924383--1/8/2007--AMERICAN_TECHNOLOGY_CORP

related topics

{stock, price, share}

{customer, product, revenue}

{product, candidate, development}

{regulation, government, change}

{property, intellectual, protect}

{control, financial, internal}

{acquisition, growth, future}

{product, market, service}

{stock, price, operating}

{product, liability, claim}

{personnel, key, retain}

{cost, regulation, environmental}

{operation, international, foreign}

{investment, property, distribution}

{regulation, change, law}

{financial, litigation, operation}

We have a history of net losses. We expect to continue to incur net losses and we may not achieve or maintain profitability. We may need additional capital for growth. Two related customers accounted for 40% of our total revenues for fiscal year 2006. We continue to be dependent on a few large customers. We must expand our customer base in order to grow our business. The growth of our Government and Military Group revenues is materially dependent on acceptance of our LRAD products by government, military and developing force protection and emergency response agencies. If these agencies do not purchase our LRAD products, our revenues will be adversely affected. 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. We may not be successful in obtaining the necessary licenses from the U.S. Federal government required for us to sell some of our products abroad. We are currently 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. Our products have never been produced in quantity, and we may incur significant and unpredictable warranty costs as these products are mass produced. We could incur charges for excess and obsolete inventory. We do not have the ability to predict future operating results. Our quarterly and annual revenues are likely to fluctuate significantly due to many factors, any of which could result in our failure to achieve our revenue expectations. Many potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete. Sound reproduction markets are subject to rapid technological change, so our success will depend on our ability to develop and introduce new technologies. Our competitive position will be seriously damaged if we cannot obtain patent protection for important differentiating aspects of our products or otherwise protect intellectual property rights in our technology. Our competitive position will be seriously damaged if our products are found to infringe on the intellectual property rights of others. Material weaknesses or deficiencies in our internal control over financial reporting could harm stockholder and business confidence on our financial reporting, our ability to obtain financing and other aspects of our business. Our HSS technology is subject to regulation by the Food and Drug Administration, which could lead to unanticipated expense or litigation. We may face personal injury and other liability claims that harm our reputation and adversely affect our sales and financial condition. Our international operations could be harmed by factors including political instability, natural disasters, fluctuations in currency exchange rates and changes in regulations that govern international transactions. The WEEE and RoHS directives in Europe may impact the cost of our products and/or our ability to sell products in Europe. Our inability to maintain or find collaborators and strategic alliance relationships in the future may inhibit our ability to develop our proprietary sound technologies and products. We rely on outside manufacturers and suppliers to provide a large number of components and sub-assemblies incorporated in our products and may rely on the complete production of our products by third parties in the future. 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. 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. Our success is dependent on the performance and integration of our executive team, and the cooperation, performance and retention of our executive officers and key employees. We may not address successfully the problems encountered in connection with any potential future acquisitions. Evolving regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty. Our equity financings impose certain liquidated damages that may impair our liquidity and ability to raise capital. We will become subject to these liquidated damages if we are not able to have a post-effective amendment to our existing registration statements effective on or before February 1, 2007. We will not be eligible to use short-form registration statements on Form S-3 for future financings until January 2008 absent a waiver of eligibility requirements from the SEC. If we are not current in our filings with the SEC, we will face several adverse consequences. Sales of common stock issuable on the exercise of outstanding options and warrants, may depress the price of our common stock. We may issue preferred stock in the future, and the terms of the preferred stock may reduce the value of your common stock. Our stock price is volatile and may continue to be volatile in the future.

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924383--1/8/2007--AMERICAN_TECHNOLOGY_CORP_/DE/