American Technology Corporation Awarded $480,000 Contract to Deliver Long Range Acoustic Devices to U.S. Navy 5th Fleet.

SAN DIEGO -- Company Provides End-of-Quarter Revenue Guidance

American Technology Corporation (ATC) (NASDAQ:ATCO) announced today it has been awarded a $480,000 contract by the U.S. Navy for delivery of Long Range Acoustic Devices (LRAD(TM)) for use by the 5th Fleet.

LRAD is a breakthrough long-range hailing and warning, directed acoustic device designed to communicate with authority and exceptionally high intelligibility in a 15-30-degree beam. Positioned in the bullnose or bridge wing of either a Navy or Coast Guard patrol craft, LRAD can issue a verbal challenge with instructions in excess of 500 hundred meters in a focused beam, and follow up with a warning tone to influence behavior or determine intent. Effective ranges of over 1,000 meters are possible in ship-to-ship applications.

This is the third order for the 5th Fleet, the first having been placed in June 2004. According to officials from U.S. Navy Central Command, "LRAD has been deployed on patrol craft to enhance the Maritime Interdiction Operations (MIO) within the US NAVCENT Area of Influence (AOI). Recently the deployed LRADs were directed at over 400 potential vessel threats in a two-week period and resulted in the subject vessels altering course and changing speed over 80% of the time at ranges between 100 and 700 meters. LRAD significantly enhances interdiction efforts and most importantly provides a safe standoff distance for the young sailors of the U.S. Navy and the U.S. Coast Guard as they perform their vital duty of protecting shipping, oil terminals, and combating waterborne terrorism in the gulf. LRAD is a force multiplier that allows the operators to determine intent while protecting valuable assets."

"LRAD is generating an increasing number of successful performance reports from the field regarding its daily use in communicating, warning and determining intent," remarked Carl Gruenler, ATC's vice president for military and government operations. "LRAD is viewed as a revolutionary and enabling technology with the potential to be included in a host of major force protection systems worldwide. While LRAD can be scaled via volume control to each particular situation, causing no harm to those who heed the verbal instructions, it is powerful enough to be effective over long distances and positively influence behavior. With patents pending, our proprietary long-range hailing and warning device is becoming known around the world as The Sound of Force Protection(TM)."

"We are seeing a strong interest from several government and military agencies for additional LRAD purchases and deployments to fulfill identified critical needs; commercial entities are also expressing interest for short-term deployment," said Kalani Jones, president and chief operating officer of ATC.

Jones continued: "Due primarily to the nature of the Government's year-end procurement process, which delayed anticipated orders, we believe our revenue for the quarter ending September 30, 2004, will be approximately $1.2 million. We expect to receive orders from, and ship to, the U.S. Navy, U.S. Army and new commercial customers next quarter (fiscal Q1 2005). ATC has positioned its inventory so that it can immediately deliver on these and other expected emerging LRAD orders.

"Based primarily on the strong reception LRAD is receiving from government, military and homeland security agencies, we expect strong revenue growth in fiscal Q1 and 2005," concluded Jones.

About American Technology Corporation

American Technology Corporation is Shaping the Future of Sound(R) by developing, manufacturing and globally distributing its proprietary sound technologies and products, which include: the award-winning HSS(R) (HyperSonic(R) Sound Technology), NeoPlanar(R) Technology, LRAD(TM) (Long Range Acoustic Device), PureBass(R) Sub-Woofer Technology and Stratified Field(R) Technology (SFT(R)). The Company is establishing a strong portfolio of patents, trademarks and intellectual property, including over 140 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.

About Non-Executive Compensation

In accordance with NASDAQ Marketplace Rule 4350, as amended, American Technology Corporation granted inducement stock options to certain of its employees on September 21, 2004.

These options were granted without stockholder approval pursuant to NASDAQ Marketplace Rule 4350(i)(1)(A)(iv) under the following terms: An aggregate of 47,000 non-qualified stock options were granted to five non-executive employees with an exercise price equal to the fair market value on the grant date. The options have five-year terms with vesting of 25% on the first anniversary of the grant date and then equal vesting each quarter thereafter for the next 12 quarters, subject to continued employment and other conditions.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience and the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including, but not limited to, changes in the sound reproduction industry, our ability to develop future products, technology shifts, potential technical or manufacturing difficulties that could delay products, competition, pricing pressures, the uncertainty of market acceptance of new products and services by customers, warranty or other claims, the outcome of pending or future litigation, general economic factors, and other risks identified and discussed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management's expectations as of the date hereof. Future results may differ materially from the Company's current expectations. American Technology Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated.