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<SEC-DOCUMENT>0001181431-06-028837.txt : 20060509
<SEC-HEADER>0001181431-06-028837.hdr.sgml : 20060509
<ACCEPTANCE-DATETIME>20060509074444
ACCESSION NUMBER:		0001181431-06-028837
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20060509
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060509
DATE AS OF CHANGE:		20060509

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24248
		FILM NUMBER:		06818665

	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>8-K
<SEQUENCE>1
<FILENAME>rrd117163.htm
<DESCRIPTION>Q2 EARNINGS RELEASE
<TEXT>


<html><head>
<title>Prepared By R.R. Donnelley Financial -- Form 8-K</title>
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<b>UNITED STATES </b></font></div>

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<b>SECURITIES AND EXCHANGE COMMISSION </b></font></div>

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<b>Washington, D.C. 20549 </b></font></div>

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<b>Form 8-K </b></font></div> <div><font Size="1">&nbsp;</font></div>

<div Align="center"><font Face="times New Roman" Size="4" Color="#000000">
<b>Current Report </b></font></div>

<div Align="center"><font Face="times New Roman" Size="4" Color="#000000">
<b>Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 </b></font></div>

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<div Align="center"><font Face="times New Roman" Size="3" Color="#000000">
<b>Date of Report (Date of earliest event reported):&nbsp;&nbsp;05/09/2006 </b></font></div>




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<div Align="center"><font Face="times New Roman" Size="5" Color="#000000">
<b>American Technology Corporation </b></font></div>

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<b>(Exact name of registrant as specified in its charter)</b></font></div>

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<b>Commission File Number:&nbsp;&nbsp;000-24248</b></font></div>

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<div Align="center"><font Face="times New Roman" Size="3" Color="#000000"><b>Delaware</b></font>
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<div Align="center"><font Face="times New Roman" Size="3" Color="#000000"><b>87-0361799</b></font>
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<b>(State or other jurisdiction of</b></font>
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</td>
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<div Align="center"><font Face="times New Roman" Size="2" Color="#000000"><b>(IRS Employer</b></font>
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<div Style="margin-left:2%; Text-indent:-2%" Align="center"><font Face="times New Roman" Size="2" Color="#000000">
<b>incorporation)</b></font>
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</td>
<td Valign="bottom" Align="center" Width="59%">
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<b>Identification No.)</b></font>
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</td>
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<div Align="center"><font Face="times New Roman" Size="3" Color="#000000">
<b>15378 Avenue of Science, Ste 100,</div><div Align="center">San Diego, California 92128</b></font></div>


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<b>(Address of principal executive offices, including zip code)</b></font>
</div>

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<b>(858) 676-1112 </b></font>
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<b>(Registrant&#146;s telephone number, including area code)</b></font>
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<b> </b></font>
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<b>(Former name or former address, if changed since last report) </b></font>
</div>


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<div Align="left"><font Face="times New Roman" Size="2" Color="#000000">
<b>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:<BR><BR>
</b></font>


</div>



<div Align="left"><font Face="times New Roman" Size="2" Color="#000000">
<b>[&nbsp;&nbsp;]&nbsp;&nbsp;
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR><BR>

[&nbsp;&nbsp;]&nbsp;&nbsp;
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR><BR>


[&nbsp;&nbsp;]&nbsp;&nbsp;
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR><BR>


[&nbsp;&nbsp;]&nbsp;&nbsp;
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
</b>

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Information to be included in the report</b>
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<b>Item 2.02.&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Condition</b></font>
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<div  align="left" Style="text-indent:4%"><font Face="times New Roman" Size="2" Color="#000000">
On May 9, 2006, American Technology Corporation issued a press release announcing financial results for its quarter ended March 31, 2006. <p>A copy of the press release is attached hereto as Exhibit 99.1. <p>In accordance with General Instruction B.2. of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed 'filed' for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. </div><div align="left" style="text-indent:4%"></font>
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<b>Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits</b></font>
</div>

<div><font Size="1">&nbsp;</font>
</div>

<div  align="left" Style="text-indent:4%"><font Face="times New Roman" Size="2" Color="#000000">
(d) Exhibits<p>Exhibit No.  Description</div><div align="left" style="text-indent:4%">99.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Press Release dated May 9, 2006</font>
</div>

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<b>Signature(s) </b></font>
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized. </font>
</div>

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	</font>
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	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font></td>
	<td Valign="top" Width="53%">
	<div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	American Technology Corporation</font>
	</div>	</td>
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<tr>
	<td Valign="top" Colspan="3" Width="53%"> <div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	Date: May 09, 2006</font>
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	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font>
	</td>
	<td> <font Size="1">&nbsp;</font>
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	<div Align="center"><font Face="times New Roman" Size="2" Color="#000000">
	By:</font>
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	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font></td>
	<td Valign="top" Width="53%">
	<div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	/s/&nbsp;&nbsp;&nbsp;&nbsp;John R. Zavoli</font>
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	<hr Noshade Align="left" Color="#000000">
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	<td Valign="bottom" Width="53%">
	<div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	John R. Zavoli</font>
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	<td Valign="bottom" Width="53%">
	<div><font Face="times New Roman" Size="2" Color="#000000">President and Chief Operating Officer</font>
	</div>
</td>
</tr>
<tr><td>&nbsp;</td></tr>
<tr><td>&nbsp;</td></tr>



</table></div>





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<hr  Size="3" Color="#cceeff" Width="100%" Align="center">

<p Align="center"><font Size="2">&nbsp;</font>
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<b>Exhibit Index </b></font>
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	<b>Exhibit&nbsp;No.</b></font>
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	<td Valign="top" Width="3%" Align="left"><font Face="times New Roman" Size="2">&nbsp;&nbsp;</font></td>
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	<b>Description</b></font>
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	EX-99.1</font>
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	<td Valign="top" Width="3%" Align="left"><font Face="times New Roman" Size="2">&nbsp;&nbsp;</font></td>
	<td Valign="top" Width="100%" Align="left">
	<div><font Face="times New Roman" Size="2" Color="#000000">
	Press Release dated May 9, 2006</font>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>rrd117163_13407.htm
<DESCRIPTION>PRESS RELEASE DATED MAY 9, 2006
<TEXT>



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<TITLE>DRAFT 1: 022304</TITLE>


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<B><I>


</I><P>FOR IMMEDIATE RELEASE</P>


</B>


<B><I><P>&#9;&#9;</P>


</I><FONT SIZE=4><P ALIGN="CENTER">AMERICAN TECHNOLOGY CORPORATION </P>


<P ALIGN="CENTER">ANNOUNCES SECOND QUARTER RESULTS</P>


<P ALIGN="CENTER"></P>


<P ALIGN="CENTER">Company Reports Over $7.5 Million in Order Backlog</P>


<P ALIGN="CENTER">&nbsp;</P>


</FONT><P>SAN DIEGO, CA, May 9, 2006 -- American Technology Corporation (ATC) (NASDAQ: ATCO)</B>, a leading innovator of commercial, government and military directed sound products and solutions<FONT FACE="Arial" SIZE=2>, </FONT>today announced its results for its second fiscal quarter ended March 31, 2006. </P>


<P>For the second quarter of fiscal year 2006, the Company reported revenues of $1.47 million, compared to $2.82 million in the second quarter of fiscal year 2005 and $1.90 million in the first fiscal quarter ended December 31, 2005.  The decrease in revenues in the second quarter ended March 31, 2006 compared to the same quarter a year ago resulted primarily from a reduction in military sales and the inclusion of product revenues of $1.7 million (part of a $4.9 million order received in December 2004) in the prior year's second quarter.</P>


<P>For the second quarter of fiscal year 2006, the Company's gross profit was $188,000 or approximately 13% of revenues compared to a gross profit of $1.33 million, or approximately 47% of revenues for the same quarter a year ago, and compared to a gross profit of $1.06 million, or approximately 56% of revenues for the first fiscal quarter ended December 31, 2005.  The decrease in gross profit both absolute and as a percentage of revenues to the same quarter a year ago was principally the result of the decreased sales of our higher margin LRAD&trade; products.</P>


<P>Net loss for the second quarter of fiscal year 2006 was $2.63 million compared to a net loss of $1.61 million for the same quarter a year ago and a net loss of $770,516 for the first fiscal quarter ended December 31, 2005. The second quarter 2006 net loss increased over the same quarter a year ago primarily due to the decrease in revenues and gross profit as a result of reduced LRAD deliveries to government and military customers. Net loss available to common stockholders for the quarter was $(0.11) per share compared to $(0.15) per share for the same quarter last fiscal year and $(0.03) for the first fiscal quarter ended December 31, 2005. </P>


<P>For the six months ended March 31, 2006, the Company reported revenues of $3.37 million, compared to $7.23 million for the six months ended March 31, 2005.  The decrease in revenues for the six months ended March 31, 2006 compared to the same six months a year ago resulted primarily from a reduction in military sales and the impact of an order totaling $4.9 million reported during the six months ended March 31, 2005.</P>


<P>For the first six months of fiscal year 2006, the Company's gross profit was $1.25 million or approximately 37% of revenues, compared to $4.17 million, or approximately 58% of revenues for the same period a year ago. The decrease in gross profit both absolute and as a percentage of revenues was principally the result of the decreased sales of our higher margin LRAD products.</P>


<P>Net loss for the first six months of fiscal year 2006 was $3.40 million compared to a net loss of $3.14 million for the same period a year ago. The net loss for the first six months of fiscal 2006 increased over the same period a year ago primarily due to the decrease in revenues and gross profit as a result of reduced LRAD deliveries to government and military customers and significant expense incurred in evaluating the Company's system of internal controls over financial reporting for compliance with Section 404 of the Sarbanes-Oxley Act. Net loss available to common stockholders for the first six months of fiscal 2006 was $(0.14) per share compared to $(0.24) per share for the same period last fiscal year. </P>


<P>ATC also reported that its research and development expenses decreased to $502,000 for the three months ended March 31, 2006 compared to $1.47 million for the same period a year ago. The company also reported its order backlog was approximately $7.5 million at March 31, 2006 compared to $128,000 at March 31, 2005.</P>


<P>&quot;In the second quarter, we experienced several challenges that affected our financial results including, material shortages, transitioning to a new contract manufacturer, hiring new members of the management and operations teams, and a company headquarters facility move,&quot; said John Zavoli, president and chief operating officer of ATC. &quot;With the move behind us and our management and operations positions filled, we are addressing the material shortages and making good progress in ramping up product builds and deliveries with the new contract manufacturer.&quot;</P>


<P>&quot;We are also driving down our R &amp; D expenses while working on reducing costs, increasing product margins, and growing the markets for our directional acoustic beam forming products and technologies,&quot; commented Zavoli.</P>


<P>&quot;With $5.7 million of our $7.5 million backlog shippable in this fiscal year per purchase order contracts, year-to-date sales of $3.4 million, and expected continuing orders during the second half of our fiscal year, dependent on our ability to manufacture to meet demand, we anticipate exceeding fiscal 2005 revenues,&quot; concluded Zavoli. </P>


<FONT FACE="Arial" SIZE=2>


</FONT><B><FONT SIZE=2><P>A</FONT><FONT SIZE=3>bout American Technology Corporation</P>


</B><P>American Technology Corporation is Shaping the Future of Sound&reg; through its proprietary directed sound products and technologies which include: the award-winning HSS&reg; (HyperSonic&reg; Sound technology); LRAD&trade; (Long Range Acoustic Device) products family; NeoPlanar&reg; products family, Sound Vector&trade; technology, and others. The Company is establishing a strong portfolio of patents, trademarks, and intellectual property including over 320 U.S. and foreign patents and pending patent applications to date.  For more information on the company and its technologies and products please visit our web site at www.atcsd.com.</P>


</FONT><B><FONT SIZE=2>


<P>Safe Harbor statement under the Private Securities Litigation Reform Act of 1995:</B> Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development 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, including but not limited to, the performance of our management team, market acceptance of our directed sound technologies and products, entry of competitors, the possibility our intellectual prop
erty protections will not prevent others from marketing products similar to or competitive with our products, potential technical or manufacturing difficulties that could delay product deliveries or increase warranty costs, and other risks identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management's expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the "Risk Factors" section of the company's Form 10-K for the year ended September 30, 2005 and Form 10-Q for the quarter ended March 31, 2006. American Technology Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated.</P>


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<P>FOR FURTHER INFORMATION CONTACT:</P>





<P>Investor Relations:&#9;&#9;&#9;&#9;&#9;&#9;Media Inquiries:</P>


<P>Robert Putnam&#9;&#9;&#9;&#9;&#9;&#9;Don Mathias</P>


<P>(858) 679-3168&#9;&#9;&#9;&#9;&#9;&#9;(949) 855-4520</P>


<P>robert@atcsd.com&#9;&#9;&#9;&#9;&#9;&#9;dwmath@aol.com</P>


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<P>&nbsp;</P></FONT>


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<FONT SIZE=3><P ALIGN="CENTER">&nbsp;</P>


</FONT><B><P ALIGN="CENTER"><A NAME="RANGE!A1:D33">American Technology Corporation </A></B></TD>


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<B><P ALIGN="CENTER"> Condensed Statements of Operations</B></TD>


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<B><P ALIGN="CENTER">(000's omitted except per share amounts)</B></TD>


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<B><P ALIGN="CENTER">(Unaudited)</B></TD>


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<FONT SIZE=2><P ALIGN="CENTER">For the three months ended</P>


<P ALIGN="CENTER"> March 31, </FONT></TD>


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<FONT SIZE=2><P ALIGN="CENTER">2006</FONT></TD>


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<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="CENTER">2005</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>Total revenues</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> $1,466 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">$2,817</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>Cost of revenues</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">1,278 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,490</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=32>


<B><FONT SIZE=2><P>Gross profit</B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=32>


<FONT SIZE=2><P ALIGN="RIGHT">188 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=32><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=32>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,327 </FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<B><FONT SIZE=2><P>Operating expenses:</B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>  Selling, general and administrative</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 2,047 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 2,044 </FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>  Research and development</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">502 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,466 </FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>Total operating expenses</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 2,549 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 3,510 </FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>Loss from operations</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> (2,361)</FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> (2,183)</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<B><FONT SIZE=2><P>Other income (expense):</B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>  Interest income</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 71 </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">19</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>  Interest expense</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">-- </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> (131)</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>  Unrealized gain (loss) on derivative revaluation</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> (340) </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 682</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P>Total other income (expense)</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">(269)</FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">570</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16>


<B><FONT SIZE=2><P>Net loss</B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">(2,630)</FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">(1,613)</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=20>


<FONT SIZE=2><P>Dividend requirements on convertible preferred stock</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=20>


<FONT SIZE=2><P ALIGN="RIGHT">-- </FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>


<FONT SIZE=2><P ALIGN="RIGHT">1,519</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=21>


<B><FONT SIZE=2><P>Net loss available to common stockholders </B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=21>


<FONT SIZE=2><P ALIGN="RIGHT"> $(2,630)</FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=21>


<FONT SIZE=2><P ALIGN="RIGHT"> $(3,132)</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=28>


<B><FONT SIZE=2><P>Net loss per share of common stock - basic and diluted</B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=28>


<FONT SIZE=2><P ALIGN="RIGHT"> $(0.11)</FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=28><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=28>


<FONT SIZE=2><P ALIGN="RIGHT"> $(0.15)</FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=28>


<B><FONT SIZE=2><P>Average weighted number of common shares outstanding</B></FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=28>


<FONT SIZE=2><P ALIGN="RIGHT">24,382,731</FONT></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=28><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=28>


<FONT SIZE=2><P ALIGN="RIGHT"> 20,665,004 </FONT></TD>


</TR>


<TR><TD WIDTH="67%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>


</TR>


</TABLE>





<FONT SIZE=3>


<P>&nbsp;</P>


<P>&nbsp;</P></FONT>


<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=577>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=12>


<FONT SIZE=3><P>&nbsp;</P>


</FONT><FONT SIZE=2><P><A NAME="RANGE!A1:D35">&nbsp;</A></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=12>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=12>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=12><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=12>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="81%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<B><P ALIGN="CENTER">American Technology Corporation </B></TD>


<TD WIDTH="4%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="12%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


</TR>


<TR><TD WIDTH="81%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=20>


<B><P ALIGN="CENTER">Condensed Balance Sheets</B></TD>


<TD WIDTH="4%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>


<TD WIDTH="12%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>


</TR>


<TR><TD WIDTH="81%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20>


<B><P ALIGN="CENTER">(000's omitted except per share amounts)</B></TD>


<TD WIDTH="4%" VALIGN="TOP" COLSPAN=2 HEIGHT=20><P></P></TD>


<TD WIDTH="3%" VALIGN="TOP" HEIGHT=20><P></P></TD>


<TD WIDTH="12%" VALIGN="TOP" HEIGHT=20><P></P></TD>


</TR>


<TR><TD WIDTH="81%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20>


<B><P ALIGN="CENTER">(Unaudited)</B></TD>


<TD WIDTH="4%" VALIGN="TOP" COLSPAN=2 HEIGHT=20><P></P></TD>


<TD WIDTH="3%" VALIGN="TOP" HEIGHT=20><P></P></TD>


<TD WIDTH="12%" VALIGN="TOP" HEIGHT=20><P></P></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<P ALIGN="CENTER">&nbsp;</TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<P ALIGN="CENTER">&nbsp;</TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="CENTER">March 31,</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="CENTER">September 30,</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<P ALIGN="CENTER">&nbsp;</TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<P ALIGN="CENTER">&nbsp;</TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="CENTER">2006</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="CENTER">2005</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>ASSETS</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Current Assets:</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>  Cash and cash equivalents</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> $5,449 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> $10,348 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>  Accounts Receivable</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">1,943</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 880 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>  Inventories, net of $494 and $691 reserve for obsolescence</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,648 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,800 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>  Prepaid expenses and other</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">161</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 201 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Total current assets</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">9,201</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 13,229 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Equipment</B>, net</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">672</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 607 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Patents, net</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">1,408</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">1,373</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Long term deposits</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">58 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=22>


<B><FONT SIZE=2><P>Total assets</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=22>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=22>


<FONT SIZE=2><P ALIGN="RIGHT"> $11,339 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=22><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=22>


<FONT SIZE=2><P ALIGN="RIGHT"> $15,209 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>


<B><FONT SIZE=2><P>LIABILITIES AND STOCKHOLDERS' EQUITY</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=20>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Current Liabilities:</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P> Accounts payable</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> $1,435 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> $1,985 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P> Accrued liabilities</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">1,014</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,224 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>Derivative warrant instrument</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">1</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 282 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>Capital lease short-term portion</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">5</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 12 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Total current liabilities</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 2,455 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 3,503 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=21>


<B><FONT SIZE=2><P>Long-Term Liabilities:</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=21>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=21>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=21><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=21>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff">


<FONT SIZE=2><P>8% Unsecured Subordinated Promissory Notes, net of $743,977</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff">


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff">


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff">&nbsp;</TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff">


<FONT SIZE=2><P>&nbsp;</FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff">


<FONT SIZE=2><P>  and $-0- debt discount</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff">


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff">


<FONT SIZE=2><P ALIGN="RIGHT"> - </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff">&nbsp;</TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff">


<FONT SIZE=2><P ALIGN="RIGHT"> - </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>Derivative warrant instrument</FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,153 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 1,564 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<B><FONT SIZE=2><P>Total liabilities</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT">3,608 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>


<FONT SIZE=2><P ALIGN="RIGHT"> 5,067 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>


<B><FONT SIZE=2><P>Total stockholders' equity</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>


<FONT SIZE=2><P ALIGN="RIGHT">7,731 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=20>


<FONT SIZE=2><P ALIGN="RIGHT"> 10,142 </FONT></TD>


</TR>


<TR><TD WIDTH="60%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=28>


<B><FONT SIZE=2><P>Total liabilities and stockholders' equity</B></FONT></TD>


<TD WIDTH="4%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=28>


<FONT SIZE=2><P>&nbsp;</FONT></TD>


<TD WIDTH="17%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=28>


<FONT SIZE=2><P ALIGN="RIGHT"> $11,339 </FONT></TD>


<TD WIDTH="3%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=28><P></P></TD>


<TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=28>


<FONT SIZE=2><P ALIGN="RIGHT"> $15,209 </FONT></TD>


</TR>


</TABLE>





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