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Thursday, Oct 6, 2022

American Technology Investigating the Timing of Stock Option Grants

American Technology Corp., which develops and licenses cutting-edge technology involving focused sound waves, said it has begun an investigation into the granting of stock options after discovering accounting errors in previous financial reports.

The announcement Dec. 11 adds another company to an exploding list of public companies delving into stock option issuing practices in the wake of similar investigations by the Securities and Exchange Commission. The SEC is looking at companies that backdated the issue date on the options, which allowed receivers to gain larger profits when exercising the options.

American Technology said its probe, which covers eight years from September 1998 to September 2006, hasn’t found misconduct or fraud on the part of management. The company said it did not know what adjustments might have to be made on past financial reports.

American Technology also said in its regulatory filing that it would not be able to submit its annual financial report due Dec. 14.

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When American Technology restates its financials, the news is certain to be negative. However, that shouldn’t surprise shareholders.

Since its launch in 1981, American Technology has never turned a profit. For the fiscal year ended Sept. 30, 2005, it lost $9 million. In 2004, it lost $5.9 million, and in 2003, its loss was $8.2 million, according to securities filings.

For the nine months ending June 30, ATC posted a loss of $4.2 million on revenue of $6.3 million. That compares with a loss of $6.7 million on revenue of $8.5 million for the nine months of 2005, according to financial reports.

In positive news, American Technology said it received $1 million in new orders for the first quarter that ends Dec. 31, bringing total orders to about $3 million for the year.

ATC joins a quite a few local firms investigating when and how they granted stock options.

Applied Micro Circuits Corp. was on the regulatory radar screen shortly after it announced in May that it was looking into its option practices.

AMCC, which relocated its headquarters to Sunnyvale in 2005, failed to hold a special shareholders meeting in July and November as scheduled. The company said it was being investigated by the U.S. attorney’s office.

Meanwhile, AMCC said Nasdaq granted the company a delay until Dec. 21, when it can file its annual 10-K report for the fiscal year ended March 31.

Traded on Nasdaq under ATCO, shares of American Technology closed Dec. 11 at $4.24, and have ranged from $1.90 to $5.26 in the past 52 weeks.

American Technology products use a technology called hypersonic sound to transmit focused sound waves far distances. Both government and commercial customers have used the technology for security uses.

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Maxwell Gets Big Order:

Maxwell Technologies Inc., a San Diego-based maker of ultracapcitors and other backup power systems for industrial use, said it obtained an order for 3 million units of specialized batteries by a wind turbine systems manufacturer.

Although the company wouldn’t release the dollar figure of the two-year contract, analysts estimated its the value at $15 million.

The company reported $45 million in sales last year, and is on track to exceed $53 million in sales this year.

Maxwell wouldn’t release the name of the manufacturer, but analysts speculated that Enercon, a German firm that previously purchased components for its wind energy systems, was the buyer.

Maxwell spokesman Mike Sund said the contract likely wouldn’t create new jobs locally since most of the assembly work is done in Switzerland.

Maxwell had 300 employees as of Sept. 30, evenly divided between here and in Switzerland. That’s up from 241 employees from Dec. 31.

Traded under MXWL on Nasdaq, shares closed Dec. 11 at $14.47 and ranged from $12.84 to $23.35 in the past 52 weeks.

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Third AMS Executive Sentenced:

U.S. District Court Judge Larry Burns sentenced Sandra Miller Christie, a former vice president at Advanced Marketing Services Inc., to 36 months in prison Dec. 11. Christie pleaded guilty last year to two counts involving accounting fraud, one for conspiracy and one for falsifying records. A federal grand jury had charged her with 33 counts of wrongdoing in March 2005.

AMS is a distributor of books and related services to large retail warehouse operators, including Costco and Sam’s Club.

Christie and two other AMS employees pleaded guilty to a scheme that reduced the amount of advertising and promotional material AMS was supposed to provide to customers, thereby increasing profits. According to the indictment, the scheme cost publishers $6.8 million.

Also this year, Burns sentenced Marcy Wilson Roke, former marketing director for AMS, to five years’ probation, including one year at a halfway house. The judge also sentenced Roke to 500 hours of community service.

Burns sentenced Karyn Ann Larko, AMS’ former director of advertising, to five years’ probation.

An investigation that began in 2003 that resulted in the resignation of chief executive Michael Nicita continues, said Assistant U.S. Attorney Eric Beste.

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ITLA Moving To NYSE:

ITLA Capital Corp., the holding company of Imperial Capital Bank based in San Diego, plans to move trading of its stock from the Nasdaq to the New York Stock Exchange starting Dec. 29.

The company said its board determined that the stock would benefit by associating with NYSE, whose members are generally larger and better established than those of Nasdaq.

“They did a substantial amount of due diligence on this, and there’s an element of cachet associated with the Big Board. It’s taken us a long time to meet the financial requirements to trade there,” said Chief Financial Officer Tim Doyle.

Doyle denied that ITLA’s less than stellar stock performance had any bearing on the decision to move.

Since its public offering in 1995, the stock appreciated by 400 percent, but in the last two years, the stock declined by a few points. For the 52 weeks, ITLA gained 3.47 percent, compared with the S & P; 500, which is up by about 13 percent.

ITLA’s primary subsidiary, Imperial Capital Bank, has about $3.2 billion in total assets, seven branches, and 21 loan production offices across the nation.

Doyle asserted that the company had no problems with Nasdaq, and that the exchange had treated ITLA well. The increased visibility derived from trading on NYSE should bring more benefits to the company, he said.

When it moves over, ITLA would be the 11th local company trading on the New York exchange.

The company’s new symbol will be IMP.

As of Dec. 11, ITLA closed at $53.05, and has ranged from $44.65 to $58.52 in the past 52 weeks.

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PriceSmart Has Higher Sales:

PriceSmart Inc., a San Diego operator of warehouse stores mainly in the Caribbean, said November same-store sales rose 18.5 percent from the same month a year earlier, which brought revenue for the first quarter that ended Nov. 30 to $198 million.

For the fiscal year that ended Aug. 31, PriceSmart reported net income of $11.9 million on revenue of $737.7 million, with sales increased 18.7 percent from the prior fiscal year.

In its 2005 fiscal year, PriceSmart reported a net loss of $63.6 million on revenue of $618.8 million.

The stock, traded under PSMT on Nasdaq, rose to a high of $19.95 on Dec. 12. Its prior high was $19.27, and its low in the past year was $7.55.

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Ticker Takes:

WD-40 Co., WDFC on Nasdaq, declared a regular quarterly dividend of 25 cents, up 13.6 percent from the prior quarter, to shareholders payable Jan. 31. MediciNova Inc., a local biotech firm, began trading on Nasdaq on Dec. 7 under MNOV. Shares of iVow Inc., which makes products to treat morbid obesity, were delisted from Nasdaq on Dec. 7 and moved to the Pink Sheets under the ticker IVOW.PK. ImageWare Systems Inc., traded as IW on the American Stock Exchange, said it obtained a contract valued at $1.2 million from an undisclosed federal agency to develop an identity management system.

Send any news of San Diego-based public companies to Mike Allen via e-mail at


. He can be reached at (858) 277-6359.


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