<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
Commission File Number 0-24248
AMERICAN TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 87-0361799
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
13114 Evening Creek Drive South, San Diego, California 92128
------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(858) 679-2114
--------------
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $.00001 par value
-------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding in 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
As of January 24, 2000, the aggregate market value of the Common Stock of the
Registrant held by non-affiliates of the Registrant was approximately $109
million.
The number of shares of Common Stock, $.00001 par value, outstanding on January
24, 2000, was 11,564,489.
<PAGE>
EXPLANATORY NOTES
This Amendment No. 1 on Form 10-K/A is being filed by American Technology
Corporation (the "Company") as an amendment to its Annual Report on Form 10-K
for the fiscal year ended September 30, 1999 to amend and restate in its
entirety Part III.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company are as follows:
NAME AGE POSITION AND OFFICES
- ---- --- --------------------
Cornelius J. Brosnan 52 Chairman of the Board of Directors,
President and Chief Executive Officer
Elwood G. Norris 61 Director and Chief Technology Officer
Richard M. Wagner 54 Director
David J. Carter 51 Director
O'Connell J. Benjamin 49 Director
Renee Warden 35 Chief Accounting Officer, Treasurer and
Secretary
Cornelius J. Brosnan was appointed a director of the Company in October
--------------------
1997. In July 1998 he was appointed Chairman of the Board of Directors,
President and Chief Executive Officer of the Company and commenced full time
duties in August 1998. From June 1997 to August 1998, he was Vice President of
Strategic Planning for Sprint PCS. From May 1995 to June 1997 he was Vice
President, Product Planning Center for Samsung North America. From 1987 to May
1995 he held various executive positions at AT&T, including serving as General
Manager of Cordless Telephones, New Business Development Director for Consumer
Products,
<PAGE>
Engineering Director for Interactive TV Services and most recently as
Program Director for Broadband Networks. Mr. Brosnan received a B.A. in
Political Science degree from Middlebury College in 1969.
Elwood G. Norris has been a director of the Company since August 1980.
----------------
He served as President of the Company from August 1980 to February 1994. He
currently manages the Company's research and development activities as Chief
Technology Officer. From 1988 to November 1999 he was a director and Chairman of
e.Digital Corporation ("e.Digital"), a public company engaged in electronic
product development, distribution and sales. He served as Chief Technology
Officer to e.Digital from October 1995 to November 1999. From 1988 to October
1995 he served as e.Digital's President and Chief Executive Officer. In January
1997, he was re-appointed as Chief Executive Officer of e.Digital and served in
that capacity until July 1998. From August 1989 to October 1999 he served as
director of Patriot Scientific Corporation, a public company engaged in the
development of microprocessor technology and digital modem products. He also
served as Chairman and Chief Executive Officer of Patriot until June 1994. From
June 1995 until June 1996 when he was re-appointed Chairman, Mr. Norris served
as temporary President and Chief Executive Officer of Patriot. He is an inventor
with over 20 U.S. patents, primarily in the fields of electrical and acoustical
engineering. He is the inventor of the Company's HyperSonic Sound, EPD
technology and other technologies. Mr. Norris devotes only part-time services to
the Company, approximating 30-35 hours per week.
Richard M. Wagner has served as a director of the Company since 1986
-----------------
and served as Secretary of the Company from February 1994 to March 1999. Since
1980, Mr. Wagner has been a self-employed real estate broker and agent. In 1986
he founded and has since operated The Mortgage Company and Scripps Escrow Co.,
which provide full-service real estate services. Mr. Wagner received a Masters
of Science degree from San Diego State University in 1974.
David J. Carter was appointed as a director of the Company in September
---------------
1998. Since January 1999, he has been Vice President of Copyright Clearance
Center, a copyright licensing service. From 1983 until April 1998, he was
employed by AT&T, with his last position as General Manager and Product
Development Vice President. He previously served in other positions at AT&T
including Business Development Vice President and Consumer Products Marketing
Vice President. Prior to his employment with AT&T, he served as a Marketing
Research Consultant and Managing Consultant - Marketing and Business Strategy
for General Electric Company. His career
<PAGE>
has included technical positions at Temple Barker & Sloane, Inc., Decision
Research Corp. and Johnson & Johnson. He obtained a B.S. in Mathematics in 1970
and a M.S. in Mathematical Statistics in 1973 from the University of
Massachusetts.
O'Connell J. Benjamin was appointed as a director of the Company in
---------------------
September 1998. For the past 25 years he has been employed with Bell
Laboratories and its parent, Lucent Technologies. He is currently Senior Vice
President at Lucent Digital Radio, a Lucent Technologies venture developing a
digital enhancement to analog radio broadcasting technology. He has served in a
variety of positions at Bell Laboratories, including Vice President of Telephone
Products Research and Development, Vice President of Wireless Technology, Vice
President of Customer Technical Support and Director of Cellular Telephones. He
received a B.S. (1973) and an M.S. (1975) in Electrical Engineering from the
Brooklyn Polytechnic Institute.
Renee Warden was appointed Chief Accounting Officer, Treasurer and
------------
Secretary of the Company in March 1999. From May 1993 until her promotion she
served as the Company's Accounting Manager. Since June 1997 she has also served
as Controller of e.Digital and she previously served as Accounting Manager for
e.Digital. Ms. Warden obtained a B.S. degree in business accounting from the
University of Phoenix in 1999. Ms. Warden devotes only part-time services to the
Company, approximating 25 hours per week.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Act")
requires the Company's officers, directors and persons who own more than 10% of
a class of the Company's securities registered under Section 12(g) of the Act to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of copies of such reports furnished to the
Company and written representations that no other reports were required during
the fiscal year ended September 30, 1999, the Company believes that all persons
subject to the reporting requirements pursuant to Section 16(a) filed the
required reports on a timely basis with the SEC, except (a) Cornelius J. Brosnan
filed late a Form 5 disclosing two transactions; (b) Elwood J. Norris filed late
a Form 5 disclosing one transaction; and (c) Richard M. Wagner filed late a Form
5 disclosing one transaction.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
There is shown below information concerning the compensation of the
Company's chief executive officer for the fiscal year ended September 30, 1999
and the one other executive officer of the Company whose salary and bonus
exceeded $100,000 during the fiscal year ended September 30, 1999 (each a "Named
Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------------------------- COMPENSATION
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
--------------------------- ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Cornelius J. Brosnan, ........ 1999 $250,663 -- -- 200,000 $ 32,161(1)
Chairman, President and CEO 1998 $ 32,308 $ 50,000 -- 300,000 --
1997 -- -- -- -- --
Elwood G. Norris, ............ 1999 $125,893 -- -- 21,000 --
Chief Technology Officer .. 1998 $101,538 $ 86,652(2) $ 973(3) -- --
1997 $ 24,453 -- $ 7,866(3) -- --
</TABLE>
(1) Represents bonus paid for relocation costs.
(2) Represents bonus applied to cancel note.
(3) Represents royalties paid.
<PAGE>
Except for stock options, discussed below, and stock bonuses discussed
above, no Named Executive Officer received any form of non-cash compensation
from the Company in the fiscal years ended September 30, 1999, 1998 or 1997, or
currently receives any such compensation, in excess of 10% of the amount of the
total amount of annual salary and bonus reported for the Named Executive Officer
above.
OPTION GRANTS
Shown below is certain information on grants of stock options for the
fiscal year ended September 30, 1999 to the Named Executive Officers.
OPTION GRANTS FOR FISCAL YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL RATES OF STOCK
SECURITIES OPTIONS GRANTED APPRECIATION (1)
UNDERLYING TO EMPLOYEES IN EXPIRATION --------------------
NAME OPTIONS GRANTED FISCAL YEAR EXERCISE PRICE DATE 5% 10%
---- --------------- ---------------- -------------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Cornelius J. Brosnan 100,000 22% $10.00 7/16/2003 $ 0(2) $ 0(2)
100,000 22% $10.00 7/16/2003 $ 0(3) $ 0(3)
Elwood G. Norris 21,000 5% $ 5.00 2/02/2004 $29,010 $64,104
</TABLE>
(1) Potential realizable value is calculated as the aggregate difference
between the market price of the Common Stock and the option exercise price
assuming that the stock price appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the option
term. These amounts are calculated based on the requirements promulgated by
the Securities and Exchange Commission and are not an estimate of future
stock price growth.
<PAGE>
(2) Options vest if and when the market price of the Company's Common Stock
equals or exceeds $25.00 per share for twenty consecutive trading days.
Options would have no value at assumed rates of stock price appreciation.
(3) Options vest if and when the market price of the Company's Common Stock
equals or exceeds $50.00 per share for twenty consecutive trading days.
Options would have no value at assumed rates of stock price appreciation.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information on unexercised options of the
Named Executive Officers at September 30, 1999:
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS HELD AT VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS
SEPTEMBER 30, 1999 AT SEPTEMBER 30, 1999 (1)
------------------------------------- -----------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Cornelius J. Brosnan 117,500 382,500 -- (2) -- (2)
Elwood G. Norris 287,000 14,000 $1,923,688 $32,375
</TABLE>
(1) Based on the last sale price at the close of business on September 30, 1999
of $7.3125 per share.
(2) All options were out-of-the-money at September 30, 1999.
LONG-TERM INCENTIVE PLANS
The Company does not have any stock appreciation rights plans in effect
and has no long-term incentive plans, as those terms are defined in Securities
and Exchange Commission regulations. During the fiscal year ended September 30,
1999, the Company did not adjust or amend the exercise price of stock options
awarded to the Named Executive Officers. The Company has no defined benefit or
actuarial plans covering any Named Executive Officer.
<PAGE>
EMPLOYMENT ARRANGEMENTS
Effective July 17, 1998 the Company entered into a three year
employment contract with Mr. Brosnan in his capacity Chairman of the Board of
Directors, President and Chief Executive Officer. The agreement provides for a
base salary of $20,000 per month, subject to future reviews. The agreement
provides that bonuses are to be determined and payable at the discretion of the
Board of Directors. The Company also pays limited automobile expenses to Mr.
Brosnan. The Company may terminate Mr. Brosnan's employment with or without
cause (as defined), but termination without cause (other than disability or
death) results in a severance payment equal to up to six months of Mr. Brosnan's
then monthly base salary. Likewise, upon a change in control (as defined in the
agreement), Mr. Brosnan may elect to terminate his employment and obtain a
payment equal to the greater of (i) the remaining months of the employment
agreement multiplied by the then base monthly salary, or (ii) twelve months of
Mr. Brosnan's then monthly base salary. Mr. Brosnan has agreed not to disclose
trade secrets, has agreed to assign inventions to the Company during employment
and has agreed to a two-year non-compete agreement. In connection with the
employment agreement, the Company granted Mr. Brosnan options to purchase up to
250,000 common shares at $8.50 per share, with 10,000 shares vesting on the date
of the grant and the balance vesting over 32 months commencing two months after
his full-time service with the Company began, subject to acceleration for
certain events. In connection with Mr. Brosnan's employment and move to the San
Diego area, the Company agreed to pay limited moving expenses and paid a $50,000
bonus in lieu of amounts forfeited by Mr. Brosnan with his previous employer.
Effective September 1, 1997 the Company entered into a three year
employment contract with Mr. Norris for his part-time services as Chief
Technology Officer. The agreement provides for a base salary of $10,000 per
month, to be adjusted by the Board of Directors subject to future reviews. The
agreement provides that Mr. Norris shall participate in bonus, benefit and other
incentives at the discretion of the Board of Directors. The Company may
terminate Mr. Norris' employment with or without cause (as defined), but
termination without cause (other than disability or death) results in a
severance payment equal to up to twelve months of Mr. Norris' then monthly base
salary and any bonus on an as if perfected basis. Likewise upon a change in
control (as defined in the agreement), Mr. Norris may elect to terminate his
employment and obtain a payment equal to the greater of (i) the remaining months
of the employment agreement multiplied by Mr. Norris' then base monthly salary
plus any bonus on an as if
<PAGE>
perfected basis, or (ii) twelve months of Mr. Norris' then monthly base salary.
Mr. Norris has agreed not to disclose trade secrets and has agreed to assign
certain inventions (as defined) to the Company during employment.
The Company is also obligated to pay to Mr. Norris a 1% royalty on all
sales of radio equipment based on the gross amount received by the Company less
returns and allowances pursuant to a September 3, 1985 royalty agreement.
Pursuant to an Addendum Agreement dated December 2, 1996, the Company is also
obligated to pay Mr. Norris a 2% royalty on gross revenues received by the
Company from certain of the Company's technologies.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company designated a Compensation Committee consisting of Cornelius
J. Brosnan, Richard M. Wagner and David J. Carter on October 30, 1999. Prior to
such date, the Board of Directors as a whole performed the role of a
compensation committee. Prior to October 30, 1999, Cornelius J. Brosnan, Elwood
G. Norris and Richard M. Wagner, each officers or employees of the Company for
all or a portion of the fiscal year ended September 30, 1999, participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation.
Certain conflicts of interest now exist and will continue to exist
between the Company and certain of its officers and directors due to the fact
that they have other employment or business interests to which they devote some
attention and they are expected to continue to do so. The Company has not
established policies or procedures for the resolution of current or potential
conflicts of interest between the Company and its management or
management-affiliated entities. There can be no assurance that members of
management will resolve all conflicts of interest in the Company's favor. The
officers and directors are accountable to the Company as fiduciaries, which
means that they are legally obligated to exercise good faith and integrity in
handling the Company's affairs. Failure by them to conduct the Company's
business in its best interests may result in liability to them.
During the fiscal year ended September 30, 1999, Elwood G. Norris
served on the board of directors of e.Digital. Mr. Norris resigned from the
board of e.Digital effective November 3, 1999. The board of directors of
e.Digital performed the function of a compensation committee, and Mr. Norris,
also an executive officer of e.Digital until November 1999, served on the
Company's Board of Directors, which performed the function of a compensation
committee. Renee Warden, the Company's Chief Accounting Officer, Treasurer and
Secretary, also
<PAGE>
serves as the chief accounting officer of e.Digital. See Item 13 "Certain
Relationships and Related Transactions" concerning other relationships between
the Company and e.Digital.
DIRECTOR COMPENSATION
No direct or indirect remuneration has been paid or is payable by the
Company to the directors in their capacity as directors during fiscal 1999. The
Company does not anticipate paying during the fiscal year ending September 30,
2000 any direct or indirect remuneration to any directors of the Company in
their capacity as directors other than in the form of reimbursement of expenses
of attending directors' or committee meetings. However, directors have received
in the past, and may receive in the future, stock option grants.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
ownership of the Company's stock as of January 24, 2000 by: (i) each director;
(ii) each of the executive officers named in the Summary Compensation Table;
(iii) all executive officers and directors of the Company as a group; and (iv)
all those known by the Company to be beneficial owners of more than five percent
of any class of the Company's voting stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT & NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
-------------- ------------------- ------------------------ -----
<S> <C> <C> <C>
Common Elwood G. Norris 3,228,634 (2) 27.2%
13114 Evening Creek Drive South
San Diego, California 92128
Common Cornelius J. Brosnan 172,500 (3) 1.5%
13114 Evening Creek Drive South
San Diego, California 92128
Common Richard M. Wagner 74,600 (4) *
13114 Evening Creek Drive South
San Diego, California 92128
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT & NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
-------------- ------------------- ------------------------ ----------
<S> <C> <C> <C>
Common O'Connell J. Benjamin 20,000 (3) *
13114 Evening Creek Drive South
San Diego, California 92128
Common David J. Carter 20,000 (3) *
13114 Evening Creek Drive South
San Diego, California 92128
Series B Entities Affiliated with Granite Capital LP 148,860(5) 62.7%
126 E. 56th Street, 25th Floor
New York, NY 10022
Series B Strategic Restructuring Partnership 20,000 8.4%
1114 Avenue of the Americas
New York, NY 10036
Common All Directors and Executive
Officers as a Group (6 Persons) 3,518,034 (6) 29.1%
</TABLE>
* Less than 1%.
- --------------------------------
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Percentage of beneficial ownership is based on 11,564,489
shares of Common Stock and 237,260 shares of Series B Preferred Stock
outstanding on January 24, 2000.
(2) Includes 2,934,634 shares held by a family trust for which Mr. Norris may
be deemed the beneficial owner and 294,000 Common shares issuable upon the
exercise of outstanding stock options within 60 days of January 24, 2000.
<PAGE>
(3) Consists of Common shares issuable upon the exercise of outstanding stock
options within 60 days of January 24, 2000.
(4) Includes 30,000 Common shares issuable upon the exercise of outstanding
stock options within 60 days of January 24, 2000.
(5) Represents 100,000, 3,600, 16,000, 350 and 28,850 shares of Series B
Preferred stock held by Granite Capital L.P., Granite Capital LP II,
Granite Capital Overseas, Ermitage Granite Fund Ltd. and Grannum Value
Fund, respectively (collectively, the "Granite Entities"). Walter F.
Harrison, III and Louis M. Eisenberg are general partners of Granite
Capital, LLC, Granite Capital International, LLC, and Grannum Capital
Management, LLC, which entities share voting and investment power over all
shares owned by the Granite Entities and therefore may be deemed to be
beneficial owners of such shares. Each of Granite Capital L.P., Granite
Capital LP II, Granite Capital Overseas, Ermitage Granite Fund Ltd. and
Grannum Value Fund may be issued up to 100,000, 3,660, 16,000, 350, and
28,850, respectively, of shares of Common Stock upon the exercise of
outstanding warrants that are exercisable within 60 days of January 24,
2000.
(6) Includes 538,800 Common shares issuable upon the exercise of outstanding
stock options within 60 days of January 24, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On July 11, 1997, the Company entered into a three-year lease. To meet
the credit requirements of the landlord, both the Company and e.Digital entered
into a joint lease agreement for approximately 12,925 square feet with aggregate
monthly payments of $13,830 inclusive of utilities and costs. The Company is
occupying approximately 7,500 square feet of the jointly leased office space
with its share of monthly payments being approximately $8,000. Accordingly, the
Company could become obligated for the entire lease should e.Digital default on
its share of payments thereon. Elwood G. Norris, a director and Chief Technology
Officer of the Company, was a director and Chief Technology Officer of e.Digital
until November 1999. He is the owner of less
<PAGE>
than 1% of e.Digital's common shares. Renee Warden, Chief Accounting Officer,
Treasurer and Secretary of the Company, is Controller of e.Digital and the owner
of less than 1% of its common shares.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN TECHNOLOGY CORPORATION
January 28, 2000
By: /s/ CORNELIUS J. BROSNAN
--------------------------------
Cornelius J. Brosnan
Chairman, President and Chief
Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Date: January 28, 2000 By /s/ CORNELIUS J. BROSNAN
------------------------
Cornelius J. Brosnan, Chairman,
President and Chief Executive
Officer and Director
(Principal Executive Officer)
Date: January 28, 2000 By /s/ RENEE WARDEN
----------------
Renee Warden, Chief Accounting
Officer, Treasurer and
Secretary
(Principal Financial and
Accounting Officer)
Date: January 28, 2000 By /s/ ELWOOD G. NORRIS
--------------------
Elwood G. Norris
Chief Technology Officer and
Director
Date: January 28, 2000 By /s/ RICHARD M. WAGNER
---------------------
Richard M. Wagner
Director
Date: January 28, 2000 By /s/ O'CONNELL J. BENJAMIN
-------------------------
O'Connell J. Benjamin
Director
Date: January 28, 2000 By /s/ DAVID J. CARTER
-------------------
David J. Carter
Director
