Current Report
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the Securities Exchange Act
of 1934
Date
of Report (Date of Earliest Event Reported): July
19, 2005 (July 14, 2005)
AMERICAN
TECHNOLOGY CORPORATION
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
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000-24248
|
87-0361799
|
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification
No.)
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|
13114
Evening Creek Drive South, San Diego,
California
|
92128
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|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant’s
Telephone Number, Including Area Code: (858)
679-2114
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 (see General Instruction A.2. below):
| ¨ |
Written
communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ¨ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |
| ¨ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Item
1.01. Entry Into a Material Definitive
Agreement.
On
July
14, 2005, we entered into a Securities Purchase Agreement with selected
institutional investors pursuant to which we issued and sold 2,868,851 shares
of
our common stock at a purchase price of $4.88 per share. The financing closed
on
July 18, 2005. In connection with this financing, we issued two warrants to
each
investor. The “A” Warrants are exercisable for an aggregate of 717,213 shares of
common stock at an exercise price of $6.36 per share. These warrants are
exercisable from January 18, 2006 until July 18, 2009. The “B” Warrants are
exercisable for an aggregate of 864,706 shares of common stock at an exercise
price of $7.23 per share. These warrants are exercisable from the date the
registration statement referred to below becomes effective until the date six
months after that effective date.
The
shares and warrants were offered, issued and sold to the following institutional
investors, whom we may refer to below collectively as the investors:
(i) Special Situations Fund III, L.P., (ii) Special Situations
Private
Equity Fund, L.P., (iii) Special Situations Technology Fund, L.P.,
(iv) Special Situations Technology Fund II, L.P., (v) SDS Capital
Group SPC, Ltd., (vi) Iroquois Master Fund Ltd, (vii) Pequot
Scout
Fund, L.P., and (viii) Pequot Mariner Master Fund, L.P.
We
received gross proceeds from this financing of approximately $14 million. We
paid a placement fee of 5% of the gross proceeds to Olympus Securities, LLC
pursuant to an Engagement Letter dated July 15, 2005. We expect to use the
net
proceeds of the financing for working capital purposes and to discharge the
approximately $2.0 million principal balance of and accrued interest on our
8%
unsecured subordinated promissory notes due December 31, 2006. Some directors,
officers, employees and consultants of our company, including a trust affiliated
with our chairman, beneficially own notes representing approximately half of
this principal balance.
We
offered and sold the shares and warrants without registration under the
Securities Act of 1933 to a limited number of qualified institutional buyers
and
other institutional accredited investors in reliance upon the exemption provided
by Rule 506 of Regulation D thereunder. The shares and warrants may not be
offered or sold in the United States in the absence of an effective registration
statement or exemption from the registration requirements under the Securities
Act. An appropriate legend was placed on the shares and the warrants issued,
and
will be placed on the shares issuable upon exercise of the warrants, unless
registered under the Securities Act prior to issuance.
In
connection with this financing, we entered into a Registration Rights Agreement
with the investors, pursuant to which we agreed to prepare and file, within
30
days following the issuance of the securities, a registration statement covering
the resale of the shares of common stock sold in the financing as well as the
shares of common stock issuable upon the exercise of the warrants. If we fail
to
have the registration statement declared effective within 90 days following
the
date of the issuance of the securities, or the purchasers are otherwise unable
to re-sell their shares purchased in the financing or upon exercise of their
warrants, we will be obligated to pay liquidated damages to the purchasers
in
the amount of 0.5% per month until 180 days after the closing, and 1% per month
thereafter.
We
have
agreed in the Securities Purchase Agreement to submit the financing to a vote
of
our stockholders for approval prior to June 2006. We have also agreed in the
Securities Purchase Agreement that, subject to certain exceptions, if during
the
next year we sell shares of our common stock, or options or warrants to purchase
shares of our common stock, in a private placement or in a public offering
using
a Form S-3, the purchasers will have certain rights of first refusal to
participate in the financing. We have also agreed in the agreements to indemnify
the purchasers for certain losses.
The
“A”
Warrants and “B” Warrants contain provisions which would adjust the exercise
price, and in inverse proportion adjust the number of shares subject to the
warrant, in the event we pay or effect stock dividends or splits, or in the
event we sell shares of our common stock at a purchase price, or options or
warrants to purchase shares of our common stock having an exercise price, less
than the exercise price of the applicable warrant. The “A” Warrants also feature
a net exercise provision, which enables the holder to choose to exercise the
warrant without paying cash by surrendering shares subject to the warrant with
a
market value equal to the exercise price. This right is available only if a
registration statement covering the shares subject to the “A” Warrants is not
available after it is initially declared effective. We have the right to redeem
the “B” Warrants if the closing price of the shares of our common stock is
$10.00 or greater for 15 consecutive trading days and the holder does not
exercise within 20 days after we give notice of redemption.
As
a
result of the anti-dilution provisions contained in the warrants we issued
in
July 2003, this financing will, at the option of the various holders of the
outstanding warrants, adjust the exercise price of the warrants from $6.75
to
$6.55. Those warrants will expire on July 10, 2007 and are exercisable for
an
aggregate of 272,729 shares of our common stock.
A
complete copy of each of the Securities Purchase Agreement, the Registration
Rights Agreement, the Form of Warrant-A, the Form of Warrant-B, the Engagement
Letter and the related press release of the Company describing the private
placement financing, are filed as Exhibits 99.1, 99.2, 99.3, 99.4, 99.5 and
99.6, respectively, and are incorporated herein by reference. The summary of
the
transaction set forth above does not purport to be complete and is qualified
in
its entirety by reference to such exhibits.
This
Current Report on Form 8-K is neither an offer to sell nor a solicitation of
an
offer to buy any of these securities. This portion of the report is being filed
pursuant to and in accordance with Rule 135c under the Securities
Act.
Item
3.02. Unregistered Sales of Equity Securities
On
July
18, 2005, we issued and sold 2,868,851 shares of our common stock, and warrants
to purchase an additional 1,581,919 shares of our common stock, to selected
institutional investors. For further information about the terms of this
financing, please see the disclosure under Item 1.01 above.
Item
9.01. Financial Statements and Exhibits
(c) Exhibits
99.1
Securities
Purchase Agreement, dated July 14, 2005
99.2
Registration
Rights Agreement, dated July 14, 2005
99.3
Form
of
Warrant-A, issued July 18, 2005
99.4
Form
of
Warrant-B, issued July 18, 2005
99.5
Engagement
Letter, dated July 15, 2005
99.6
Press
release, released July 18, 2005
SIGNATURES
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.
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AMERICAN
TECHNOLOGY CORPORATION |
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| Date: July
19, 2005 |
By: |
/s/ MICHAEL
A. RUSSELL |
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Michael
A. Russell
Chief Financial Officer |