ATCO's LETTER TO SHAREHOLDERS
The following is a direct communication from the Chairman/CEO and the President of American Technology Corporation (NASDAQ: ATCO).
San Diego, California
August 20, 2002
To the Shareholders of American Technology Corporation:
We are pleased to provide the following update on our products and our business.
HSS®
After six years of vigorous research & development and scores of patent filings, the world's only high-performance, economical, patent-protected parametric speaker system is shipping. That's HSS. Our expectations of initial market acceptance have been exceeded. Evaluation orders of real-time, production quality HSS product are being shipped to companies worldwide involved in retailing, point-of-purchase displays, museums, trade show booths, law enforcement, TV stations, expositions, transportation, government and military as well as other business sectors too numerous to mention. For example, in July, we sold and installed HSS systems for evaluation into one of the world's largest retailers. Based on early results, we expect evaluation orders to turn into company-wide installations that will bring significant sales and national exposure to our company and our technology.
In part due to our making significant performance improvements and cost reductions we deliberately slowed production in July in order to fully implement these changes. They are now fully implemented resulting in a sound output increase of more than 6db (to the layman that's more than 200%) and a greater than $65 per unit cost savings at the manufacturing level. Production rates should increase rapidly.
To date, we do not see competition for HSS products. This is based on:
1) The substantial protection afforded the Company by our issued and pending patents in the United States and other countries around the world.
2) Independent tests performed by qualified parametric speaker experts.
3) Customer reaction.
4) Pricing of HSS systems for well under $1,000 in any quantity while maintaining high margins across the board. This has been important in accelerating requests from major brands interested in the inclusion of HSS into consumer electronic products, automobiles, and other high volume areas.
NeoPlanar®
Harman Motive, a division of Harman International, is continuing their work towards the manufacture of our thin, high-output speakers for the OEM automobile market. We also are working with two well known home audio brands planning the introduction of NeoPlanar based speakers lines next year. We are in the process of scaling up NeoPlanar production with our manufacturing partner, HST, Inc., for several products.
PureBass®
In association with Amtec Manufacturing we are close to receiving significant PureBass subwoofer orders from globally recognized audio companies. With its unique cabinet construction, acoustic filters and vent configuration, our patented PureBass technology offers low distortion and accurate, seamless transition with upper range speakers.
Military and Government
NeoPlanar speakers designed specifically for the USS Carl Vinson Aircraft Carrier are complete and scheduled for installation per the terms of one of our contracts with Bath Iron Works, a division of General Dynamics. We believe this is the beginning of many military contracts for the installation of NeoPlanar speakers in facilities, vehicles and vessels throughout multiple branches of our armed services.
Our HSS and NeoPlanar military and government-related business is experiencing rapid maturation due to favorable response from demonstrations and field tests. We expect to announce additional HSS and NeoPlanar contracts and/or sales to the government/military this calendar year. We are seeking further government funding for research and development of our high-intensity non-lethal acoustic weapon. In the last 30 days, our non-lethal weapon has been successfully tested in open-field conditions at two military bases.
Retail Products
Due to the increasing acceptance and success of HSS as well as the growth we expect from our proprietary technologies, we are phasing out our retail products division (miniature radio sales) and are re-deploying those resources to maximize sales, customer support service and to give greater internal focus to our own technologies. We expect to close out remaining inventory related to this division and fully integrate these resources into our audio products division before the end of the year.
Media Relations
In the past 60 days, our HSS and non-lethal weapon technologies have been covered by a host of national and local radio and television stations as well as several print publications including:
ABC (World News Tonight with Peter Jennings) WVTM (NBC - Birmingham)
Fox News WCPO (ABC - Cincinnati)
CNN WKRN (ABC - Nashville)
NBC (Nightly News) KNX (Radio - Los Angeles)
NBC (Early Today) WBAL (Radio - Baltimore)
MSNBC The Alex Jones Show (a nationally syndicated radio show)
Tech TV Design Engineering
KNTV (NBC - San Jose) Focus Magazine
KPRC (NBC - Houston) The Los Angeles Times
KXAS (NBC - Dallas) Ottawa Dispatch
KCRA (NBC - Sacramento) Popular Science Magazine
KNSD (NBC - San Diego) Associated Press
WFMJ (NBC - Youngstown) Tech Edge/PC Upgrade
WLW (NBC - Cincinnati) Newsweek Magazine, August 5, 2002 issue (2 full pages)
WVIT (NBC - Hartford)
We expect this level of coverage to continue as well as broaden into trade magazines and publications specifically targeting retailers, sound contractors, installers and other specific industry groups.
With expanding press and media coverage coupled with the fact that HSS, NeoPlanar and PureBass technologies are all in production, the world is rapidly recognizing that we are truly Shaping The Future Of Sound.
Sincerely,
Elwood G. Norris Terry Conrad
Chairman & CEO President |
