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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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QUARTERLY REPORT UNDER SECTION 13 OR
15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended December 31, 2005



Commission File Number 333-11591



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Atmospheric Glow Technologies, Inc.

(Exact name of small business issuer as specified in its charter)



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|                         |  |                                     
|------------------------ |  | ------------------------------------
|Delaware                 |  | 62-1647888                          
|(State of incorporation) |  | (IRS Employer Identification Number)



924 Corridor Park
Boulevard

Knoxville, Tennessee 37932

(Address of principal executive offices)



(865) 777-3776

(Issuers telephone number)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



The number of shares outstanding of each of the registrants classes of common stock on February 1, 2006 was 227,947,556 Common Shares, 750,000 Class B Common Shares and 0 Class D Common Shares.



|Transitional | Small Business Disclosure Format:    Yes ̈No  x
|------------ | ----------------------------------------------



Exhibit Index at page 15.



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##### Table of Contents

PART I - FINANCIAL INFORMATION



Item 1. Financial
Statements.



|                                                                                                                                                                   |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                                                                   |  | Page
|Condensed Consolidated Balance Sheets  As of December 31, 2005 and March 31, 2005                                                                                 |  | 3   
|                                                                                                                                                                   | 
|Condensed Consolidated Statements of Operations  For the Three and Nine Months Ended December 31, 2005 and 2004, and May 1, 2000 (Inception) to December 31, 2005 |  | 4   
|                                                                                                                                                                   | 
|Condensed Consolidated Statement of Changes in Stockholders (Deficit) Equity from May 1, 2000 (Inception) to December 31, 2005                                    |  | 5   
|                                                                                                                                                                   | 
|Condensed Consolidated Statements of Cash Flows  For the Nine Months Ended December 31, 2005 and 2004, and May 1, 2000 (Inception) to December 31, 2005           |  | 6   
|                                                                                                                                                                   | 
|Notes to Condensed Consolidated Financial Statements                                                                                                               |  | 7   



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##### Table of Contents

ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

Condensed Consolidated Balance Sheets



|                                                      |  |                  |           |   |                  |   |          
|----------------------------------------------------- |  | ---------------- | --------- | - | ---------------- | - | ---------
|                                                      |  | December 31,2005 |           |   | March 31,2005(1)
|                                                      |  | (unaudited)      |           |   |                 
|Assets                                                |  |                  |           |   |                  |   |          
|Cash and cash equivalents                             |  | $                | 62,107    |   |                  | $ | 153,655  
|Receivables                                           |  |                  | 204,108   |   |                  |   | 301,145  
|Prepaid expenses                                      |  |                  | 35,037    |   |                  |   | 13,879   
|                                                      |  |                  |           |   |                  |   |          
|Total current assets                                  |  |                  | 301,252   |   |                  |   | 468,679  
|Property and equipment, less accumulated depreciation |  |                  | 593,970   |   |                  |   | 576,091  
|Intangible assets, less accumulated amortization      |  |                  | 1,461,729 |   |                  |   | 1,539,688
|Deposits                                              |  |                  | 7,988     |   |                  |   | 10,949   
|                                                      |  |                  |           |   |                  |   |          
|Total assets                                          |  | $                | 2,364,939 |   |                  | $ | 2,595,407
|                                                      |  |                  |           |   |                  |   |          
|                                                      |  |                  |           |   |                  |   |          
|Liabilities and Stockholders (Deficit) Equity        |  |                  |           |   |                  |   |          
|Notes payable to related parties                      |  | $                | 1,322,098 |   |                  | $ | 549,431  
|Notes payable                                         |  |                  | 616,402   |   |                  |   | 500,000  
|Current portion of capital leases                     |  |                  | 17,149    |   |                  |   | 21,993   
|Accounts payable                                      |  |                  | 550,272   |   |                  |   | 403,609  
|Accrued expenses                                      |  |                  | 427,842   |   |                  |   | 363,190  
|                                                      |  |                  |           |   |                  |   |          
|Total current liabilities                             |  |                  | 2,933,763 |   |                  |   | 1,838,223
|Capital leases, less current portion                  |  |                  | 11,340    |   |                  |   |         
|                                                      |  |                  |           |   |                  |   |          
|Total liabilities                                     |  |                  | 2,945,103 |   |                  |   | 1,838,223
|Stockholders (deficit) equity                        |  |                  | (580,164  | ) |                  |   | 757,184  
|                                                      |  |                  |           |   |                  |   |          
|Total liabilities and stockholders (deficit) equity  |  | $                | 2,364,939 |   |                  | $ | 2,595,407
|                                                      |  |                  |           |   |                  |   |          

---

|(1) | The March 31, 2005 Condensed Consolidated Balance Sheet was derived from the audited balance sheet for the year then ended.
|--- | ---------------------------------------------------------------------------------------------------------------------------



See accompanying Notes to Condensed Consolidated Financial Statements.



3



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##### Table of Contents

ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

Condensed Consolidated Statements of Operations



|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|----------------------------------- |  | ------------------------------- | -------- | - | ------------------------------ | - | -------- | ------------------------------------------ |  | - | ----------- | - |  | ----------- | ---------- | - |  | - | ---------- | -
|                                    |  | Three Months Ended December 31, |          |   | Nine Months Ended December 31, |   |          | May 1, 2000(Inception) toDecember 31, 2005 | 
|                                    |  | 2005                            |          |   | 2004                           |   |          | 2005                                       |  |   | 2004        |   | 
|                                    |  | (unaudited)                     |          |   | (unaudited)                    |   |          | (unaudited)                                |  |   | (unaudited) |   |  | (unaudited) |           
|Operating revenues:                 |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Contract revenues earned            |  | $                               | 407,443  |   |                                | $ | 576,985  |                                            |  | $ | 1,275,936   |   |  | $           | 1,546,289  |   |  | $ | 5,189,240  |  
|Other revenues                      |  |                                 | 126      |   |                                |   | 2        |                                            |  |   | 156         |   |  |             | 7          |   |  |   | 73,634     |  
|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Total operating revenues            |  |                                 | 407,569  |   |                                |   | 576,987  |                                            |  |   | 1,276,092   |   |  |             | 1,546,296  |   |  |   | 5,262,874  |  
|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Operating expenses:                 |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Payroll and related costs           |  |                                 | 540,922  |   |                                |   | 447,942  |                                            |  |   | 1,725,089   |   |  |             | 1,615,102  |   |  |   | 5,674,619  |  
|Laboratory expenses                 |  |                                 | 136,110  |   |                                |   | 112,705  |                                            |  |   | 503,226     |   |  |             | 465,354    |   |  |   | 2,130,020  |  
|General and administrative expenses |  |                                 | 300,274  |   |                                |   | 188,569  |                                            |  |   | 769,063     |   |  |             | 747,568    |   |  |   | 3,186,209  |  
|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Total operating expenses            |  |                                 | 977,306  |   |                                |   | 749,216  |                                            |  |   | 2,997,378   |   |  |             | 2,828,024  |   |  |   | 10,990,848 |  
|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Net loss                            |  | $                               | (569,737 | ) |                                | $ | (172,229 | )                                          |  | $ | (1,721,286  | ) |  | $           | (1,281,728 | ) |  | $ | (5,727,974 | )
|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  
|Loss per share (basic and diluted): |  | $                               | (0.00    | ) |                                | $ | (0.00    | )                                          |  | $ | (0.01       | ) |  | $           | (0.01      | ) |  | $ | (0.03      | )
|                                    |  |                                 |          |   |                                |   |          |                                            |  |   |             |   |  |             |            |   |  |   |            |  



See accompanying
Notes to Condensed Consolidated Financial Statements.



4



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##### Table of Contents

ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

Condensed Consolidated Statement of Changes in Stockholders (Deficit) Equity

From May 1, 2000 (Inception) to December 31, 2005 (unaudited)



|                                                                               |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   |            |  
|------------------------------------------------------------------------------ |  | --------------- | - |  | --------------------- | -------- | - | ------------- | ----------- | ------------- | - | -------------------- |  | ------------------- |  | ------------------------ | ----- | ------------------ | - | --------- | ------------------------- | - | ---------- | - |  | - | ---------- | -
|                                                                               |  | Previous Shares |   |  | Previous Share Amount |          |   | Common Shares |             | Common Amount |   | Class B CommonShares |  | Class BCommonAmount |  | AdditionalPaid inCapital |       | AccumulatedDeficit |   |           | TotalStockholders Equity |  
|Shares issued October 20, 2000                                                 |  | 101,101         |   |  | $                     | 116,020  |   |               |            |               | $ |                     |  |                    |  | $                        |      |                    | $ |          |                           | $ |           |   |  | $ | 116,020    |  
|Non-member contribution in 2000                                                |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   | 34,730    |                           |   |            |   |  |   | 34,730     |  
|Additional amounts received in 2001 for shares previously issued               |  |                 |   |  |                       | 4,700    |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   | 4,700      |  
|Shares redeemed in 2001                                                        |  | (11,200         | ) |  |                       | (13,000  | ) |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   | (13,000    | )
|Shares issued in 2002                                                          |  | 9,877           |   |  |                       | 168,235  |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   | 168,235    |  
|Recapitalization of company resulting from reverse merger on February 29, 2004 |  | (99,778         | ) |  |                       | (275,955 | ) |               | 210,828,848 |               |   | 2,108,288            |  | 750,000             |  |                          | 7,500 |                    |   | 705,681   |                           |   |            |   |  |   | 2,545,514  |  
|Common stock issued in 2004                                                    |  |                 |   |  |                       |          |   |               | 2,050,000   |               |   | 20,500               |  |                     |  |                          |       |                    |   | 205,000   |                           |   |            |   |  |   | 225,500    |  
|Net loss through March 31, 2004                                                |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   | (2,157,280 | ) |  |   | (2,157,280 | )
|                                                                               |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   |            |  
|Balance at March 31, 2004                                                      |  |                |   |  |                       |         |   |               | 212,878,848 |               |   | 2,128,788            |  | 750,000             |  |                          | 7,500 |                    |   | 945,411   |                           |   | (2,157,280 | ) |  |   | 924,419    |  
|Common stock issued in 2005                                                    |  |                 |   |  |                       |          |   |               | 11,253,640  |               |   | 112,536              |  |                     |  |                          |       |                    |   | 1,278,728 |                           |   |            |   |  |   | 1,391,264  |  
|Stock based compensation                                                       |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   | 290,909   |                           |   |            |   |  |   | 290,909    |  
|Net loss                                                                       |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   | (1,849,408 | ) |  |   | (1,849,408 | )
|                                                                               |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   |            |  
|Balance at March 31, 2005                                                      |  |                |   |  |                       |         |   |               | 224,132,488 |               |   | 2,241,324            |  | 750,000             |  |                          | 7,500 |                    |   | 2,515,048 |                           |   | (4,006,688 | ) |  |   | 757,184    |  
|Common stock issued                                                            |  |                 |   |  |                       |          |   |               | 2,407,000   |               |   | 24,070               |  |                     |  |                          |       |                    |   | 243,805   |                           |   |            |   |  |   | 267,875    |  
|Liabilities satisfied with common stock                                        |  |                 |   |  |                       |          |   |               | 280,568     |               |   | 2,806                |  |                     |  |                          |       |                    |   | 53,257    |                           |   |            |   |  |   | 56,063     |  
|Common stock issued with debt                                                  |  |                 |   |  |                       |          |   |               | 325,000     |               |   | 3,250                |  |                     |  |                          |       |                    |   | 56,750    |                           |   |            |   |  |   | 60,000     |  
|Net loss                                                                       |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   | (1,721,286 | ) |  |   | (1,721,286 | )
|                                                                               |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   |            |  
|Balance at December 31, 2005                                                   |  |                |   |  | $                     |         |   |               | 227,145,056 |               | $ | 2,271,450            |  | 750,000             |  | $                        | 7,500 |                    | $ | 2,868,860 |                           | $ | (5,727,974 | ) |  | $ | (580,164   | )
|                                                                               |  |                 |   |  |                       |          |   |               |             |               |   |                      |  |                     |  |                          |       |                    |   |           |                           |   |            |   |  |   |            |  



See accompanying
Notes to Condensed Consolidated Financial Statements.



5



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##### Table of Contents

ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

Condensed Consolidated Statements of Cash Flows



|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|---------------------------------------------------- |  | ---------------------------------- | ---------- | - | ---------------------------------- | - | ---------- | ----------------------------------------- |  | - | ---------- | -
|                                                     |  | Nine Months Ended December 31,2005 |            |   | Nine Months Ended December 31,2004 |   |            | May 1, 2000(Inception) toDecember 31,2005 | 
|                                                     |  | (unaudited)                        |            |   | (unaudited)                        |   |            | (unaudited)                               | 
|Net cash used in operating activities                |  | $                                  | (1,160,389 | ) |                                    | $ | (1,350,699 | )                                         |  | $ | (4,506,798 | )
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Investing activities                                 |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Additions to intangible assets                       |  |                                    | (7,004     | ) |                                    |   | (16,801    | )                                         |  |   | (1,633,215 | )
|Purchase of property and equipment                   |  |                                    | (83,856    | ) |                                    |   | (83,727    | )                                         |  |   | (839,694   | )
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Net cash used in investing activities                |  |                                    | (90,860    | ) |                                    |   | (100,528   | )                                         |  |   | (2,472,909 | )
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Finance activities                                   |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Proceeds from short term notes                       |  |                                    | 1,072,500  |   |                                    |   | 557,500    |                                           |  |   | 5,451,500  |  
|Repayments of short term notes                       |  |                                    | (156,098   | ) |                                    |   | (341,864   | )                                         |  |   | (522,598   | )
|Cash acquired in reverse merger                      |  |                                    |           |   |                                    |   |           |                                           |  |   | 53,017     |  
|Proceeds from issuance of common stock               |  |                                    | 267,875    |   |                                    |   | 1,153,914  |                                           |  |   | 1,884,639  |  
|Proceeds from issuance of members equity            |  |                                    |           |   |                                    |   |           |                                           |  |   | 217,720    |  
|Redemption of members interest                      |  |                                    |           |   |                                    |   |           |                                           |  |   | (13,000    | )
|Increase in minority interest                        |  |                                    |           |   |                                    |   |           |                                           |  |   | 43,058     |  
|Principal payments on capital lease obligations      |  |                                    | (24,576    | ) |                                    |   | (17,040    | )                                         |  |   | (72,522    | )
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Net cash provided by financing activities            |  |                                    | 1,159,701  |   |                                    |   | 1,352,510  |                                           |  |   | 7,041,814  |  
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Net (decrease) increase in cash and cash equivalents |  |                                    | (91,548    | ) |                                    |   | (98,717    | )                                         |  |   | 62,107     |  
|Cash and cash equivalents at beginning of period     |  |                                    | 153,655    |   |                                    |   | 301,926    |                                           |  |   |           |  
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Cash and cash equivalents at end of period           |  | $                                  | 62,107     |   |                                    | $ | 203,209    |                                           |  | $ | 62,107     |  
|                                                     |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Supplemental disclosures of cash flow information:   |  |                                    |            |   |                                    |   |            |                                           |  |   |            |  
|Cash paid for interest                               |  | $                                  | 48,432     |   |                                    | $ | 9,246      |                                           |  | $ | 144,322    |  
|Members equity in exchange for rent                 |  |                                    |           |   |                                    |   |           |                                           |  |   | 4,500      |  
|Equipment contributed by non-members                 |  |                                    |           |   |                                    |   |           |                                           |  |   | 34,730     |  
|Equipment acquired with capital lease                |  |                                    | 31,072     |   |                                    |   |           |                                           |  |   | 101,011    |  
|Furniture acquired with note payable                 |  |                                    |           |   |                                    |   |           |                                           |  |   | 11,600     |  
|Note payable paid with equity                        |  |                                    |           |   |                                    |   |           |                                           |  |   | 36,600     |  
|Minority interest in subsidiary acquired with equity |  |                                    |           |   |                                    |   |           |                                           |  |   | 27,310     |  
|Liabilities satisfied with stock                     |  |                                    | 56,063     |   |                                    |   |            |                                           |  |   | 3,016,558  |  
|Net assets obtained in reverse merger                |  |                                    |           |   |                                    |   |           |                                           |  |   | 151,749    |  
|Net liabilities assumed in reverse merger            |  |                                    |           |   |                                    |   |           |                                           |  |   | 597,321    |  



See accompanying
Notes to Condensed Consolidated Financial Statements.



6



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##### Table of Contents

ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Condensed Consolidated Financial Statements



|1. | Summary of Significant Accounting Policies and Other Disclosures
|-- | ----------------------------------------------------------------



General Information - Atmospheric Glow Technologies, Inc. and subsidiary conduct research and development activities to develop commercial
applications for the One Atmosphere Uniform Glow Discharge Plasma, a process of non-thermal, atmospheric pressure processing for use in areas such as sterilization, decontamination, surface cleaning and etching.



Condensed Consolidated Financial Statements - The accompanying
condensed consolidated financial statements include the accounts of Atmospheric Glow Technologies, Inc. and its wholly owned subsidiary, Tice Engineering and Sales, Inc. The consolidation of these entities is collectively referred to as the
Company or AGT. All significant intercompany balances and transactions have been eliminated.



These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim
financial information pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and disclosures normally included in complete financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made are of a normal recurring nature.
Operating results for the three-month and nine-month periods ended December 31, 2005 are not necessarily indicative of the results that may be expected for the year ending March 31, 2006.



The balance sheet at March 31, 2005 has been derived from the audited
financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.



The condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as of and for the period ended March 31, 2005.



Revenue and Cost Recognition - Revenues from research contracts and grants are recognized as costs are incurred under
a percentage of completion method. Contract costs include direct materials, labor, subcontract costs and allocated indirect costs such as indirect labor costs, occupancy costs and other general overhead. General and administrative costs are charged
to expense as incurred.



Royalties - The Company
recognizes royalty revenue when it is fixed and determinable.



Accounting for Stock-Based Compensation - As permitted by SFAS 148 and 123, the Company has chosen to apply the intrinsic value method provided for by APB Opinion 25, Accounting for Stock Issued to Employees, and related
interpretations in accounting for stock-based compensation awarded to employees.



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##### Table of Contents

Notes to Unaudited Condensed Consolidated Financial Statements, Continued



|1. | Summary of Significant Accounting Policies and Other Disclosures (continued)
|-- | ----------------------------------------------------------------------------



Had compensation expense for the Companys plan been determined based on the fair value at the grant dates for awards
under the plan consistent with the method of SFAS 123, the Companys net loss and loss per share would have been increased to the pro forma amounts as follows:



|                                     |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  
|------------------------------------ |  | ------------------------------- | -------- | - | ------------------------------ | - | -------- | ------------------------------------------ |  | - | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                     |  | Three months ended December 31, |          |   | Nine months ended December 31, |   |          | May 1, 2000(Inception) toDecember 31, 2005 | 
|                                     |  | 2005                            |          |   | 2004                           |   |          | 2005                                       |  |   | 2004       |   | 
|Basic and diluted:                   |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  
|Net loss, as reported                |  | $                               | (569,737 | ) |                                | $ | (172,229 | )                                          |  | $ | (1,721,286 | ) |  | $ | (1,281,728 | ) |  | $ | (5,727,974 | )
|Stock based compensation, net of tax |  |                                 |         |   |                                |   |         |                                            |  |   |           |   |  |   | 22,727     |   |  |   | 22,727     |  
|                                     |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  
|Net loss, pro forma                  |  | $                               | (569,737 | ) |                                | $ | (172,229 | )                                          |  | $ | (1,721,286 | ) |  | $ | (1,304,455 | ) |  | $ | (5,750,701 | )
|                                     |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  
|Loss per share:                      |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  
|Basic and diluted, as reported       |  | $                               | (0.00    | ) |                                | $ | (0.00    | )                                          |  | $ | (0.01      | ) |  | $ | (0.01      | ) |  | $ | (0.03      | )
|                                     |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  
|Basic and diluted, pro forma         |  | $                               | (0.00    | ) |                                | $ | (0.00    | )                                          |  | $ | (0.01      | ) |  | $ | (0.01      | ) |  | $ | (0.03      | )
|                                     |  |                                 |          |   |                                |   |          |                                            |  |   |            |   |  |   |            |   |  |   |            |  



New Accounting
StandardsIn December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. SFAS No. 123(R) will require the Company to recognize compensation expense for all stock-based compensation in our
consolidated statements of earnings. Pro forma disclosure will no longer be an alternative. The Summary of Significant Accounting Policies Accounting for Stock-Based Compensation, above, contains pro forma disclosures regarding the
effect on net earnings and earnings per share as if the Company had applied the fair value method of accounting for stock-based compensation. SFAS No. 123(R) will also require the benefits of tax deductions in excess of recognized compensation
cost to be reported as a financing cash flow, rather than as an operating cash flow, as required under current guidance. The new requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. SFAS
No. 123(R) is effective for fiscal years beginning after December 15, 2005, with early adoption permitted. The Company is currently evaluating the effect of this pronouncement on its options.



|2. | Notes Payable
|-- | -------------



During the quarter ended December 31, 2005, the Company obtained loans from certain officers, directors and shareholders amounting to $205,000 of
which $30,000 was repaid during the quarter. The loans are payable one year from the date of the note and bear interest at a rate of 10% per annum and are convertible at the option of the holder into Common Shares of the Company at the same
price as shares are being sold in any private placement active at the time of conversion, but in no event at a price greater than $0.15 per share. As an inducement to make



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##### Table of Contents

Notes to Unaudited Condensed Consolidated Financial Statements, Continued



|2. | Notes Payable (continued)
|-- | -------------------------



the loans, the holders were granted one Common Share of the Company for each dollar loaned to the Company (175,000 Common Shares during the quarter ended
December 31, 2005). During the third quarter, the Company also issued 150,000 Common Shares to two noteholders who loaned money to the Company during the second quarter. The terms of the two loans entered into in the prior quarter amounting to
$150,000 with related parties provide for the same incentives and conversion provisions as the notes described above. The resulting discount is netted with notes payable to related parties in the accompanying financial statements and is being
amortized over the term of the loans. During the third quarter, the Company obtained a $50,000 unsecured, open-end line of credit from a financial institution. Interest on this line of credit is payable monthly at 11.74%.



The Companys new borrowings for the nine month period ending
December 31, 2005 total $1,072,500. The notes bear interest at rates ranging from 8.9% to 11.74% and mature on varying dates through January 2007. Two of the notes are secured by a piece of equipment which has a carrying value of $140,618.



Subsequent to December 31, 2005, the Company obtained an
additional loan totaling $100,000 from a related party. The principal is payable on or before January 23, 2007, and bears interest at a rate of 10% per annum payable quarterly. The loan has the same conversion and inducement provisions as
the related party notes payable described above.



|3. | Loss Per Share
|-- | --------------



Basic earnings (loss) per share assumes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of
shares of common stock outstanding during each period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon the exercise of stock warrants, using the treasury stock method of
computing such effects and contingent shares, or conversion of convertible debt. As a result of the Companys net losses, the effect of potentially dilutive outstanding stock options of 15,349,675 shares had an antidilutive effect. Basic and
diluted loss per share are the same for all classes of the Companys common stock (thus they are not presented separately) because they have non-cumulative dividend rights under the terms of the Certificate of Incorporation of which none were
available for distribution.



Common stock equivalents not
included in the computation of diluted earnings per share because the options exercise prices were greater than the average market price of the common stock were 460,047 at December 31, 2005.



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Notes to Unaudited Condensed Consolidated Financial Statements, Continued



The following table sets forth the computation of basic loss per share for
the three and nine months ended December 31, 2005 and 2004, and from inception to December 31, 2005:



|3. | Loss per Share (continued)
|-- | --------------------------



|                                      |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  
|------------------------------------- |  | ------------------------------- | ----------- | - | ------------------------------ | - | ----------- | ------------------------------------------ |  | - | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                      |  | Three months ended December 31, |             |   | Nine months ended December 31, |   |             | May 1, 2000(Inception) toDecember 31, 2005 | 
|                                      |  | 2005                            |             |   | 2004                           |   |             | 2005                                       |  |   | 2004        |   | 
|Loss:                                 |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  
|Basic and diluted:                    |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  
|Loss available to common shareholders |  | $                               | (569,737    | ) |                                | $ | (172,229    | )                                          |  | $ | (1,721,286  | ) |  | $ | (1,281,728  | ) |  | $ | (5,727,974  | )
|                                      |  |                                 |             |   |                               
|Shares:                               |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  
|Basic and diluted:                    |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  
|Weighted shares outstanding           |  |                                 | 226,331,806 |   |                                |   | 223,707,488 |                                            |  |   | 225,482,615 |   |  |   | 221,824,397 |   |  |   | 223,200,606 |  
|                                      |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  
|Loss per share                        |  | $                               | (0.00       | ) |                                | $ | (0.00       | )                                          |  | $ | (0.01       | ) |  | $ | (0.01       | ) |  | $ | (0.03       | )
|                                      |  |                                 |             |   |                                |   |             |                                            |  |   |             |   |  |   |             |   |  |   |             |  



Weighted average
Common Shares outstanding for the period from May 1, 2000 (inception) to December 31, 2005, are retroactively computed to reflect the capital structure of the Company after the reverse merger.



|4. | Continuing Operations
|-- | ---------------------



The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial statements, the Company had losses of $1,721,286, $1,281,728, and $5,727,974 in the nine months ended December 31, 2005 and 2004, and inception to date, respectively. This
factor, among others, may indicate the Company will be unable to continue as a going concern for a reasonable period of time. Management realizes the Company must reach profitable operations and generate additional funds in order to continue as a
going concern. The Company expects that additional capital will be raised through private placement offerings or notes to fund the continuing efforts to commercialize the OAUGDP®technology. Absent additional capital from time to time, management may reduce commercialization costs and focus more effort on
existing revenue generated from research and development contracts.



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Item 2. Managements Discussion and Analysis or Plan of Operation.



Atmospheric Glow Technologies, Inc. (collectively with subsidiary,
AGT or the Company) acquired substantially all of the assets of Atmospheric Plasma Holdings, LLC (APH) in exchange for shares and options of AGT and other consideration effective February 29, 2004 in a
transaction accounted for as a reverse acquisition. As such, AGT became the successor business of APH and reports its financial and business history. AGTs business is a science and engineering company focalized on realizing the commercial
potential of atmospheric plasma technology.



As the successor
business of APH, AGT is considered a development stage enterprise and is currently dependent upon capital raised mainly through private placements. Our net loss was $1,721,286 for the nine months ended December 31, 2005 and we have had
cumulative losses totaling $5,727,974 since inception of the business on May 1, 2000. Current revenues consist substantially of research and development contracts related to possible applications of the patented One Atmosphere Uniform Glow
Discharge Plasma (OAUGDP®). Revenues from these contracts have increased an average of 54%
each of the last three years with an annualized decrease in revenues for the nine months ended December, 2005 of 9.7% due to a decision to shift labor resources from government contracts to commercial development. Contract revenues contribute
materially toward core development and to the building of infrastructure for the Company. However, as with other development stage enterprises in our industry, contract revenues do not cover all of our costs, specifically the additional personnel
needed to advance the technology further toward the product stage. With the shift in labor resources, the Company has made significant progress with its PlasmaAire family of indoor air purification products. In October 2005, the
PlasmaAire TriClean Max, a portable air purifier for commercial applications, was introduced at an indoor air quality trade show in Orlando, Florida and was well received by attendees. In early November 2005, AGTs PlasmaAire Induct
System, a system that works with centralized heating and cooling units, was placed for performance evaluation with a major HVAC supplier that is a potential licensee.



Results of Operations



Three Months Ended December 31, 2005 Compared to Three Months Ended December 31, 2004



We incurred a net loss of $569,737 for the three months ended December 31, 2005, compared to a net loss of $172,229 for
the three months ended December 31, 2004 for an increase in net loss of $397,508 or 231%. Our revenues decreased by 29% due to a decision to shift labor resources from government contracts to commercial development in 2005. Overall, operating
expenses have increased 30.4% including a 20.8% increase in payroll mainly due to additional employees in 2005 to support intensified development efforts. Also, general and administrative expenses increased 59.2% mainly due to increased interest
costs associated with new debt and additional office space in 2005.



Nine
Months Ended December 31, 2005 Compared to Nine Months Ended December 31, 2004



We incurred a net loss of $1,721,286 for the nine months ended December 31, 2005, compared to a net loss of $1,281,728 for the nine months ended December 31, 2004 for an



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increase in net loss of $439,558 or 34.3%. Our revenues decreased by 17.4% due to a decision to shift labor resources
from government contracts to commercial development. Overall, operating expenses have increased 6.0% with the most significant increase being a 6.8% increase in payroll and related costs due to additional employees in 2005 to support intensified
development efforts. Other increases in expense are primarily due to the increased debt and office space in 2005.



Inflation



Inflation has not had a significant impact on operations to date.



Liquidity and Capital Resources



Since our inception, we have financed our operations primarily through the sale of equity. The Company needs substantial additional funding in the near
future to develop and bring to a commercialization state its OAUGDP® technology. While there is no guarantee we can obtain such future funding, we have been successful in our efforts thus far and expect that future offerings, along with contract revenues, will provide sufficient capital
to continue through our next fiscal year. Failure to obtain new funding could have a material adverse effect on our liquidity.



At December 30, 2005, we had $62,107 in cash and cash equivalents. The goal of our current fundraising efforts is to raise an additional $6,500,000
for operations. During the current fiscal year we have raised $267,875 in capital through the sale of stock for cash. Also, the Company issued 180,000 and 100,568 Common Shares in settlement of certain liabilities in the amounts of $45,000 and
$11,063, respectively. Expenditures for 2006, specifically payroll and related costs, are expected to remain flat or increase slightly based on the pace of fundraising. Furthermore, AGT has most of its development team in place. With the additional
funds management hopes to raise, and current or likely contract revenues, we should have sufficient capital to meet our operating needs for two years.



Outstanding debt of $500,000 is expected to be refinanced or converted into Common Shares by the noteholders in exchange for 2,000,000 Common Shares. In
addition, subsequent to quarter-end, AGT obtained an additional loan in the principal amount of $100,000 from a related party. The principal is payable on or before January 23, 2007, and bears interest at a rate of 10% per annum payable
quarterly. The terms of the note can be found in the Notes to the Condensed Consolidated Financial Statements. AGT does not expect any significant unfunded capital expenditures during the next year.



Special Considerations



This section captioned Special Considerations and other parts of
this Quarterly Report on Form 10-QSB include certain forward-looking statements within the meaning of the federal securities laws. Actual results and the occurrence or timing of certain events could differ materially from those described in any of
such forward-looking statements due to a number of factors, including those set forth below and elsewhere in this Form 10-QSB. See Other Factors Relating to Forward-Looking Statements below.



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Product Development. The key to future success will be our ability to develop and commercialize
new applications using the OAUGDP®technology. There are no assurances that AGT can
successfully develop or commercialize new applications of the OAUGDP®technology.



Key Management and Technical Staff. We must be able to
identify, recruit and retain key management and technical staff. There are no assurances such individuals can be identified, hired or retained.



New Capital. Our future operations are dependent on its ability to raise sufficient capital for these needs. There are no assurances that we can
raise these funds.



Other Factors Relating to Forward-Looking
Statements



Statements contained in this Form 10-QSB
that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as believes, anticipates,
expects and similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements or events, or timing of events, to differ materially from any future results, performance or achievements or events, or timing of events, expressed or implied by such forward-looking statements. We cannot assure that we will be able to
anticipate or respond timely to the changes that could adversely affect our operating results in one or more fiscal quarters. Results of operations in any past period should not be considered indicative of results to be expected in future periods.
Fluctuations in operating results may result in fluctuations in the price of our securities.



There can be no assurance that we will be able to raise any additional financing on acceptable terms. If such financing is not available on satisfactory terms, we may be unable to expand the business or develop new
customers as desired and our operating results may be adversely affected. Debt financing will increase expenses and must be repaid regardless of operating results. Equity financing could result in dilution to existing stockholders.



Some of the more prominent known risks and uncertainties of our business are
set forth below. However, this section does not discuss all possible risks and uncertainties to which we are subject, nor can it be assumed that there are not other risks and uncertainties which may be more significant.



| |  |  | the lack of working capital needed to further develop and apply the OAUGDP®technology and managements ability to find acceptable financing to supply such working capital;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the potential failure to successfully negotiate licensing agreements, or find strategic partners to further develop, or potential buyers for, the OAUGDP®technology;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the shortage of qualified and competent engineers, scientists or product specialists and the risk that we will be unable to retain key employees and managers;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | dependence on start-up technologies and applications and the ability to continue to successfully obtain government contracts which are expected to generate most of our revenue for
some time;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the unanticipated expense of new product development, the potential failure to complete new products on a timely and cost effective basis, and the failure of any such products to
achieve substantial market acceptance;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the dependence on patents and the ability to protect proprietary products, the potential that existing patents or future patents obtained by us will not be enforceable, the risk
that the products will infringe on patents held by others or the risk that competitors will develop similar or functionally similar products; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the potential adverse effect of competition, the potential failure to provide competitive timely designs of cost-effective solutions, products or services and the potential adverse
effect of technological change with which we are unable to keep pace.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 3. Controls and Procedures.



Evaluation of
Disclosure Controls and Procedures



The Companys
Chief Executive Officer and the Chief Accounting Officer carried out an evaluation of the effectiveness of the design and operations of the Companys disclosure controls and procedures as of December 31, 2005. Disclosure controls and
procedures are designed to ensure that information required to be disclosed by a company in its periodic SEC filings is recorded, processed and reported within the time periods specified in the SECs rules and forms. Based upon that evaluation,
the Chief Executive Officer concluded that the Companys disclosure controls and procedures as of December 31, 2005 were effective in timely alerting him to material information relating to the Company (including its consolidated
subsidiaries) required to be included in the Companys periodic SEC filings.



Changes in Internal Controls



There were no
significant changes in the Companys internal control over financial reporting or in other factors identified in connection with the evaluation described above that occurred during the Companys fiscal quarter ended December 31, 2005
that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



PART II - OTHER INFORMATION



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.



In October 2005, AGT issued 385,000 Common Shares for $58,100 in an offering under Regulation S under the Securities Act of 1933 (the Securities
Act). In November 2005, AGT issued another 131,000 Common Shares for $19,180 under that same offering The issues were a



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part of an offering of up to 18,750,000 Common Shares at a price equal to the final bid on the Electronic Bulletin Board
for AGTs shares on the day before the transaction. The placement agent in the sale of these shares was Swift Investment Bank, Ltd. which received a 35% commission on funds raised by it offshore.



In December 2005, AGT issued 1,602,000 Common Shares for $271,220 in the same
offering under Regulation S under the Securities Act. The issues were a part of the offering of up to 18,750,000 Common Shares at a price equal to the final bid on the Electronic Bulletin Board for AGTs shares on the day before the
transaction. The placement agent for the in the sale of these shares was Bellador Information Services FZ-LLC, which received a 35% commission on funds raised by it offshore.



Also in December 2005, AGT issued 100,000 Common Shares in an offering under Section 506 of Regulation D under the
Securities Act at a rate of $0.12 per share. LandOak Securities, LLC, a company owned by a director and shareholder of AGT, acted as placement agent and received a 6% commission on the sales under Regulation D.



Item 6. Exhibits and Reports on Form 8-K.



Exhibits Index



|                                                                                                                                                             |  |                      |  |            
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------- |  | -----------
|                                                                                                                                                             |  | Exhibit Table Number |  | Page Number
|I.       Articles of Incorporation and Bylaws                                                                                                                |  | 3                    |  |            
|(i)     Certificate of Incorporation of Tice Technology, Inc.                                                                                                |  |                      |  | ±          
|(ii)    Certificate of Amendment to Certificate of Incorporation of Tice Technology, Inc. (now Atmospheric Glow
Technologies, Inc.)                          |  |                      |  | *          
|(ii)    Amended and Restated Bylaws of Atmospheric Glow Technologies, Inc.                                                                                   |  |                      |  | x          
|                                                                                                                                                             |  |                     
|II.     Instruments Defining Rights of Security Holders                                                                                                      |  | 4                    |  |            
|(i)     Registration Rights Agreement Giving Purchasers under the Private Placement Closed on June 25, 1999
Certain Demand and Piggyback Registration Rights |  |                      |  | #          
|(ii)    Incentive Stock Option Plan and Agreement Between Charles R. West and Tice Technology, Inc.                                                          |  |                      |  | #          
|                                                                                                                                                             |  |                     
|III.    Rule 13a-14(a)/15d-14(a) Certifications                                                                                                              |  | 31                   |  |            
|(i)     Certifications  Chief Executive Officer, Thomas W. Reddoch                                                                                          |  |                      |  | 17         
|(ii)    Certifications  Chief Accounting Officer, Sharon L. Draper                                                                                          |  |                      |  | 19         
|                                                                                                                                                             |  |                     
|IV.   Section 1350 Certifications                                                                                                                            |  | 32                   |  |            
|(i)     Certification Chief Executive Officer, Thomas W. Reddoch and Chief Accounting Officer, Sharon L.
Draper                                             |  |                      |  | 21         
|                                                                                                                                                             |  |                     
|V.     Additional Exhibits                                                                                                                                   |  | 99                   |  |            
|(i)     Audit Committee Charter                                                                                                                              |  |                      |  | x          

---

|± | Previously filed as an exhibit to Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 of Tice Technology, Inc. that became effective August 1, 1997.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Previously filed as an exhibit to Form 10-KSB for the year ended March 31, 2004.
|- | --------------------------------------------------------------------------------



|x | Previously filed as an exhibit to Form 10-KSB for the year ended March 31, 2005.
|- | --------------------------------------------------------------------------------



|# | Previously filed as an exhibit to Form 10-K for the year ended March 31, 2000.
|- | ------------------------------------------------------------------------------



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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



Atmospheric Glow Technologies, Inc.By:

/s/ Thomas W. ReddochThomas W. Reddoch, Chairman and ChiefExecutive OfficerDate: February 13, 2006By:

/s/ Sharon L. DraperSharon L. Draper, Chief Accounting OfficerDate: February 13, 2006




16