UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington,  D.C.  20549

FORM 10-QSB



QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended December 31, 2007



| |                                                    | 
| | -------------------------------------------------- | 
| | Atmospheric Glow Technologies, Inc.                | 
| | (Exact name of registrant as specified in charter) | 



|                                               |  |                          |  |                                  
|---------------------------------------------- |  | ------------------------ |  | ---------------------------------
|Delaware                                       |  | 333-11591                |  | 62-1647888                       
|(State or other jurisdiction
of incorporation) |  | (Commission File Number) |  | (IRS Employer
Identification No.)



| |                                                           | 
| | --------------------------------------------------------- | 
| | 924 Corridor Park Boulevard, Knoxville, Tennessee   37932 | 
| | (Address of principal executive offices)                  | 



| |                                                      | 
| | ---------------------------------------------------- | 
| | (865) 777-3776                                       | 
| | (Registrants Telephone Number, including Area Code) | 



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 xNo o



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x



The number of shares outstanding of each of the registrant’s classes of common stock on January 10, 2008 was 239,512,074 Common Shares, 750,000 Class B Common Shares and 0 Class D Common Shares.



Transitional Small Business Disclosure Format: Yes o No x



Exhibit Index on page 14









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|               |                                                                                                                                                                     |     
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|               |                                                                                                                                                                     | Page
|               | PART I FINANCIAL INFORMATION                                                                                                                                        |     
|               |                                                                                                                                                                     |     
|Item 1.        | Financial Statements.                                                                                                                                               |     
|               |                                                                                                                                                                     |     
|               | Condensed Consolidated Balance Sheets -- As of December 31, 2007 and March 31, 2007                                                                                 | 3   
|               | Condensed Consolidated Statements of Operations -- For the Three and Nine Months Ended December 31, 2007 and 2006, and May 1, 2000 (Inception) to December 31, 2007 | 4   
|               | Condensed Consolidated Statement of Stockholders Deficit from May 1, 2000 (Inception) to December 31, 2007                                                         | 5   
|               | Condensed Consolidated Statements of Cash Flows -- For the Nine Months Ended December 31, 2007 and 2006, and May 1, 2000 (Inception) to December 31, 2007           | 6   
|               | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                                      | 7   
|               |                                                                                                                                                                     |     
|Item 2.        | Managements Discussion and Analysis or Plan of Operations                                                                                                          | 10  
|Item 3.        | Controls and Procedures                                                                                                                                             | 13  
|               |                                                                                                                                                                     |     
|               | PART II OTHER INFORMATION                                                                                                                                           |     
|               |                                                                                                                                                                     |     
|Item 2.        | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                         | 14  
|Item 6.        | Exhibits                                                                                                                                                            | 14  
|               |                                                                                                                                                                     |     
|SIGNATURES     | 15                                                                                                                                                                 
|               |                                                                                                                                                                     |     
|CERTIFICATIONS | 16                                                                                                                                                                 









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PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS



ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY 
(A DEVELOPMENT STAGE ENTERPRISE)Condensed Consolidated Balance Sheets



|                                                       |              |             |           |   |             |  |  |  |  |  | 
|------------------------------------------------------ | ------------ | ----------- | --------- | - | ----------- |  |  |  |  |  | 
|                                                       | December 31, |             | March 31,
|                                                       | 2007         |             | 2007 (1) 
|                                                       | (unaudited)  |             |           |  
|Assets                                                 |              |             |           |   |            
|Cash and cash equivalents                              | $            | 41,574      |           | $ | 25,421     
|Restricted cash                                        |              | 29,728      |           |   | 84,170     
|Trade receivables                                      |              | 38,832      |           |   | 222,253    
|Prepaid expenses                                       |              | 29,478      |           |   | 35,319     
|Total current assets                                   |              | 139,612     |           |   | 367,163    
|Property and equipment, less accumulated depreciation  |              | 366,226     |           |   | 446,739    
|Intangible assets, less accumulated amortization       |              | 519,518     |           |   | 587,825    
|Deposits                                               |              | 7,988       |           |   | 7,988      
|Total assets                                           | $            | 1,033,344   |           | $ | 1,409,715  
|Liabilities and Stockholders Deficit                  |              |             |           |   |            
|Current portion of notes payable to related parties    | $            | 2,981,266   |           | $ | 2,559,845  
|Notes payable                                          |              | 316,942     |           |   | 494,304    
|Current portion of long-term debt                      |              | 6,559       |           |   | 6,053      
|Current portion of capital leases                      |              | 3,746       |           |   | 6,839      
|Accounts payable                                       |              | 626,633     |           |   | 631,124    
|Accrued expenses                                       |              | 428,418     |           |   | 589,603    
|Current portion of deferred revenue                    |              | 34,000      |           |   | --         
|Total current liabilities                              |              | 4,397,564   |           |   | 4,287,768  
|Notes payable to related parties, less current portion |              | --          |           |   | 45,000     
|Long-term debt, less current portion                   |              | 32,885      |           |   | 36,592     
|Capital leases, less current portion                   |              | --          |           |   | 1,916      
|Deferred revenue, less current portion                 |              | 129,000     |           |   | --         
|Total liabilities                                      |              | 4,559,449   |           |   | 4,371,276  
|Stockholders deficit                                  |              | (3,526,105) |           |   | (2,961,561)
|Total liabilities and stockholders deficit            | $            | 1,033,344   |           | $ | 1,409,715  



(1)

The March 31, 2007 Condensed Consolidated Balance Sheet was derived from the audited balance sheet for the year then ended.



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements



3



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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) to
December 31,
|                                    | 2007                            |           | 2006                           |   | 2007                                    |  | 2006        |           | 2007       
|                                    | (unaudited)                     |           | (unaudited)                    |   | (unaudited)                             |  | (unaudited) |           | (unaudited)
|Operating revenues:                 |                                 |           |                                |   |                                         |  |             |           |             |   |             |  |   |            
|Contract revenues earned            | $                               | 282,271   |                                | $ | 412,889                                 |  | $           | 1,214,267 |             | $ | 1,205,464   |  | $ | 8,558,650  
|Other revenues                      |                                 | 39,670    |                                |   | 21,296                                  |  |             | 115,584   |             |   | 36,174      |  |   | 309,580    
|Total operating revenues            |                                 | 321,941   |                                |   | 434,185                                 |  |             | 1,329,851 |             |   | 1,241,638   |  |   | 8,868,230  
|Operating expenses:                 |                                 |           |                                |   |                                         |  |             |           |             |   |             |  |   |            
|Payroll and related costs           |                                 | 275,165   |                                |   | 464,603                                 |  |             | 995,437   |             |   | 1,614,693   |  |   | 9,302,499  
|Laboratory expenses                 |                                 | 100,772   |                                |   | 56,511                                  |  |             | 201,483   |             |   | 297,999     |  |   | 2,898,366  
|General and administrative expenses |                                 | 231,191   |                                |   | 73,470                                  |  |             | 783,573   |             |   | 1,059,218   |  |   | 5,825,206  
|Impairment of intangible assets     |                                 | --        |                                |   | --                                      |  |             | --        |             |   | --          |  |   | 752,101    
|Total operating expenses            |                                 | 607,128   |                                |   | 594,584                                 |  |             | 1,980,493 |             |   | 2,971,910   |  |   | 18,778,172 
|Net loss                            | $                               | (285,187) |                                | $ | (160,399)                               |  | $           | (650,642) |             | $ | (1,730,272) |  | $ | (9,909,942)
|Loss per share (basic and diluted): | $                               | (0.00)    |                                | $ | (0.00)                                  |  | $           | (0.00)    |             | $ | (0.01)      |  | $ | (0.04)     



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements



4



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ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

Condensed Consolidated Statement of Stockholders Deficit

From May 1, 2000 (Inception) to December 31, 2007 (unaudited)



|                                                          |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   |                                      |  |   |             |  |   |            
|--------------------------------------------------------- | --------------- |  | --------------------- | --------- | ------------- | ----------- | ------------- | - | --------------------- |  | --------------------- |  | -------------------------- | ----- | ------------------- | - | ------------------------------------ |  | - | ----------- |  | - | -----------
|                                                          | Previous
Shares |  | Previous
Share
Amount |           | Common
Shares |             | Common
Amount |   | Class B
Common
Shares |  | Class B
Common
Amount |  | Additional
Paid in
Capital |       | Accumulated
Deficit |   | Total
Stockholders
(Deficit)
Equity
|Shares issued October 20, 2000                            | 101,101         |  | $                     | 116,020   |               | -           |               | $ | -                     |  | -                     |  | $                          | -     |                     | $ | -                                    |  | $ | -           |  | $ | 116,020    
|Non-Member contribution in 2000                           |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   | 34,730                               |  |   |             |  |   | 34,730     
|Additional amounts received 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 | (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    
|Common stock issued in 2005                               |                 |  |                       |           |               | 11,253,640  |               |   | 112,536               |  |                       |  |                            |       |                     |   | 1,278,728                            |  |   |             |  |   | 1,391,264  
|Stock based compensation in 2005                          |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   | 290,909                              |  |   |             |  |   | 290,909    
|Common stock issued in 2006                               |                 |  |                       |           |               | 8,296,849   |               |   | 82,969                |  |                       |  |                            |       |                     |   | 963,516                              |  |   |             |  |   | 1,046,485  
|Net loss through March 31, 2005                           |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   |                                      |  |   | (6,585,403) |  |   | (6,585,403)
|Balance at March 31, 2006                                 | -               |  |                       | -         |               | 232,429,337 |               |   | 2,324,293             |  | 750,000               |  |                            | 7,500 |                     |   | 3,478,564                            |  |   | (6,585,403) |  |   | (775,046)  
|Common stock, shares issued                               |                 |  |                       |           |               | 5,882,737   |               |   | 58,828                |  |                       |  |                            |       |                     |   | 285,946                              |  |   |             |  |   | 344,774    
|Stock-based compensation                                  |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   | 142,608                              |  |   |             |  |   | 142,608    
|Net loss                                                  |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   |                                      |  |   | (2,673,897) |  |   | (2,673,897)
|Balance at March 31, 2007                                 | -               |  |                       | -         |               | 238,312,074 |               |   | 2,383,121             |  | 750,000               |  |                            | 7,500 |                     |   | 3,907,118                            |  |   | (9,259,300) |  |   | (2,961,561)
|Common stock, shares issued                               |                 |  |                       |           |               | 1,200,000   |               |   | 12,000                |  |                       |  |                            |       |                     |   | 26,000                               |  |   |             |  |   | 38,000     
|Stock-based compensation                                  |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   | 48,098                               |  |   |             |  |   | 48,098     
|Net loss                                                  |                 |  |                       |           |               |             |               |   |                       |  |                       |  |                            |       |                     |   |                                      |  |   | (650,642)   |  |   | (650,642)  
|Balance at December 31, 2007                              | -               |  | $                     | -         |               | 239,512,074 |               | $ | 2,395,121             |  | 750,000               |  | $                          | 7,500 |                     | $ | 3,981,216                            |  | $ | (9,909,942) |  | $ | (3,526,105)



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements



5



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ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY 
(A DEVELOPMENT STAGE ENTERPRISE)Condensed Consolidated Statements of Cash Flows



|                                                     |                                     |           |                                     |   |                                              |  |   |            
|---------------------------------------------------- | ----------------------------------- | --------- | ----------------------------------- | - | -------------------------------------------- |  | - | -----------
|                                                     | Nine Months
Ended
December 31,
2007 |           | Nine Months
Ended
December 31,
2006 |   | May 1, 2000
(Inception) to
December 31,
2007
|                                                     | (unaudited)                         |           | (unaudited)                         |   | (unaudited)                                 
|Net cash provided by (used in) operating activities  | $                                   | 7,383     |                                     | $ | (1,342,336)                                  |  | $ | (6,352,414)
|Investing activities                                 |                                     |           |                                     |   |                                              |  |   |            
|Additions to intangible assets                       |                                     | (12,126)  |                                     |   | (11,032)                                     |  |   | (1,662,123)
|Proceeds from sale of fixed assets                   |                                     | 15,000    |                                     |   | -                                            |  |   | 15,000     
|Purchase of property and equipment                   |                                     | -         |                                     |   | (674)                                        |  |   | (843,002)  
|Net cash provided by (used in) investing activities  |                                     | 2,874     |                                     |   | (11,706)                                     |  |   | (2,490,125)
|Finance activities                                   |                                     |           |                                     |   |                                              |  |   |            
|Proceeds from short term notes                       |                                     | 88,762    |                                     |   | 1,170,626                                    |  |   | 7,215,825  
|Repayments of short term notes                       |                                     | (132,299) |                                     |   | (258,743)                                    |  |   | (1,079,499)
|Cash acquired in reverse merger                      |                                     | -         |                                     |   | -                                            |  |   | 53,017     
|Proceeds from issuance of common stock               |                                     | -         |                                     |   | 409,025                                      |  |   | 2,573,985  
|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      |                                     | (5,009)   |                                     |   | (14,361)                                     |  |   | (97,265)   
|Net cash (used in) provided by financing activities  |                                     | (48,546)  |                                     |   | 1,306,547                                    |  |   | 8,913,841  
|Net (decrease) increase in cash and cash equivalents |                                     | (38,289)  |                                     |   | (47,495)                                     |  |   | 71,302     
|Cash and cash equivalents at beginning of period     |                                     | 109,591   |                                     |   | 55,150                                       |  |   | -          
|Cash and cash equivalents at end of period           | $                                   | 71,302    |                                     | $ | 7,655                                        |  | $ | 71,302     
|Supplemental disclosures of cash flow information:   |                                     |           |                                     |   |                                              |  |   |            
|Cash paid for interest                               | $                                   | 50,322    |                                     | $ | 118,883                                      |  | $ | 373,515    
|Members equity in exchange for rent                 |                                     | -         |                                     |   | -                                            |  |   | 4,500      
|Equipment contributed by non-members                 |                                     | -         |                                     |   | -                                            |  |   | 34,730     
|Equipment acquired with capital lease                |                                     | -         |                                     |   | -                                            |  |   | 101,011    
|Furniture acquired with note payable                 |                                     | -         |                                     |   | -                                            |  |   | 11,600     
|Note payable paid with equity                        |                                     | -         |                                     |   | -                                            |  |   | 111,600    
|Minority interest in subsidiary acquired with equity |                                     | -         |                                     |   | -                                            |  |   | 27,310     
|Debt satisfied with stock                            |                                     | -         |                                     |   | -                                            |  |   | 3,130,283  
|Net assets obtained in reverse merger                |                                     | -         |                                     |   | -                                            |  |   | 151,749    
|Net liabilities assumed in reverse merger            |                                     | -         |                                     |   | -                                            |  |   | 597,321    



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements



6



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ATMOSPHERIC GLOW TECHNOLOGIES, INC. & SUBSIDIARY 
(A DEVELOPMENT STAGE ENTERPRISE)Notes to Unaudited Condensed Consolidated Financial Statements



1.

Summary of Significant Accounting Policies and Other Disclosures



General Information - Atmospheric Glow Technologies, Inc. and subsidiary (the Company or AGT) is a development stage enterprise that conducts research and development activities to develop commercial applications for the One Atmosphere Uniform Glow Discharge Plasma (OAUGDP®), a process of non-thermal, atmospheric pressure processing for use in areas such as sterilization, decontamination, surface cleaning and etching.  The Company will continue to be a development stage enterprise until commercial applications of its technologies are realized.



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, 2007 are not necessarily indicative of the results that may be expected for the year ending March 31, 2008.



The balance sheet at March 31, 2007 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, 2007.



Restricted Cash and Cash Equivalents - The Company has restricted cash of $29,728 and $84,170 as of December 31, 2007 and March 31, 2007, respectively.  This balance is required by a government contract whereupon transfers to operations can occur as costs are incurred.



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.



Accounting for Stock-Based Compensation - The Company accounts for its stock options under the recognition and measurement provisions of FASB Statement No. 123(R),Share-Based Payment(FAS 123(R)).   The Company recognized $48,098 and $108,074 in compensation expense under its stock option arrangements for the nine month periods ended December 31, 2007 and 2006, respectively.





7



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A summary of options outstanding under the Companys stock option arrangements as of December 31, 2007 and changes during the nine month period then ended is presented below:



|                                  |               |  |                                    |      |                           |           |                                    |   |     
|--------------------------------- | ------------- |  | ---------------------------------- | ---- | ------------------------- | --------- | ---------------------------------- | - | ----
|                                  | Common
Shares |  | Weighted
Average of
Exercise
Price |      | Stock
Options
Exercisable |           | Weighted
Average of
Exercise
Price
|Under option at March 31, 2007    | 12,079,114    |  |                                    |      |                           | 6,079,114 |                                    | $ | 0.28
|Options expired                   | (1,809,114)   |  | $                                  | 0.99 |                           |           |                                    |   |     
|Under option at December 31, 2007 | 10,270,000    |  |                                    |      |                           | 6,270,000 |                                    | $ | 0.11



2.

Notes Payable to Related Parties, Notes Payable and Long-term Debt



During the three months ended December 31, 2007, the Company renegotiated a loan with a shareholder which was previously in default.  The restructured note payable is non-interest bearing and provides for monthly payments $5,000 through March 2008; $10,000 from April through June 2008; $15,000 from July through November 2008 with the remaining balance due in December 2008.  In consideration of this modification, the Company issued 600,000 shares of Common Stock to the note holder. (The Company also issued an additional 600,000 shares of Common Stock to this note holder during the nine months ended December 31, 2007 for related note extensions previous to this modification.)  The Company recognized a gain on the restructuring of this note of $4,600 which is reflected in the accompanying condensed consolidated financial statements.  The restructured note is recorded at its net present value of $178,390 as of December 31, 2007.



Also during the quarter ended December 31, 2007, the Company negotiated extensions on certain of its maturing notes payable.  Notes totaling $1,319,552 including accrued interest thereon, were extended through May 31, 2008 while other notes totaling $1,215,379 including interest thereon, were extended through June 30, 2008.  For the nine months ended December 31, 2007, interest totaling approximately $256,000 has been paid through the issuance of new debt.



Subsequent to December 31, 2007, the Company extended the maturity date to July 2008 for its $50,271 promissory note with a bank bearing interest at the banks prime rate (7.25% at December 31, 2007 and 6.0% effective January 31, 2008).  The note is collateralized by equipment with a carrying value of approximately $200,000 and is secured by the personal guarantees of certain members of the Companys board of directors.



3.

Loss Per Share



Basic 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 convertible debt of 92,029,400 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 were 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 at December 31, 2007.



The following table sets forth the computation of basic loss per share for the three and nine months ended December 31, 2007 and 2006, and from inception to December 31, 2007:



8



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|                                      |                                 |             |                                |   |                                         |  |      |             |      |   |             |  |   |            
|------------------------------------- | ------------------------------- | ----------- | ------------------------------ | - | --------------------------------------- |  | ---- | ----------- | ---- | - | ----------- |  | - | -----------
|                                      | Three months ended
December 31, |             | Nine months ended
December 31, |   | May 1, 2000
(Inception) to
December 31,
|                                      | 2007                            |             | 2006                           |   | 2007                                    |  | 2006 |             | 2007
|Loss:                                 |                                 |             |                                |   |                                         |  |      |             |      |   |             |  |   |            
|Basic and diluted:                    |                                 |             |                                |   |                                         |  |      |             |      |   |             |  |   |            
|Loss available to common shareholders | $                               | (285,187)   |                                | $ | (160,399)                               |  | $    | (650,642)   |      | $ | (1,730,272) |  | $ | (9,909,942)
|Shares:                               |                                 |             |                                |   |                                         |  |      |             |      |   |             |  |   |            
|Basic and diluted:                    |                                 |             |                                |   |                                         |  |      |             |      |   |             |  |   |            
|Weighted shares outstanding           |                                 | 239,812,074 |                                |   | 237,773,803                             |  |      | 239,522,074 |      |   | 236,156,372 |  |   | 230,308,659
|Loss per share                        | $                               | (0.00)      |                                | $ | (0.00)                                  |  | $    | (0.00)      |      | $ | (0.01)      |  | $ | (0.04)     



Weighted average Common Shares outstanding for the period from May 1, 2000 (inception) to December 31, 2007, are retroactively computed to reflect the capital structure of the Company after the reverse merger.



4.

Sub-Licensing Agreement



In November 2007, the Company entered into a sublicensing agreement whereby the licensee is allowed a five year renewable sub-license for exclusive use of certain licensed and wholly-owned technology. The agreement provides for an initial payment of $200,000 plus royalties of 3% of net sales with a minimum royalty payment of $50,000 annually.  For the nine months ended December 31, 2007, the Company had revenues of $37,000 related to this agreement.



5.

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 $650,642, $1,730,272 and $9,909,942 in the nine months ended December 31, 2007 and 2006, and inception to date, respectively. Additionally, the Company has suffered negative cash flows from operations of $6,352,414 since inception and also has a net capital deficiency of approximately $3,526,000 as of December 31, 2007.  These conditions raise substantial doubt about the Companys ability to continue as a going concern for a reasonable period of time.



The Company has implemented certain cost-saving measures which provide for decreased labor costs through employee attrition and layoffs in addition to salary and benefit reductions for existing employees.  The Company has also reduced its leased facility by approximately 30% and has realized further savings through the elimination of certain incidental services previously provided by third parties.



Management realizes the Company must reach profitable operations and generate additional funds in order to continue as a going concern.  The Company continues to pursue additional capital and business development opportunities.  Absent additional capital, management may further reduce commercialization efforts and focus on existing revenue generated from research and development contracts.  Further, if these efforts also prove unsuccessful, the Company may be required to suspend its entire operations.



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ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.



AGT is a development stage enterprise with a management team that has been working to reduce the Companys dependence on capital raised mainly through debt and sale of equity through private placement by better aligning current expenses with revenues.  As a result, AGTs net loss was decreased by 62% (to $650,642) for the nine months ended December 31, 2007 as compared to the same period last year.  The Company has experienced cumulative losses of $9,909,942 since inception of the business on May 1, 2000 with revenues consisting primarily of research and development contracts related to potential applications of the patented OAUGDP® technology.



Annualized revenues from these contracts are relatively consistent this fiscal year compared to the same period last year, however other revenues increased $79,410 mainly due to the sublicensing of a portion of AGTs intellectual properties during the quarter ended December 31, 2007 and increased product sales.  While total revenues increased 7.1%, expenses were actually reduced by one-third during nine months ended December 31, 2007 compared to the same period in 2006, mainly due to the implementation of a number of cost reduction initiatives undertaken by the Company.



Results of Operations



Three Months Ended December 31, 2007 Compared to the Three Months Ended December 31, 2006



The Companys net loss increased by 78%, as AGT incurred a net loss of $285,187 for the quarter ended December 31, 2007 compared to a net loss of $160,399 for the quarter ended December 31, 2006.  Contract-related revenues were down by one-third compared to the same period last year, offset somewhat by the sublicensing of a portion of our intellectual properties.  The continued alignment of company expenses with current revenues resulted in a 41% reduction of payroll and related costs, however total operating expenses were 5% higher than the same quarter last year due to higher interest expenses and costs related to execution of the sublicensing agreement. The 216% increase in general and administrative expenses is due primarily to the December 2006 rescission of incentive shares previously issued to certain debtors. There were no such transactions in 2007.



Nine Months Ended December 31, 2007 Compared to Nine Months Ended December 31, 2006



The Company incurred a net loss of $650,642 for the nine months ended December 31, 2007, compared to a net loss of $1,730,272 for the nine months ended December 31, 2006 for a decrease in net loss of $1,079,630 or 62%.  Revenues increased by 7.1% as numerous governmental research and development contracts were completed and a portion of the Companys intellectual properties was sublicensed.  Even as revenues increased, operating expenses were reduced by one-third as the impact from numerous cost reduction initiatives was realized.



Inflation



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



Liquidity and Capital Resources



Since the Companys inception, AGT has financed its operations primarily through the sale of equity, and more recently through debt, the majority of which is convertible to equity.  The Company needs substantial additional funding in the near future to: 1) support and sustain operations; 2) further develop its technologies, and; 3) commercialize its OAUGDP® intellectual properties.  There is no guarantee such future funding can be obtained as soon as it is needed.





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At December 31, 2007, AGT had $71,302 in cash and cash equivalents, $29,728 of which is restricted for use on one contract.  The immediate goal of the Companys fundraising efforts is to raise an additional $400,000 in the near term to sustain company operations and enable continued work with prospective strategic business partners.  Since its inception, AGT has worked with a number of investment groups and prospective strategic partners to obtain such funding however it is now redirecting its efforts to existing investors and lenders.  Such future funds if obtained, coupled with projected revenues, should provide sufficient capital to enable continued Company operations into the next fiscal year.  Failure to obtain new funding would have a near-term, material adverse effect on AGTs liquidity and viability.



In June 2007, and in line with its cost reduction efforts, AGT released 4,000 square feet of its leasehold to another party, with part of this transaction including the sale of certain furniture and fixtures for $15,000.  During this same nine month period ended December 31, 2007, the Company obtained a $50,271 note from a financial institution, payable in January 2008, bearing interest at prime rate (7.25% at December 31, 2007 and 6.0% effective January 31, 2008), secured by guarantees of four board members and collateralized by certain equipment with a carrying value of approximately $200,000.  The maturity date for this note was subsequently extended to July 2008.  There have been no other recent borrowings or other new cash inflows with the exception of the receipt of accounts receivable related to the Companys research and development work, product sales and the sublicensing of a portion of its intellectual properties.



Expenditures for fiscal year 2008 compared to fiscal year 2007 are expected to remain approximately one-third lower as a result of significant cost reduction efforts undertaken by the Company.  The objective for plasma-related operations is to be self-sustaining until such time as the technology may be appropriately commercialized.



Future Operations



Management believes that future revenues are dependent on a number of factors including the ability of AGT to: 1) immediately secure necessary funding to sustain operations; 2) continue the development and commercialization of its OAUGDP® technologies through contracts and strategic business partnering, and; 3) successfully develop and market the technology.  Marketplace competition and acceptance of the technology as well as general economic factors are also important determinants of future revenues.



In addition to plasma-related opportunities, management pursued a number of complementary business opportunities over the past year in an attempt to generate additional revenue and profitability, however to date such efforts have not been successful and the Company will continue to emphasize opportunities related to its OAUGDP® technologies.



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.



New Capital.  The viability of future operations is heavily dependent on the Companys ability to raise sufficient capital in the very near term to satisfy its operating requirements.  There are no assurances that such funds can be secured.



Product Development.  One determinant of the Companys future success will be AGTs ability to develop and commercialize new applications using the OAUGDP® technology. There are no assurances that the Company can successfully develop or commercialize new applications of the OAUGDP® technology.



Key Management and Technical Staff.  AGT 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.





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Alternative Business Opportunities.  In addition to future revenue opportunities related to its plasma technology, management has also pursued a number of complementary business opportunities to add significant revenue and profitability.  However as of the date of this filing, none of these alternatives have moved beyond the initial evaluation phase  absent substantial additional working capital, it is very unlikely that the Company will be able to successfully move beyond its focus on commercialization of its OAUGDP® technology.



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.  Management cannot assure that the Company will be able to anticipate or respond timely to the changes that could adversely affect AGTs 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 AGT securities.



There can be no assurance that AGT will be able to generate any additional funding with acceptable terms.  If such money is not available on satisfactory terms, the Company may be unable to expand the business or develop new customers as needed and its operating results may be adversely affected to the extent that the Company may no longer be viable.  Debt financing will increase expenses and must be repaid regardless of operating results.  Funding in the form of equity could result in dilution to existing stockholders.



Some of the more prominent known risks and uncertainties of AGTs business are set forth below.  However, this section does not discuss all possible risks and uncertainties to which the Company is subject, nor can it be assumed that there are not other risks and uncertainties which may be more significant.  Such other factors include, among others, those described in the Business section and elsewhere in Managements Discussion and Analysis and the factors listed below:



·

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, distribute and sell products based on the OAUGDP® technology, or the inability of the Company to find potential buyers for that technology;



·

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



·

dependence on start-up technologies and applications and the ability to continue to successfully obtain government contracts which are expected to generate most of the Companys revenue for the foreseeable future;



·

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





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·

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 the Company is unable to keep pace.





ITEM 3.

CONTROLS AND PROCEDURES.



Evaluation of Disclosure Controls and Procedures



The Companys Chief Executive Officer, who is also the Companys interim 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, 2007.  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, 2007 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 quarter ended December 31, 2007 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.  However, during the Companys quarter ended June 30, 2007, the Companys Chief Accounting Officer left AGT to pursue other career opportunities and a replacement has not yet been made.  The former Chief Accounting Officer assisted in transitioning her related responsibilities on an interim basis to the Chief Executive Officer and he continues to leverage both internal and external resources to complete those responsibilities.



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PART II. OTHER INFORMATION



ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



During the quarter ended December 31, 2007, in connection with an unsecured loan made on October 24, 2006 by Sujon Limited (Sujon) to the Company in the principal amount of $200,000 and as an inducement to extend the maturity of the loan and work out a revised payment schedule, Sujon received 600,000 Common Shares of the Company.  The shares were issued in a private placement under Section 4(2) of the Securities Act.



ITEM 6.

EXHIBITS.



|                                                                                                                                 |                      |  |            
|-------------------------------------------------------------------------------------------------------------------------------- | -------------------- |  | -----------
|                                                                                                                                 | 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)
Common Stock Purchase Warrant                                                                                                |                      |  | #          
|III.
Material Contracts                                                                                                          | 10                   |  |            
|(i)
2006 Equity Incentive Plan of Atmospheric Glow Technologies, Inc.                                                            |                      |  | #          
|(ii)
Employment Agreement - W. Scott McDonald and Atmospheric Glow Technologies, Inc.                                            |                      |  | #          
|(iii)
Stock Option Agreement - W. Scott McDonald and Atmospheric Glow Technologies, Inc.                                         |                      |  | #          
|(iv)
Severance Agreement - W. Scott McDonald and Atmospheric Glow Technologies, Inc.                                             |                      |  | #          
|IV.
Rule 13a-14(a)/15d-14(a) Certifications                                                                                      | 31                   |  |            
|(i)
Certifications  Chief Executive Officer and interim Chief Accounting Officer, W. Scott McDonald                             |                      |  | 16         
|V.
Section 1350 Certifications                                                                                                   | 32                   |  |            
|(i)
Certification Chief Executive Officer and interim Chief Accounting Officer, W. Scott McDonald                               |                      |  | 17         
|VI.
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-QSB for the quarter ended June 30, 2006.



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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.                         
|                         |  |     |                                                             
|                         |  |     |                                                              | 
|Date:  February 13, 2008 |  | By: | /s/ W. Scott McDonald                                        | 
|                         |  |     | W. Scott McDonald                                            | 
|                         |  |     | Chief Executive Officer and Interim Chief Accounting Officer





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