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-29</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
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<TD width="100%" colSpan=3><FONT size=1>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
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  <FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In December 2004, the Company entered into a Committed Equity Financing Facility (CEFF) with Kingsbridge Capital Ltd., pursuant to which Kingsbridge committed to purchase</FONT></font><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
subject to certain significant limiting conditions,</FONT></font></font><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> up to $25 million of the Company&#146;s common stock to support future growth. As part of the arrangement, the Company issued a warrant to Kingsbridge to purchase 275,000 shares of its common stock at a price of $8.60 per share.
  The warrant is exercisable beginning six months after the date of grant and
  for a period of five years thereafter. Subject to certain conditions and limitations, from time to time under the CEFF, the Company may require Kingsbridge to purchase newly-issued shares of its common stock at a price that is between 88% and 92% of the volume weighted average price during a 15 day purchase period, and thereby raise capital as required, at the time, price and in the amounts deemed suitable to the Company. The CEFF
requires the Company to have a resale registration statement filed within 45 days of </FONT>



  <FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entering the CEFF, and to have such registration statement declared effective by the Securities and Exchange Commission (SEC) within 45 days or 120 days of filing, depending  on whether the SEC elects to review the registration statement.
No draws can be made by the company until the registration statement is
effective.&nbsp; As of December 14, 2004 the Company had not filed the required resale registration statement. Based on such factors as market conditions, financing needs and the time required for the SEC to declare the resale registration statement effective, the Company currently expects that it may begin to utilize the CEFF during fiscal 2005 in order to fund working capital requirements.
  However, the timing and extent of the Company's ability to use the CEFF is
  uncertain. <br>
<br>
The Company is obligated to use 40% of the proceeds it may receive from the CEFF
to prepay any outstanding interest and principal on the notes sold in December
2004 and discussed below.</FONT><p><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the rules of the Nasdaq Stock Market, the maximum number of shares the Company may sell to Kingsbridge without approval of the Company's stockholders is
  3,684,728 (exclusive of the warrant), which may further limit the amount of proceeds the Company is able to obtain from the CEFF. </FONT>
  </p>
  <p><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company agreed to pay to a consultant a finder fee equal to 4% of the first $5 million raised under the CEFF, 3% for the second $5 million raised under the CEFF, 2% for the third $5 million raised under the CEFF, and 1.5% for any additional amounts raised.<br>
  <br>
  In December 2004, the Company
sold for cash in a private offering an aggregate of $2,000,000 of unsecured
subordinated promissory notes due December 31, 2006.&nbsp; Interest on these notes
accrues at the rate of 8% per year and is due and payable quarterly in arrears.&nbsp;
The Company is required to use 40% of the net proceeds of any future equity
financing to prepay these notes, including any amounts the Company raises
pursuant to the CEFF described above.&nbsp; The Company may also prepay these notes
in its discretion at any time without penalty after June 30, 2005. </p>
<p class="Normal">In connection with the issuance
of these notes, each purchaser was granted a warrant to purchase 7,500 shares of
the Company's common stock until December 31, 2009 for each $100,000 of notes
purchased (prorated for amounts less than $100,000) such that the Company issued
in the aggregate warrants exercisable for an aggregate of 150,000 shares of its
common stock.&nbsp; The exercise price of the warrants was $9.28 per share for
purchasers who were directors, officers, employees or consultants of the
Company, or affiliates of such persons, and $8.60 per share for other
purchasers.&nbsp; Warrants exercisable for 75,000 shares were issued at each such
exercise price.&nbsp; The holders of these warrants are entitled to be included on
any registration statement the Company files after the registration statement
for the CEFF described above, subject to customary exceptions and cut-back
rights.</p>
<p class="Normal">A trust affiliated with an
officer, director and significant stockholder of the Company purchased a note in
the principal amount of $500,000 and received a warrant exercisable for 37,500
shares with an exercise price of $9.28 per share. </p>
</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In October 2004, the Company granted an extension of time to exercise options to purchase 75,550 shares of common stock held by certain terminated employees. As a result, the Company will recognize an expense of $215,300 in the first quarter of fiscal 2005 for these options.
  <br>
  <br>
  On December 22, 2004, the Company granted inducement stock options to certain
  of our new employees.&nbsp; These options were granted without stockholder
  approval to 6 new non-executive employees as an inducement material to the
  individuals' entering into employment with our company, and the issuances were
  approved by our Compensation Committee pursuant to NASDAQ Marketplace Rule
  4350(i)(1)(A)(iv).&nbsp; The options are exercisable for an aggregate of
  76,500 shares of common stock with an exercise price of $10.06 per share.&nbsp;
  Each option has a five year term and vests 25% on the first anniversary of the
  grant date and then quarterly thereafter for the next 12 quarters, subject to
  continued employment and other conditions.&nbsp;
<p class="Normal">On November 16, 2004, the Company
granted to Carl Gruenler, the Vice President of Government and Force Protection
Systems Group, a five-year stock option under the 2002 Stock Option Plan, to
purchase 75,000 shares of common stock at an exercise price of $6.70 per share.&nbsp;
The option vests over four years, with 25% of the shares vesting on the first
anniversary of the date of grant, and the balance vesting in equal quarterly
installments thereafter.&nbsp;  </FONT></DIV>

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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>



<Font style='font-size:10.0pt;layout-grid-mode:line; color:windowtext' face="Times New Roman">
<DIV>&nbsp;<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2"><DIV>
<TABLE id=PGBRK3 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT id=TAB3 style="COLOR: black; LETTER-SPACING: 207pt">
&nbsp;&nbsp;</FONT>&nbsp;</TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-30</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR3 cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>Notes to the Financial Statements</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
<p>
<BR></DIV></TD></TR></TABLE></DIV>

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<DIV align=left>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="71%" colspan="4">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>15. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>Years Ended September 30,</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>2004 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="12%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>2003 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="11%" colSpan=2>
<DIV align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><STRONG>2002 </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #000000 thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Supplemental Information:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="12%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="11%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Cash paid for interest</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,889 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">111,886 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">12,265 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Cash paid for taxes</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">14,537 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,467 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">800 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Non-cash financing activities:</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Senior notes applied to warrant exercise</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">681,845 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">-</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Senior notes applied to purchase of Series E stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,000,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">-</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Issuance of stock warrants in connection with convertible debt</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">624,750 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Purchase of computer equipment with capital lease</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">50,041 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">12% subordinated notes and interest</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">converted to common stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,435,032 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Sale of equipment for accounts payable</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">117,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued on conversion of Series B stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">2,101,413 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued on conversion of Series C stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">236,498 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued on conversion of Series D stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">1,935,559 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued on conversion of Series E stock</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">320,414 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">823,208 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#cbdbd1>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="57%">
<DIV style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">Common stock issued for settlement of legal accrual</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">248,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=right width="11%">
<DIV><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #cbdbd1" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR bgColor=#ffffff>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="57%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #ffffff" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV valign="top"></DIV></DIV>



</font>
<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext'>

<p><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2"></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>16. SUMMARIZED QUARTERLY RESULTS (unaudited)</STRONG></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following table presents unaudited operating results for each quarter within the two most recent years. The Company believes that all necessary adjustments consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the following quarterly results when read in conjunction with the financial statements included elsewhere in this report. Results of operations for any particular quarter are not necessarily indicative of results of operations for a full fiscal year.</FONT></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>First </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Second </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Third </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fourth </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fiscal 2004</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenues</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">774,778 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,493,250 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,107,281 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,377,240 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross profit (loss) (1)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">366,300 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">548,026 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,100,962 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">267,440 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,136,427</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,165,196</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,390,411</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,268,402</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loss per Share (2)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.07</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.08</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.09</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.11</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<tr>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
</tr>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>First </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Second </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Third </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fourth </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Quarter </STRONG></FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<tr>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="12%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=middle width="11%" colSpan=2>
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
</tr>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>Fiscal 2003</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenues</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">423,299 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">237,942 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">313,612 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">340,573 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross profit (loss) (1)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">101,664 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(112,842</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">127,511 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(344,984</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net loss</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,731,645</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,854,306</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,382,652</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2,258,410</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loss per Share (2)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.13</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.18</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.19</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.12</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</FONT></DIV></TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=list cellSpacing=0 cellPadding=0 width="100%">
<TR style="LINE-HEIGHT: 1.25" vAlign=top>
<TD style="WIDTH: 18pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)&nbsp;&nbsp;</FONT></TD>
<TD><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross profit is calculated by subtracting cost of revenues from total revenues. </FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=list cellSpacing=0 cellPadding=0 width="100%">
<TR style="LINE-HEIGHT: 1.25" vAlign=top>
<TD style="WIDTH: 18pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)&nbsp;&nbsp;</FONT></TD>
<TD><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loss per share is computed independently for each quarter and the full year based upon respective average shares outstanding. Therefore, the sum of the quarterly net loss per share amounts may not equal the annual amounts reported.</FONT></TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%" colSpan=3>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=right><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">
F-31</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG>American Technology Corporation<br>
  Schedule II - Valuation and Qualifying Accounts</STRONG></FONT></DIV>

</font>



<Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' face="Times New Roman" size="2">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>
<HR align=center width="100%" color=#000000 noShade SIZE=2>
</DIV></TD></TR></TABLE></DIV>
<DIV><BR><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV>
<TABLE id=10001 cellSpacing=0 cellPadding=0 width="100%" style="border-left-width: 0">
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="57%" colSpan=4>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>ALLOWANCE FOR DOUBTFUL ACCOUNTS</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance at</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charged to</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beginning</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost and </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At end of</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of period</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expenses</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deductions</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Period</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,191 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,809 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,191 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,191 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>RESERVE FOR OBSOLESCENCE</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance at</FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charged to</FONT></DIV></TD>

</font>



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<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beginning</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost and </FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At end of</FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of period</FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expenses</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deductions</FONT></DIV></TD>

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<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Period</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">90,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">110,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,000 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>WARRANTY RESERVE</STRONG></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance at</FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charged to</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance</FONT></DIV></TD>

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<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beginning</FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost and </FONT></DIV></TD>

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  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>&nbsp;</DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At end of</FONT></DIV></TD>

</font>



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<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<tr>
  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</FONT></DIV></TD>

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<TD style="BORDER-BOTTOM: #ffffff thin solid" width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of period</FONT></DIV></TD>

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<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expenses</FONT></DIV></TD>

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<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="12%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deductions</FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="2%">&nbsp;</TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: black thin solid" vAlign=bottom align=right width="11%" colSpan=2>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=right>
  <p align="center"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Period</FONT></DIV></TD>

</font>



  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext; layout-grid-mode:line' face="Times New Roman" size="2">
<TD style="BORDER-BOTTOM: #ffffff thin solid" vAlign=bottom align=left width="1%">&nbsp;</TD>

</font>



</tr>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#FFFFFF">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#FFFFFF">
&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2004</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">319,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">101,671 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">89,254 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">331,917 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2003</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,313 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">313,187 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">319,500 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT>&nbsp;</DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="43%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year ended September 30, 2002</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,313 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="2%" bgcolor="#CBDBD1">&nbsp;</TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=right width="11%" bgcolor="#CBDBD1">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,313 </FONT></DIV></TD>
<TD style="BORDER-BOTTOM: medium none" vAlign=bottom align=left width="1%" bgcolor="#CBDBD1">&nbsp;</TD></TR></TABLE></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><BR></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=center><BR></DIV>
<DIV valign="top"></DIV>
<DIV><BR></DIV>
<DIV>
<TABLE id=PGBRK cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%" colSpan=3>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 18pt" align=right><FONT id=TAB2 style="COLOR: black; LETTER-SPACING: 207pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;</DIV></TD></TR>
<TR>
<TD align=left width="33%"><FONT size=1>&nbsp;</FONT></TD>
<TD align=middle width="34%"><FONT style="DISPLAY: inline; FONT-SIZE: 10pt" face="Times New Roman">F-32</FONT></TD>
<TD align=right width="33%"><FONT size=1>&nbsp;</FONT></TD></TR>
<TR vAlign=top>
<TD style="PAGE-BREAK-AFTER: always" width="100%" colSpan=3><FONT size=1>
<HR style="PAGE-BREAK-AFTER: always" color=black noShade SIZE=1>
</FONT></TD></TR></TABLE></DIV>
<DIV>
<TABLE id=HDR cellSpacing=0 cellPadding=0 width="100%" align=center border=0>
<TR>
<TD vAlign=bottom width="100%">
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align=left><FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><STRONG></STRONG></FONT>&nbsp;</DIV></TD></TR></TABLE></DIV>

</font>

<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:none;mso-outline-level:
9;tab-stops:9.0pt 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;</p>

<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal'>



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<p align=center style='margin:0in;font-size:12.0pt;font-family:Times;color:black;text-align:center'><b
><Font style='font-family:"Times New Roman"'><a name="SIGNATURES">SIGNATURES</a></Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized. </Font></p>


<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;font-size:10.0pt;font-family:"Times New Roman"'><b ><Font style='font-size:10.0pt;font-family: "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AMERICAN TECHNOLOGY CORPORATION</Font></b></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font style="font-size: 10.0pt; font-family: Times New Roman">March
17, 2005</font></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: <u>/s/ ELWOOD G. NORRIS</u>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elwood
G. Norris</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chairman
of the Board</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;margin-left:.5in;text-indent:-.5in'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;</Font></p>

<p style='margin:0pt;margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of registrant in the
capacities and on the dates indicated.</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Date:&nbsp;
<font style="font-size: 10.0pt; font-family: Times New Roman">March 17,
2005&nbsp;&nbsp; </font>
&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; By
<u>/s/ ELWOOD G. NORRIS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u>&nbsp;&nbsp;&nbsp; </Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elwood
G. Norris</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chairman
of the Board and Director</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Co-Principal
Executive Officer)</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Date:&nbsp;
<font style="font-size: 10.0pt; font-family: Times New Roman">March 17,
2005&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; </font>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;By
<u>/s/ KALANI JONES&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kalani
Jones</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President,
Chief Operating Officer and Director</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Co-Principal
Executive Officer)</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<Font style='font-family:"Times New Roman"' size="2">


  <Font style='font-family:Times New Roman; color:windowtext; font-size:10.0pt' size="2">

<Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman' face="Times New Roman">

 <Font style='font-size:10.0pt;font-family:"Times New Roman";font-weight:normal'>



<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'>

<Font style='font-size:10.0pt; font-family:Symbol' size="2">

  <Font style='font-size:10.0pt;font-family:"Times New Roman"'>

<Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman">

<Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2">

  <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'>

 <Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman">

 <Font style='font-size:10.0pt;font-family:Symbol'>



<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Date:&nbsp;
</Font></font></font></font></font></font></font></font></font></font></font><font style="font-size: 10.0pt; font-family: Times New Roman; color: windowtext; font-weight: normal; layout-grid-mode: line" face="Times New Roman" size="2">M<font style="font-size: 10.0pt; font-family: Times New Roman; color: windowtext; font-weight: normal; layout-grid-mode: line">arch
17, 2005&nbsp;&nbsp; </font></font>
<Font style='font-size:10.0pt;font-family:Symbol'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;By
<u>/s/ MICHAEL A. RUSSELL&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</Font><Font style='font-size:10.0pt;font-family:"Times New Roman"; font-weight:normal'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size:10.0pt; font-family:Symbol' size="2"><Font style='font-size:10.0pt;font-family:"Times New Ro









man"'><Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext'><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman"><Font style='font-size:10.0pt;font-family:Symbol'><Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman' face="Times New Roman"><Font style='font-family:Times New Roman; color:windowtext; font-size:10.0pt' size="2"><Font style='font-family:"Times New Roman"' size="2">Michael A. Russell,
Chief Financial Officer</font></font></font></font></font></font></font></font></font></font></font></font></Font></font><font style="font-size: 10.0pt; font-family: Times New Roman; color: windowtext; font-weight: normal; layout-grid-mode: line" face="Times New Roman" size="2">
<font style="font-size: 10.0pt; font-family: Times New Roman; color: windowtext; font-weight: normal; layout-grid-mode: line">and
Secretary</font></font></p>

 <Font style='font-size:10.0pt;font-family:Symbol'>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</Font><Font style='font-family:"Times New Roman"' size="2"><Font style='font-family:Times New Roman; color:windowtext; font-size:10.0pt' size="2"><Font style='font-size:10.0pt; color:windowtext; font-family:Times New Roman' face="Times New Roman"><Font style='font-size:10.0pt;font-family:Symbol'><Font style='font-size:10.0pt; font-family:Symbol; color:windowtext' size="2" face="Times New Roman"><Font style='font-size:10.0pt; font-family:Symbo









l; color:windowtext'><Font style='font-size:10.0pt;font-family:Symbol; color:windowtext' face="Times New Roman" size="2"><Font style='font-size:10.0pt;font-family:Symbol;layout-grid-mode:line; color:windowtext' face="Times New Roman"><Font style='font-size:10.0pt;font-family:"Times New Roman"'><Font style='font-size:10.0pt; font-family:Symbol' size="2"><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size: 10.0pt;font-family:"Times New Roman";font-weight:normal; layout-grid-mode:line; color:windowtext'><Font style='font-size:10.0pt;font-family:"Times New Roman"; font-weight:normal'>(Principal
Financial and Accounting Officer)</Font></font></font></font></font></font></font></font></font></font></font></font></font></p>

 </font></font></font></font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>
Date:&nbsp;<font style="font-size: 10.0pt; font-family: Times New Roman"> March
17, 2005&nbsp; </font>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
<u>/s/&nbsp;<font style="font-size: 10.0pt; font-family: Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font>&nbsp;&nbsp;&nbsp;</u></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard
M. Wagner</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>Date:&nbsp;
<font style="font-size: 10.0pt; font-family: Times New Roman">March 17,
2005&nbsp; </font>
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
<u>/s/<font style="font-size: 10.0pt; font-family: Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font>&nbsp;&nbsp;&nbsp;&nbsp;</u></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;David
J. Carter</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Palatino;color:black'><Font style='font-size:10.0pt;font-family:"Times New Roman"'>&nbsp;</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>Date:&nbsp; <font style="font-size: 10.0pt; font-family: Times New Roman">March
17, 2005&nbsp; </font>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By<u>
/s/&nbsp;<font style="font-size: 10.0pt; font-family: Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font>&nbsp;&nbsp;&nbsp;</u></Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Daniel
Hunter</Font></p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><Font style='font-size:10.0pt;
font-family:"Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director</Font></p>



<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;</p>



<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'><font style="font-size: 10.0pt; font-family: Times New Roman">*
By: <u>/s/ Elwood G.
Norris&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></p>



<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;'>&nbsp;&nbsp;&nbsp;<font style="font-size: 10.0pt; font-family: Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
Elwood G. Norris<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Attorney-In-Fact</font></p>



<Font style='font-size:10.0pt;font-family:"Times New Roman"; color:windowtext' face="Times New Roman" size="2">
<p align="center"><font size="2" face="Times New Roman">
- - <font style="font-size: 10.0pt; font-family: Times New Roman">5</font>4 -</font></p>
<hr size="3" color="#000080">
<div STYLE="page-break-before: always">
  &nbsp;
</div>
</font>

</font></font>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:none;mso-outline-level:
9;tab-stops:9.0pt 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in'>&nbsp;</p>

<p style='margin:0in;font-size:12.0pt;font-family:Times;color:black;mso-pagination:none;mso-outline-level:
9;tab-stops:9.0pt 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in' align="center"><b
><Font style='font-family:"Times New Roman"'><a name="Exhibit Index">Exhibit
Index</a></Font></b></p>

</font></font>
<p><Font style='font-size:10.0pt' face="Times New Roman">&nbsp;</Font></p>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>3.  Articles of
Incorporation and Bylaws</B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
of Incorporation of American Technology Corporation (Delaware) dated  March 1, 1992.
Filed as Exhibit 2.1 on Form 10-SB effective August 1, 1994.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment
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&nbsp;31, 1997, dated May 13, 1997.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corrected
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.3</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corrected
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.4</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corrected
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.5</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.6</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1.7</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate
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.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Restated
Bylaws of American Technology Corporation. Filed as Exhibit 4.9 on  Form S-3 filed on
January 24, 2005.</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4.  Instruments
Defining the Rights of SecurityHolders</B></FONT></P>

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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Specimen
Common Stock Certificate. Filed as Exhibit 4.10 on Form S-3 filed on  January 24, 2005.</FONT></TD>
</TR>
</TABLE>
<BR>


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<BR>
<BR>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>10.  Material
Contracts</B></FONT></P>

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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Royalty
Agreement between ATC and Elwood G. Norris dated September 3,  1985.&nbsp;&nbsp;Filed as
Exhibit 6.2 on Form 10-SB effective August 1, 1994.+ </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Assignment
of Technology Agreement between ATC and Elwood G. Norris dated  March 2, 1992. Filed as
Exhibit 6.3 on Form 10-SB effective August 1, 1994.+</FONT></TD>
</TR>
</TABLE>
<BR>


<p align="center"><font size="2" face="Times New Roman">-55-</font></p>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>
<p>&nbsp;</p>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.2.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Addendum
Agreement to Assignment of Technology Agreement between ATC and  Elwood G. Norris dated
December 2, 1996. Filed as Exhibit 10.3.1 on Form 10-KSB for year  ended September 30,
1996, dated December 13, 1996.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.3</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amended
and Restated Sublease Agreement between ATC and Smiths Industries  Aerospace &amp; Defense
Systems, Inc. as amended, dated September 1,  2000.&nbsp;&nbsp;Filed as Exhibit 10.6.1 on
Form 10-K for the year ended September 30,  2000, dated October 29, 2000.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.3.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First
Amendment to Amended and Restated Sublease Agreement, dated January 1,  2004.&nbsp;&nbsp;Filed
as Exhibit 10.1 on Form 10-Q for the quarter ended March 31, 2004,  dated May 5, 2004.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.4</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement dated as of September 1, 1997 between ATC and Elwood G.  Norris. Filed as
Exhibit 10.16 on Form 10-KSB for year ended September 30, 1997, dated  December 1, 1997.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.5</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1997
Stock Option Plan as adopted on January 23, 1998. Filed as Exhibit 10.1 on  Form S-8 dated
July 27, 1998.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.5.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Incentive Stock Option Agreement under 1997 Stock Option Plan.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.5.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Non-Statutory Stock Option Agreement under 1997 Stock Option Plan.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.6</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002
Stock Option Plan.&nbsp;&nbsp;Filed as Exhibit 99.1 on Form S-8 dated  November 18,
2002.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.6.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Option Grant Notice and Stock Option Agreement under 2002  Stock Option Plan.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.7</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Purchase Warrant exercisable until September 30, 2006 granted to  accredited
investors for an aggregate of 1,012,500 common shares (individual warrants  differ as to
holder, number of shares and issuance date).&nbsp;&nbsp;Filed as Exhibit 4.12  on Form
8-K dated October 12, 2001.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.8</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Series
D Stock and Warrant Purchase Agreement dated May 3,  2002.&nbsp;&nbsp;Filed as Exhibit
10.1 on Form 10-Q for the quarter ended March 31, 2002,  dated May 15, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.8.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment
No. 1 to Series D Preferred Stock and Warrant Purchase Agreement  dated July 3, 2002.&nbsp;&nbsp;Filed
as Exhibit 10.3 on Form 10-Q for the quarter ended  June 30, 2002, dated August 14, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.9</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Purchase Warrant exercisable until March 31, 2007 granted to  investors for an
aggregate of 517,880 common shares (individual warrants differ as to  holder, number of
shares and issuance date). Filed as Exhibit 10.2 on Form 10-Q for the  quarter ended
March 31, 2002, dated May 15, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.10</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of 8% Senior Secured Promissory Note due December 31, 2003 aggregating  $1,500,000
granted to accredited investors (individual notes differed as to holder and  amount).
Filed as Exhibit 4.1 on Form 8-K dated October 7, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.10.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Amendment to 8% Senior Secured Promissory Note. Filed as Exhibit  4.6 on Form 8-K
dated March 6, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>


<p align="center"><font size="2" face="Times New Roman">-56-</font></p>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>
<p>&nbsp;</p>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.11</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Security Agreement. Filed as Exhibit 4.2 on Form 8-K dated October 7,  2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.12</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">License
Agreement between ATC and Harman International Industries, Inc. dated  August 24, 2001.
Portions of this exhibit (indicated by asterisks) have been omitted  pursuant to a
request for confidential treatment pursuant to Rule 24b-2 of the Securities  Exchange Act
of 1934. Filed as Exhibit 10.19 on Form 10-K for the year ended September 30,  2002,
dated December 23, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.13</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Series
E Preferred Stock and Warrant Purchase Agreement dated February 28,  2003. Filed as
Exhibit 4.1 on Form 8-K filed on March 6, 2003. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.14</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Stock Purchase Warrant exercisable until December 31, 2007 granted to  accredited
investors for an aggregate of 514,875 common shares (individual warrants differ  as to
holder, number of shares and issuance date).&nbsp;&nbsp;Filed as Exhibit 4.3 on Form  8-K
dated March 6, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.15</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
letter of James M. Irish dated January 27, 2003. Filed as Exhibit  10.5 on Form 10-Q for
the quarter ended March 31, 2003, dated May 15, 2003.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.16</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities
Purchase Agreement dated July 11, 2003. Filed as Exhibit 4.1 on  Form 8-K dated July 17,
2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.17</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration
Rights Agreement dated July 11, 2003. Filed as Exhibit 4.2 on  Form 8-K dated July 17,
2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.18</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Common Stock Warrant exercisable until July 10, 2007 granted to  accredited investors
for an aggregate of 454,547 common shares (individual warrants differ  as to holder,
number of shares and issuance date). Filed as Exhibit 4.3 on Form 8-K dated  July 17,
2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.19</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">License
and Remarketer Agreement between ATC and General Dynamics Armament  and Technical
Products, Inc. dated February 14, 2003. Filed as Exhibit 10.27 on Form 10-K  for the year
ended September 30, 2003, dated December 29, 2003. Portions of this exhibit  (indicated
by asterisks) have been omitted pursuant to a request for confidential  treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.20</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">License
and Remarketer Agreement between ATC and Bath Iron Works Corporation  dated February 13,
2003. Filed as Exhibit 10.28.1 on Form 10-K for the year ended  September 30, 2003, dated
December 29, 2003. Portions of this exhibit (indicated by  asterisks) have been omitted
pursuant to a request for confidential treatment pursuant to  Rule 24b-2 of the
Securities Exchange Act of 1934.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.21</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Assignment
of License and Remarketer Agreement from Bath Iron Works  Corporation to General Dynamics
Armament and Technical Products, Inc., dated September 23,  2003. Filed as Exhibit
10.28.2 on Form 10-K for the year ended September 30, 2003, dated  December 29, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.22</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Kalani Jones dated August 28, 2003, as amended. Filed  as Exhibit 10.29 on
Form 10-K for the year ended September 30, 2003, dated December 29,  2003.+</FONT></TD>
</TR>
</TABLE>
<BR>


<p align="center"><font size="2" face="Times New Roman">-57-</font></p>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>
<p>&nbsp;</p>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.23</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Carl Gruenler, as amended. Filed as Exhibit 10.30 on  Form 10-K for the year
ended September 30, 2003, dated December 29, 2003.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.24</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Inducement Grant Notice and Inducement Stock Option Agreement. Filed  as Exhibit 4.1
on Form 8-K dated September 28, 2004.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.25</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Table
of Inducement Grants.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.26</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Special Stock Option.&nbsp;&nbsp;Filed as Exhibit 99.2 on Form S-8 dated  November 18,
2002.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.27</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Michael Russell. Filed as Exhibit 10.1 on Form 10-Q  for the quarter ended
June 30, 2004, dated August 4, 2004.+ </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.28</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Inducement
Grant Notice and Inducement Stock Option Agreement of Michael  Russell.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.29</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Joseph A. Zerucha.&nbsp;&nbsp;Filed as Exhibit 10.2  on Form 10-Q for the
quarter ended December 31, 2003, dated February 12, 2004.+&nbsp; </FONT></TD>
</TR>
</TABLE>
<BR>

&nbsp;<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.30</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Separation
Agreement of Joseph A. Zerucha.&nbsp;&nbsp;Filed as Exhibit 10.2  on Form 10-Q for the
Form 10-Q for the quarter ended June 30, 2004, dated August 4, 2004.+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.31</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment
Agreement of Bruce Ehlers.&nbsp;&nbsp;Filed as Exhibit 10.1 on  Form 10-Q for the quarter
ended December 31, 2003, dated February 12, 2004.+ </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.32</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Release
Agreement of Bruce Ehlers.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.33</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Special
Stock Option with Elwood Norris dated November 13, 2000.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.34</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Special
Stock Option with David Carter dated November 13, 2000.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.35</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Special
Stock Option with Richard Wagner dated November 13, 2000.*+</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.36</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Common
Stock Purchase Agreement dated December 14, 2004 with Kingsbridge  Capital Limited. Filed
as Exhibit 10.1 on Form 8-K filed December 17, 2004.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.37</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration
Rights Agreement dated December 14, 2004 with Kingsbridge  Capital Limited. Filed as
Exhibit 10.2 on Form 8-K filed December 17, 2004.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.38</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Warrant
dated December 14, 2004 in favor of Kingsbridge Capital Limited.  Filed as Exhibit 4.1 to
Form 8-K filed December 17, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.39</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Promissory
Note and Warrant Purchase Agreement dated December 23, 2004 with  the purchasers
described therein. *</FONT></TD>
</TR>
</TABLE>
<BR>


<p align="center"><font size="2" face="Times New Roman">-58-</font></p>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>
<p>&nbsp;</p>

<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.40</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Unsecured Subordinated Promissory Note. *</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.41</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form
of Warrant. *</FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>23 Consents of
Experts and Council </B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">23.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Consent
of BDO Seidman, LLP.</FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Left Bold" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>24 Power of Attorney </B></FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Power
of Attorney. Reference is made to the signature page of Form 10-K for the year ended
September 30, 2004. </FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Left Bold" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Certifications </B></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
of Elwood G. Norris, Co-Principal Executive Officer, pursuant to  Rule 13a-14(a) or
15d-14(a) of the Securities and Exchange Act of 1934, as adopted  pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31.2</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
of Kalani Jones, Co-Principal Executive Officer, pursuant to  Rule 13a-14(a) or 15d-14(a)
of the Securities and Exchange Act of 1934, as adopted  pursuant to Section&nbsp;302 of
the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31.3</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
of Michael A. Russell, Principal Financial Officer, pursuant to  Rule 13a-14(a) or
15d-14(a) of the Securities and Exchange Act of 1934, as adopted  pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">32.1</FONT></TD>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="88%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification
pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to  Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002, executed by Elwood G. Norris and  Kalani Jones, Co-Principal
Executive Officers, and Michael A. Russell, Principal Financial  Officer.</FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">* Previously filed
with Form 10-K for the year ended September 30, 2004.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">+&nbsp;&nbsp;Management
contract or compensatory plan or arrangement. &nbsp;</FONT></P>


<!-- MARKER FORMAT-SHEET="PublicEase Pg Break w/ Number" -->
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-59- </FONT></P>
<HR STYLE="page-break-after: always" SIZE=3 COLOR=GRAY NOSHADE>
<BR>


<p>&nbsp;</p>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<FILENAME>atco_10kaex23-1.htm
<TEXT>
<HTML><HEAD>
<TITLE>
Exhibit 23.1
</TITLE>
</HEAD><BODY id=38 style="MARGIN: 2%; TEXT-INDENT: 0pt" bgColor=#ffffff>
<DIV><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibit
23.1</FONT></DIV>
<DIV><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><BR>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center>CONSENT OF INDEPENDENT </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center>REGISTERED PUBLIC ACCOUNTING FIRM </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><BR></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><BR></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left>American Technology Corporation </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left>San Diego, California </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><BR></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>We hereby consent to the incorporation by reference in the
Registration Statements on Forms S-8 (File No. 333-09265, File No. 333-09269,
File No. 333-23845, File No. 333-59929, File No 333-54034 and File No.
333-101279) and Forms S-3 (File No. 333-27455, File No. 333-36003, File No.
333-71351, File No. 333-99675, File No. 333-36000, File No. 333-105740, File No.
333-107635 and 333-122264) of our report dated November 10, 2004, except for
Note 14 as to which the date is December 23, 2004, relating to the financial
statements of American Technology Corporation appearing in the Company's Annual
Report on Form 10-K/A Amendment #2 for the year ended September 30, 2004. </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><BR></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left>/s/ BDO Seidman, LLP&nbsp; &nbsp; &nbsp;&nbsp;&nbsp; &nbsp;
&nbsp;&nbsp;&nbsp; &nbsp; &nbsp;&nbsp;&nbsp; &nbsp; &nbsp;&nbsp;&nbsp; &nbsp;
&nbsp;&nbsp;&nbsp; &nbsp; &nbsp;&nbsp;&nbsp; &nbsp; &nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><BR></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left>Costa Mesa, CA </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left>March 16, 2005 </DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><BR></DIV>
<DIV>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>
<p>&nbsp;</p>

  <p></DIV></FONT></DIV></BODY></HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>atco_10kaex31-1.htm
<TEXT>
<HTML><HEAD>
<font face="Times New Roman" size="2">
<TITLE>
exhibit 31.1
</TITLE>
</HEAD></font><BODY id=38 bgColor=#ffffff>
<DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>
  <p align="left"><font size="2" face="Times New Roman">Exhibit 31.1</font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=right>
  <p align="center">
  <FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>CERTIFICATIONS</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I, Elwood
G. Norris, certify that:</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
<TABLE id=hangingindent
style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" cellSpacing=0
cellPadding=0 width="100%" align=center border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 10pt" align=left><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</FONT></TD>
    <TD align=left><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
      id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;I have
      reviewed this Amendment No. 2 to the annual report on Form 10-K of
      American Technology Corporation;</FONT></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant&#8217;s other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have: </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV style="MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 10pt" align=left><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)</FONT></TD>
    <TD align=left><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
      id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp; </FONT>[paragraph
      omitted pursuant to SEC Release Nos. 33-2838 and
34-47986];</FONT></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Evaluated
      the effectiveness of the registrant&#8217;s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosed
      in this report any change in the registrant&#8217;s internal control over
      financial reporting that occurred during the registrant&#8217;s most recent
      fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect the registrant&#8217;s internal control over financial
      reporting; and</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant&#8217;s other certifying officers and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the registrant&#8217;s independent registered public accounting firm and the
      audit committee of registrant&#8217;s board of directors (or persons performing
      the equivalent functions): </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant&#8217;s ability to record,
      process, summarize and report financial information; and
  </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant&#8217;s internal
      controls over financial reporting.</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
March 17, 2005</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;<U>/s/</U></FONT><U><FONT
id=TAB2 style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman" size="2">&nbsp;</FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Elwood G.
Norris</FONT><font face="Times New Roman"><FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt" size="2">&nbsp;&nbsp;</FONT></font></U></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;Elwood G.
Norris, Chairman of the Board</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;(Co-Principal
Executive Officer)</FONT></DIV>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>
</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>atco_10kaex31-2.htm
<TEXT>
<html>
<head>
<title>exhibit 31.2</title>
</head>
<body>
<font size="2" face="Times New Roman">Exhibit 31.2 </font>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=right>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>CERTIFICATIONS</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I, Kalani
Jones, certify that:</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;&nbsp;
I have
reviewed this Amendment No. 2 to the annual report on Form 10-K of American
Technology Corporation;</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant&#8217;s other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have: </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)</FONT><FONT
id=TAB2 style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman" size="2">&nbsp;<FONT id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;</FONT></FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[paragraph
omitted pursuant to SEC Release Nos. 33-2838 and 34-47986];</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Evaluated
      the effectiveness of the registrant&#8217;s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosed
      in this report any change in the registrant&#8217;s internal control over
      financial reporting that occurred during the registrant&#8217;s most recent
      fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect the registrant&#8217;s internal control over financial
      reporting; and</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant&#8217;s other certifying officers and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the registrant&#8217;s independent registered public accounting firm and the
      audit committee of registrant&#8217;s board of directors (or persons performing
      the equivalent functions): </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant&#8217;s ability to record,
      process, summarize and report financial information; and
  </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant&#8217;s internal
      controls over financial reporting. </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
March 17, 2005 </FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT><U>&nbsp;/s/
</U></FONT><U>
  <FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman" size="2">&nbsp;</FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kalani
Jones</FONT><font face="Times New Roman"><FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt" size="2">&nbsp;&nbsp;&nbsp;</FONT></font></U></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;Kalani
Jones, President and Chief Operating Officer</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;(Co-Principal
Executive Officer)</FONT></DIV>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.3
<SEQUENCE>5
<FILENAME>atco_10kaex31-3.htm
<TEXT>
<html>

<head>
<title>Exhibit 31.3</title>
</head>

<body>
<font size="2" face="Times New Roman">Exhibit 31.3</font><DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=right>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>CERTIFICATIONS</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I,
Michael A. Russell, certify that:</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;&nbsp;
I have
reviewed this Amendment No. 2 to the annual report on Form 10-K of American
Technology Corporation;</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant&#8217;s other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have: </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
[paragraph
omitted pursuant to SEC Release Nos. 33-2838 and 34-47986];</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Evaluated
      the effectiveness of the registrant&#8217;s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosed
      in this report any change in the registrant&#8217;s internal control over
      financial reporting that occurred during the registrant&#8217;s most recent
      fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect the registrant&#8217;s internal control over financial
      reporting; and</FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant&#8217;s other certifying officers and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the registrant&#8217;s independent registered public accounting firm and the
      audit committee of registrant&#8217;s board of directors (or persons performing
      the equivalent functions): </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant&#8217;s ability to record,
      process, summarize and report financial information; and
  </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV>
<TABLE id=hangingindent cellSpacing=0 cellPadding=0 width="100%" align=center
border=0>
  <TR style="LINE-HEIGHT: 1.1" vAlign=top>
    <TD style="WIDTH: 40pt">&nbsp;</TD>
    <TD style="WIDTH: 30pt">
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)</FONT></DIV></TD>
    <TD>
      <DIV style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><FONT
      style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant&#8217;s internal
      controls over financial reporting. </FONT></DIV></TD></TR></TABLE></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
March 17, 2005 </FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;<U>/s/
</U></FONT><U>
  <FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman" size="2">&nbsp;</FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Michael
A. Russell</FONT><font face="Times New Roman"><FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt" size="2">&nbsp;&nbsp;</FONT></font></U></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;Michael A.
Russell, Chief Financial Officer</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;(Principal
Financial Officer)</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<hr size="2" color="#C0C0C0">
<div STYLE="page-break-before: always">&nbsp;</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>6
<FILENAME>atco_10kaex32-1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>
</TITLE>
</HEAD>
<BODY BGCOLOR="#FFFFFF" link="#0033FF" vlink="#0033FF" alink="#0033FF">


<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><font size="2">
<DIV id=PGBRK style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=FTR>
<DIV style="WIDTH: 100%" align=left>
<DIV>
&nbsp;</DIV></DIV></DIV></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><font face="Times New Roman">Exhibit 32.1</font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=right><font face="Times New Roman"><BR></font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>CERTIFICATION
OF CO-PRINCIPAL EXECUTIVE OFFICERS AND PRINCIPAL FINANCIAL
OFFICER</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>PURSUANT
TO</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>18
U.S.C. SECTION 1350,</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>AS
ADOPTED PURSUANT TO</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=center><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><STRONG>SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002</STRONG></FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><font face="Times New Roman"><BR></font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each of
the undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an
officer of American Technology Corporation (the &#8220;Company&#8221;), that, to his
knowledge, the Amendment No. 2 to the Annual Report of the Company on Form 10-K
for the fiscal ended September 30, 2004 fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 and that the information
contained in such report fairly presents, in all material respects, the
financial condition and results of operation of the Company as of the dates and
for the periods presented in the financial statements included in such
report.</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><font face="Times New Roman"><BR></font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;Dated: March
  17, 2005</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;<U>/s/</U></FONT><U><FONT
id=TAB2 style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman">&nbsp;</FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Elwood G.
Norris</FONT><font face="Times New Roman"><FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt">&nbsp;&nbsp;</FONT></font></U></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;</FONT>&nbsp;<FONT id=TAB2
style="LETTER-SPACING: 10pt">&nbsp; </FONT>Elwood G. Norris, Chairman of the
Board</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;(Co-Principal
Executive Officer)</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><font face="Times New Roman"><BR>&nbsp;</font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;<U>/s/</U></FONT><U><FONT
id=TAB2 style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman">&nbsp;</FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kalani
Jones</FONT><font face="Times New Roman"><FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt">&nbsp;&nbsp;&nbsp;</FONT></font></U></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;Kalani
Jones, President and Chief Operating Officer</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2
style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;(Co-Principal
Executive Officer)</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=left><font face="Times New Roman"><BR></font></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT><U>&nbsp;/s/
</U></FONT><U>
  <FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt" face="Times New Roman">&nbsp;</FONT><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Michael
A. Russell</FONT><font face="Times New Roman"><FONT id=TAB2
style="COLOR: black; LETTER-SPACING: 26pt">&nbsp;&nbsp;&nbsp;</FONT></font></U></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;Michael A.
Russell, Chief Financial Officer</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify><FONT
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><FONT
id=TAB2 style="LETTER-SPACING: 10pt">&nbsp;&nbsp;&nbsp;</FONT>&nbsp;(Principal
Financial Officer)</FONT></DIV>
<DIV
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.1; MARGIN-RIGHT: 0pt"
align=justify>&nbsp;</DIV>
</DIV></HTML>

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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