American Technology Corporation Announces $14 Million Institutional Financing; New Capital for Sales, Marketing and Deliveries of ATC`s Directed Sound Products

SAN DIEGO--(BUSINESS WIRE)----American Technology Corporation (ATC) (Nasdaq:ATCO) announced today an agreement for $14 million in institutional financing through the sale of common shares and warrants to funds managed by selected institutional investors.

The company expects to use the net proceeds from this institutional financing for marketing, sales and deliveries of its proprietary directed sound products including HSS(R) H450 highly directional sound systems, LRAD(TM), MRAD(TM), and thin panel NeoPlanar(R) speaker products, as well as to prepay its unsecured subordinated promissory notes issued in December 2004 and for general working capital.

The agreement provides, subject to standard closing conditions, for the issuance of 2,868,851 shares of the company`s common stock, and warrants to purchase an additional 1,581,919 shares of the company`s common stock. The shares of common stock are being issued at a price of $4.88 per share. The 717,213 ``A`` warrants have an exercise price of $6.36 per share and expire in July 2009. The 864,706 ``B`` Warrants have an exercise price of $7.23 per share and expire six months after registration of the underlying shares, as described below. If exercised, the warrants could generate up to an additional $10.8 million in proceeds to ATC. The company has agreed to file a registration statement covering the resale of any shares of common stock issued to investors at the expected closing of the financing, and upon the exercise of the warrants. The company`s Form 8-K, to be filed with the SEC, will provide a description of the other material terms of this transaction and copies of the executed documents.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy shares of the company`s common stock or warrants. The shares and warrants being sold to the investors, and the shares that may be issued to them upon exercise of the warrants, have not been registered under the Securities Act of 1933 or applicable state securities laws and may not be offered or sold in the United States or any state thereof absent registration under the Securities Act and applicable state securities laws or an applicable exemption from the registration of the Securities Act and applicable state laws. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

About American Technology Corporation

American Technology Corporation is Shaping the Future of Sound(R) by developing, manufacturing and globally distributing its proprietary directed sound technologies and products which include: the award-winning HSS(R) (HyperSonic(R) Sound technology), LRAD(TM) (Long Range Acoustic Device), NeoPlanar(R) planar magnetic technology, and others. The Company is establishing a strong portfolio of patents, trademarks, and intellectual property including over 215 U.S. and foreign patents and patent filings to date. For more information on the company and its technologies and products, please visit our web site at www.atcsd.com.