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<SEC-DOCUMENT>0001181431-07-009711.txt : 20070208
<SEC-HEADER>0001181431-07-009711.hdr.sgml : 20070208
<ACCEPTANCE-DATETIME>20070208171937
ACCESSION NUMBER:		0001181431-07-009711
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20070208
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070208
DATE AS OF CHANGE:		20070208

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:		07593588

	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>rrd146371.htm
<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>

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<b>Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 </b></font></div>

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<b>Date of Report (Date of earliest event reported):&nbsp;&nbsp;02/08/2007 </b></font></div>




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<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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</td>
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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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<div Align="center"><font Face="times New Roman" Size="2" Color="#000000"><b>(IRS Employer</b></font>
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<b>incorporation)</b></font>
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<b>Identification No.)</b></font>
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<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>
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<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>

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On February 8, 2007, American Technology Corporation issued a press release announcing financial results for its quarter ended December 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.</font>
</div>

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<b>Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits</b></font>
</div>

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</div>

<div  align="left" Style="text-indent:4%"><font Face="times New Roman" Size="2" Color="#000000">
(d) Exhibits<p>Exhibit No.&nbsp;&nbsp;&nbsp; Description</div><div align="left" style="text-indent:4%">99.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Press Release dated February 8, 2007</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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	<td Valign="top" Colspan="3" Width="53%"> <div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000"></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>
	</td>
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	</font>
	</div>
	</td>
	<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>
</tr>
<tr><td>&nbsp;</td></tr>
<tr><td>&nbsp;</td></tr>
<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: February 08, 2007</font>
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	</td>
	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font>
	</td>
	<td> <font Size="1">&nbsp;</font>
	</td>
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	</td>	<td Valign="top" Align="center" Width="3%">
	<div Align="center"><font Face="times New Roman" Size="2" Color="#000000">
	By:</font>
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	</td>
	<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;Thomas R. Brown</font>
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	</td>
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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">
	Thomas R. Brown</font>
	</div>
	</td>
</tr>

<tr>
	<td> <font Size="1">&nbsp;</font></td>
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	<td Valign="bottom" Width="53%">
	<div><font Face="times New Roman" Size="2" Color="#000000">President, Chief Executive Officer and Interim Chief Financial Officer</font>
	</div>
</td>
</tr>
<tr><td>&nbsp;</td></tr>
<tr><td>&nbsp;</td></tr>



</table></div>





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<b>Exhibit Index </b></font>
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	<b>Exhibit&nbsp;No.</b></font>
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	</td>
	<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>
	</div>

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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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	<div><font Face="times New Roman" Size="2" Color="#000000">
	Press Release dated February 8, 2007</font>
	</div>
		</td>
</tr>





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</body></html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>rrd146371_18326.htm
<DESCRIPTION>PRESS RELEASE DATED FEBRUARY 8, 2007
<TEXT>
<HTML>
<HEAD>
<TITLE>DRAFT 1: 022304</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">
<B><P>FOR IMMEDIATE RELEASE&#9;&#9;&#9;&#9;&#9;&#9;&#9;</P>
</B>
<B><I><P>&#9;&#9;</P>
</I><FONT SIZE=4><P ALIGN="CENTER">AMERICAN TECHNOLOGY REPORTS 104% INCREASE</P>
<P ALIGN="CENTER"> IN YEAR OVER YEAR FIRST QUARTER RESULTS</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Strong LRAD&reg; Sales Drive Revenue Growth</P>
<P>&nbsp;</P>
</FONT><P>SAN DIEGO, CA, February 8, 2007 - American Technology Corporation (ATC) (NASDAQ: ATCO)</B>, a leading innovator and producer of commercial and military directed sound products and solutions<FONT FACE="Arial" SIZE=2>, </FONT>today reported results for its first fiscal 2007 quarter ended December 31, 2006. </P>
<P>ATC reported revenues for the first quarter of $3.90 million, a 104% increase from $1.92 million in revenues for the same quarter of last fiscal year. Revenues increased due to sales of LRAD products to a growing number of customers. The marketing efforts of the Company's enhanced sales force, successful product deployments and extensive product demonstrations have contributed to increased market awareness and customer acceptance of ATC's suite of LRAD products. </P>
<P>Gross profit for the quarter ended December 31, 2006 was $1.96 million, or 50% of revenues, compared to $1.06 million, or 56% of revenues, for the same period ended December 31, 2005. The absolute increase in gross profit was principally the result of the increased sales of LRAD products and the decrease in gross profit percentage was primarily the result of product mix. </P>
<P>The operating loss for the first quarter of fiscal 2007 was $597,000, a significant improvement compared to the operating loss of $1.88 million for the prior year's first quarter. The reduced operating loss was due to higher revenues and reduced operating costs. The net loss for the quarter ended December 31, 2006 was $514,000 or $(0.02) per share, compared to a net loss of $771,000 or $(0.03) per share for the same period ended December 31, 2005. The net loss for the first quarter of fiscal 2006 included recognition of a non-cash gain on derivative revaluation of $1.0 million.</P>
<P>Operating expenses decreased from $2.94 million for the quarter ended December 31, 2005 to $2.55 million for the same period ended December 31, 2006. The $2.55 million in operating expenses included $426,000 of legal, accounting and consulting costs associated with a voluntary review of historical stock option grants and the related restatement of financial statements for fiscal years 2005 and 2004 including 2003 and 2002 financial data and certain adjustments for 1999-2001. Non-cash stock-based compensation expense included in operating expenses and cost of sales was $151,000 and $188,000 for the first quarter of fiscal 2007 and 2006, respectively.</P>
<P>&quot;Even with the costs of the historical stock option review, we reported a substantial reduction in operating and net loss in our most recent quarter,&quot; said Tom Brown, president and chief executive officer of American Technology Corporation. &quot;Strong LRAD sales, consolidation of facilities and cost control measures resulted in improved revenues and operating results.&quot; </P>
<P>&quot;We are making progress on the major initiatives announced last September,&quot; continued Brown. &quot;Through deploying an enhanced national and international direct sales force we are experiencing greater demand from large commercial and defense-related entities to integrate LRAD's powerful directed sound capabilities into their programs and systems. Also, we expect to realize improved product margins in upcoming quarters through the implementation of the cost reductions made to our HSS&reg;, LRAD and NeoPlanar&reg; product lines.&quot; </P>
<P>&quot;We expect continued sales growth from our LRAD suite of products throughout this year,&quot; concluded Brown. &quot;We also expect improved HSS sales due to the timing of anticipated rollouts of previously announced and new digital signage installations.&quot; </P>
<FONT FACE="Arial" SIZE=2>
</FONT><B><FONT SIZE=3><P>About American Technology Corporation</P>
</B><P>American Technology Corporation provides directed audio solutions that place clear, highly intelligible sound exactly where needed. ATC's HyperSonic&reg; Sound, NeoPlanar&reg; and Long Range Acoustic Device (LRAD&reg;) product lines make up the core of an expanding portfolio of directed sound products and technologies. For more information about ATC and its directed sound solutions please visit the company's web site at <B>www.atcsd.com.</B> </P>
</FONT>
<B><FONT SIZE=2><P>Safe Harbor statement under the Private Securities Litigation Reform Act of 1995:</B> This press release contains forward-looking statements that reflect our current view with respect to future events and performance. These statements are forward-looking statements and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on current information and expectations, and involve a number of risks and uncertainties.  Actual results may differ materially from those projected in such statements due to various factors. More information about potential factors that could affect our business and financial results is included in the Form 10-K for the fiscal year ended September 30, 2006 under the heading "Item 1A - Risk Factors."  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are quali
fied in their entirety by this cautionary statement, and we undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date any such statement is made.</P>
</FONT>
<P>FOR FURTHER INFORMATION CONTACT:</P>
<P>Investor Relations:&#9;&#9;&#9;&#9;&#9;</P>
<P>Robert Putnam&#9;&#9;&#9;&#9;&#9;</P>
<P>(858) 676-0519&#9;&#9;&#9;&#9;&#9;</P>
<P>robert@atcsd.com&#9;</P>
<FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
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<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=619>
<TR><TD VALIGN="BOTTOM" COLSPAN=4 HEIGHT=24>
<B><P ALIGN="CENTER"><A NAME="RANGE!A1:D33">American Technology Corporation </A></B></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=4 HEIGHT=20>
<B><P ALIGN="CENTER"> Condensed Statements of Operations</B></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=4 HEIGHT=24>
<B><P ALIGN="CENTER">(000's omitted except per share amounts)</B></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=4 HEIGHT=24>
<B><P ALIGN="CENTER">(Unaudited)</B></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=33><P></P></TD>
<TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=33>
<FONT SIZE=2><P ALIGN="CENTER">For the three months ended</P>
<P ALIGN="CENTER"> December 31, </FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">2006</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">2005</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>Total revenues</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">3,904</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">$1,916</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>Cost of revenues</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1,948 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 852</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=32>
<B><FONT SIZE=2><P>Gross profit</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=32>
<FONT SIZE=2><P ALIGN="RIGHT">1,956 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=32><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=32>
<FONT SIZE=2><P ALIGN="RIGHT">1,064</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<B><FONT SIZE=2><P>Operating expenses:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>  Selling, general and administrative</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2,012 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2,375 </FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>  Research and development</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">541 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 566 </FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>Total operating expenses</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2,553 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 2,941 </FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>Loss from operations</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> (597)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> (1,877)</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<B><FONT SIZE=2><P>Other income (expense):</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>  Interest income</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 116 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">74</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>  Interest and finance expense</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">(33) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>  Unrealized gain (loss) on derivative revaluation</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1,032</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P>Total other income (expense)</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">83</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1,106</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=21>
<B><FONT SIZE=2><P>Net loss </B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT"> $(514)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT"> $(771)</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=28>
<B><FONT SIZE=2><P>Net loss per share of common stock - basic and diluted</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=28>
<FONT SIZE=2><P ALIGN="RIGHT"> $(0.02)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=28><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=28>
<FONT SIZE=2><P ALIGN="RIGHT"> $(0.03)</FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=28>
<B><FONT SIZE=2><P>Average weighted number of common shares outstanding</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=28>
<FONT SIZE=2><P ALIGN="RIGHT">30,089,640</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=28><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=28>
<FONT SIZE=2><P ALIGN="RIGHT"> 24,302,848 </FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
<FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=2105>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=12>
<FONT SIZE=2><P><A NAME="RANGE!A1:D35">&nbsp;</A></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=12>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=12>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=12><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=12>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=16>
<B><P ALIGN="CENTER">American Technology Corporation </B></TD>
<TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=20>
<B><P ALIGN="CENTER">Condensed Balance Sheets</B></TD>
<TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=20>
<B><P ALIGN="CENTER">(000's omitted except per share amounts)</B></TD>
<TD WIDTH="29%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=20>
<B><P ALIGN="CENTER">(Unaudited)</B></TD>
<TD WIDTH="29%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<P ALIGN="CENTER">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<P ALIGN="CENTER">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">December 31,</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<P ALIGN="CENTER">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<P ALIGN="CENTER">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">2006</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">2006</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>ASSETS</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Current Assets:</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>  Cash and cash equivalents</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $8,567 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $9,896 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>  Accounts Receivable</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2,047</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 2,055 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>  Inventories, net of $24 and $12 reserve for obsolescence</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">4,734 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 4,450 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>  Prepaid expenses and other</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">203</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 139 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Total current assets</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">15,551</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 16,540 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Equipment</B>, net</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">615</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 694 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Patents, net</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1,394</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1,416</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Long term deposits</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">58 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">58</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=22>
<B><FONT SIZE=2><P>Total assets</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=22>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=22>
<FONT SIZE=2><P ALIGN="RIGHT"> $17,618 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=22><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=22>
<FONT SIZE=2><P ALIGN="RIGHT"> $18,708 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>
<B><FONT SIZE=2><P>LIABILITIES AND STOCKHOLDERS' EQUITY</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Current Liabilities:</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P> Accounts payable</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $1,750 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $1,904 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P> Accrued liabilities</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1,361</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 1,978 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Total current liabilities</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 3,111 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 3,882 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=21>
<B><FONT SIZE=2><P>Long-Term Liabilities:</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=21>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=21>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=21><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=21>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=2><P>8% Unsecured Subordinated Promissory Notes, net of $743,977</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff">&nbsp;</TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff">
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=2><P>  and $-0- debt discount</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<FONT SIZE=2><P ALIGN="RIGHT"> - </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff">&nbsp;</TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff">
<FONT SIZE=2><P ALIGN="RIGHT"> - </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>Extended Warranty</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>Derivative warrant instrument</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">-- </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> 1,221 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<B><FONT SIZE=2><P>Total liabilities</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">3,113 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5,105 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>
<B><FONT SIZE=2><P>Total stockholders' equity</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">14,505 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=20><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT"> 13,603 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=28>
<B><FONT SIZE=2><P>Total liabilities and stockholders' equity</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=28>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=28>
<FONT SIZE=2><P ALIGN="RIGHT"> $17,618 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=28><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=28>
<FONT SIZE=2><P ALIGN="RIGHT"> $18,708 </FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 BGCOLOR="#ffffff" HEIGHT=16>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=16><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=16><P></P></TD>
</TR>
</TABLE>
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