UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



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




For the quarterly period ended January 31, 2010



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




For the transition period from __________ to ____________



Commission file number 0-23268



AMERICAN TECHNOLOGIES GROUP, INC.

(Name of small business issuer in its charter)





Nevada
        
        95-4307525(State or other jurisdiction of
        
        (IRS Employerincorporation or organization)
        
        Identification No.)




1120 Bloomfield Avenue

West Caldwell, New Jersey 07007

(Address of principal executive offices) (zip code)



Issuer's telephone number: (973)244-9969



Securities registered under Section 12(b) of the Exchange Act:



Title of each class Name of exchange on which registered



None



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 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.xYeso  No



Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



Large accelerated filer [
        ]
        Accelerated filer [
        ]
        Non-accelerated filer [
        ]
        Smaller reporting companyx


(Do not check if a smaller


reporting company)




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

xYes
        [
        ]  No


















PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



IN ADDITION TO HISTORICAL INFORMATION, THIS QUARTERLY REPORT CONTAINS FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS IN THIS REPORT REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED HEREIN AND IN OTHER REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS REPORT, THE WORDS "ANTICIPATES", "BELIEVES", "INTENDS", "FUTURE", AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.





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AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)





NOTE 1 - ORGANIZATION AND LINE OF BUSINESS



American Technologies Group, Inc. (the "Company", "ATG", we, us, our), a Nevada corporation, was engaged in the development, commercialization and sale of products and systems using its patented and proprietary technologies.



The Company largely ceased operations during 2001 and had begun focusing efforts on restructuring and refinancing. In fiscal year ended July 31, 2005, we successfully continued these efforts to settle various pending lawsuits, reduce outstanding liabilities, acquire an equity funding facility to finance acquisition of new products, entities and technologies, and otherwise strengthen the business.



On September 7, 2005, ATG, through a newly formed wholly owned subsidiary, Omaha Holdings Corp. ("Omaha"), entered into a Share Purchase Agreement ("Agreement") with the stockholders of North Texas Steel Company, Inc. ("North Texas"), a privately-held company. Effective with the Agreement, all previously outstanding common stock owned by North Texas's shareholders was exchanged for $11,000,000. The transaction is accounted for using the purchase method of accounting in accordance with Statement of Financial Accounting Standards (SFAS) No.141, Business Combinations. The results of operations for North Texas have been included in the audited consolidated statements of operations since the date of acquisition.



On April 25, 2006, ATG, through a newly formed wholly owned subsidiary, Whitco Poles, Inc. (Whitco), acquired certain assets of Whitco Company, LP. The transaction is accounted for using the purchase method of accounting in accordance with SFAS No.141, Business Combinations. The results of operations for the Whitco Company, LP assets have been included in the audited consolidated statements of operations since the date of acquisition.



On October 20, 2008, at a special meeting of shareholders, we received the approval of our shareholders to sell substantially all of the assets of Omaha Holdings Corp., to a subsidiary of Laurus Master Fund as described in our Definitive Proxy of September 16, 2008. The transaction as described in the Definitive Proxy was closed on October 21, 2008.  Following consummation of the sale of substantially all of the assets, the Company was left without an operating business.



The accompanying unaudited condensed consolidated financial statements present on a consolidated basis the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.



A summary of the significant accounting policies applied in the preparation of the accompanying unaudited condensed consolidated financial statements follows.



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AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)





Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of January 31, 2010 and for the three and six month periods ended January 31, 2010 and 2009 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10Q. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the disclosures provided are adequate to make the information presented not misleading. These
unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and explanatory notes for the year ended July 31, 2009 as disclosed in the company's 10-K for that year as filed with the SEC, as it may be amended.

The results of the three and six months ended January 31, 2010 are not necessarily indicative of the results to be expected for the pending full year ending July 31, 2010.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis of Consolidation



Our unaudited condensed consolidated financial statements and the accompanying notes, which are prepared in accordance with U.S. generally accepted accounting principles (GAAP), include American Technologies Group, Inc. and all subsidiaries. We consolidate all majority-owned and controlled subsidiaries as well as variable interest entities in which we are the primary beneficiary as defined by Financial Accounting Standards Board (FASB) Interpretation No. 46R, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.  We did not participate in any variable interest entities for the period presented.



The accompanying unaudited condensed consolidated financial statements present on a consolidated basis the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.



Liquidity



As shown in the accompanying unaudited condensed consolidated financial statements, the Company incurred net loss from continuing operations of $78,634 and $344,501 for the six months ended January 31, 2010 and 2009, respectively. The Company's current liabilities, on a consolidated basis, exceeded its current assets by $2,480,324 as of January 31, 2010.



Income Taxes



In accordance with SFAS No. 109, deferred income taxes are the result of the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities. Generally, deferred income taxes are classified as current or non-current in accordance with the classification of the related asset or liability. Those not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. A valuation allowance is provided against deferred income tax assets in circumstances where management believes the recoverability of a portion of the assets is not reasonably assured.





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AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)



Cash Flows Presentation



For purposes of the statement of cash flows, time deposits that mature in three months or less are considered cash and cash equivalents.



Use of Estimates



In the normal course of preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include the collectability of accounts receivable, the realizability of inventories, the amounts due under accounts payable, the valuation allowance of deferred tax assets and the fair value of our equity instruments. Actual results could differ from those estimates.



Basic and Diluted Income (Loss) Per Share



Basic and diluted loss per common share is based upon the weighted average number of common shares outstanding during the fiscal year computed under the provisions of SFAS No. 128, Earnings Per Share. Common share equivalents were not considered in 2008 as they would be anti-dilutive. The number of shares outstanding in the computation of loss per share for the three months ended October 31, 2009 and 2008 is comprised of the following:



Three Months Ended
        
        Six Months EndedJanuary 31,
        
        January 31,2010
        2009
        
        2010
        2009Common shares outstanding
        9,883,406
        9,883,406
        
        9,883,406
        9,883,406Option shares deemed outstanding
        3,051,482
        3,051,482
        
        3,051,482
        3,362,778Total shares outstanding for computation
        12,934,888
        12,934,888
        
        12,934,888
        13,246,184










Reclassifications



Certain reclassifications have been made in prior year's financial statements to conform to classifications used in the current year.



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AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)





NOTE 3  FINANCIAL CONDITION AND GOING CONCERN



The condensed consolidated financial statements reflect the discontinued operating assets and liabilities and the discontinued operations for the periods covered in this report.  The Company does not have sufficient resources to fund its operations for the next twelve months.  The Company has no operations and is a public shell.



Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the condensed consolidated financial statements, during the six months ended January 31, 2010, we incurred a net loss from continuing operations of $78,634.  Since its inception, the Company has incurred significant operating losses totaling in excess of $80 million. These factors, among others, raise substantial doubt about our ability to continue as a going concern.



The Companys ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and managements ability to identify a business opportunity. While management intends to seek business combination(s) with entities having established operating histories, we cannot assure you that we will be successful in locating candidates meeting that criterion.  The Companys consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.



NOTE4 - CONCENTRATIONS



Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash, and cash equivalents and accounts receivable.



We maintain our cash and cash equivalents in bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses in these accounts. ATG believes it is not exposed to any significant credit risk on cash and cash equivalents.



10







AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)





NOTE5 - CONVERTIBLE DEBENTURES AND OTHER NOTES PAYABLE



TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION



As a result of our failure to timely pay our current obligations due to Laurus Master Fund, Ltd. ("Laurus") under our Secured Convertible Term B Note in the amount of $2,000,000, we received notification on January 31, 2008 from Laurus that certain events of default had occurred and are continuing beyond any applicable cure or grace period with respect to all of our secured obligations due to Laurus. We also received a letter from LV Administrative Services, Inc. ("LV Administrative Services"), acting in the capacity of administrative and collateral agent for Laurus, that demands the immediate payment of all past due amounts owed to Laurus by February 1, 2008. The amounts demanded totaled $13,580,810 ($10,350,000 in principal amortization, $96,777 in accrued interest, and $3,434,033 in Default Fees). We did not make such payments, and, accordingly, Laurus may take all steps it deems necessary to protect
Laurus' interests, including the enforcement and exercise of any and all of its rights, remedies, liens and security interests available to it.



In connection with our financing with Laurus, we executed a pledge agreement in favor of Laurus granting them a first priority security interest in the common stock of each of our subsidiaries. We also executed a security agreement that granted Laurus a first priority security interest in all the respective goods, inventory, contractual rights and general intangibles, receivables, documents, instruments, chattel paper, intellectual property owned by us and each of our subsidiaries. The security agreement and stock pledge agreement state that if an "event of default" occurs under any agreement with Laurus, it has the right to take possession of the collateral, to operate our business using the collateral, and has the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the collateral, at public or private sale or otherwise to satisfy its obligations under these agreements. As a
consequence of our default, Laurus has the right to pursue any of the remedies set forth in the pledge and security agreements. Likewise, GMF and GSSF have similar remedies available to them.



As a result of our default and ongoing losses, our Board and management has determined that it is advisable and in the best interests of the Company and its stockholders to sell all or substantially all of the assets of Omaha Holdings Corp., a wholly owned subsidiary of Company to a subsidiary of Laurus Master Fund, which assets consist primarily of the issued and outstanding stock of two wholly owned subsidiaries of Omaha Holdings Corp. (Sale). Thus, on April 4, 2008, the Board approved the Sale by majority vote and resolved to refer the matter to our stockholders for their approval.



On October 20, 2008, at a special meeting of shareholders, we received the approval of our shareholders to sell substantially all of the assets of Omaha Holdings Corp., to a subsidiary of Laurus Master Fund as described in our Definitive Proxy of September 16, 2008. The transaction as described in the Definitive Proxy was closed on October 21, 2008 resulting in the satisfaction of $13,580,810 plus accrued interest and fees payable to Laurus Fund and/or its affiliates and the satisfaction of the outstanding Gryphon Debt.



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AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)





NOTE 6  DIVESTITURE



On October 21, 2008, the Company completed the sale of all the assets of Omaha Holdings Corp. including the operating assets of North Texas and Whitco to a subsidiary of Laurus Master Fund as described in the Definitive Proxy dated September 16, 2008.  As a result of the transaction, the Company is without operating assets.  The Omaha Holdings Corp., North Texas and Whitco businesses are accounted for as discontinued operations in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  Accordingly, the Omaha Holdings Corp., North Texas and Whitco businesses are reflected as discontinued operations in the unaudited condensed consolidated financial statements and related notes for all periods presented.   The net revenues of North Texas and Whitco for the three-month period ended October 31, 2009 and 2008 amounted to $8,629,272 and $8,737,272, respectively.  The
income from operations of North Texas and Whitco for the three-month period ended October 31, 2009 and 2008 amounted to $324,165 and $322,088, respectively.



The sales proceeds used to compute the gain on sale of assets are as follows:



Principal due on revolving line of credit
        $  7,349,438


Principal due on term loans
        2,787,500


Liability assumed for Gryphon note
        300,000


Default fees
        3,434,033


Total sales proceeds
        $13,870,971




The basis of net assets sold totaled $10,328,690.  The resulting amount of $3,542,281 is reflected as a gain from divestiture of discontinued operations.



The major classes of discontinued assets and liabilities included in the unaudited condensed consolidated balance sheet at October 31, 2008 are shown below.



Assets
        July 31, 2009Cash
        $     1,408,373Accounts receivable, net
        4,766,652Retainage receivable
        1,862,934Inventory
        3,192,419Cost and estimated earnings
        126,224Prepaid expenses
        99,358Current assets
        11,455,960Property, plant and equipment, net
        2,502,165Goodwill
        3,390,370Total assets of Discontinued Operations
        $    17,348,495LiabilitiesAccounts payable
        $     3,856,554Accrued expenses
        1,011,467Billings in excess of cost
        2,074,338Total Liabilities of Discontinued Operations
        $     6,942,359






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AMERICAN TECHNOLOGIES GROUP, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



January 31, 2010 and 2009



(UNAUDITED)



NOTE 7  WARRANTS



The following table summarizes the changes in warrants outstanding at January 31, 2010:

Warrants Outstanding
        
        Warrants ExercisableExercise
Prices
        
        
        Number
Outstanding
        
        
        Weighted Average
Remaining
Contractual Life
(Years)
        
        
        Weighted Average
Exercise
Price
        
        
        Number
Exercisable
        
        
        Weighted Average
Exercise
Price$0.001
        
        
        3,051,482
        *
        
        N/A
        
        $
        0.001
        
        
        3,051,482
        
        $
        0.001




*Warrant issued does not have a contractual life.




For the three months ended January 31, 2010, transactions involving the Companys warrants are summarized as follows:



Number of Shares
        Weighted Average Price Per ShareOutstanding at July 31, 2009
        3,051,482
        $ 0.001Expired
        -
        -Canceled due to divestiture of discontinued operations
        -
        -Outstanding at January 31, 2010
        3,051,482
        $ 0.001






NOTE8 - SUBSEQUENT EVENT EVALUATION




Management has reviewed and evaluated material subsequent events from the balance sheet date of January 31, 2010 through the financial statements issue date of March 22, 2010. All appropriate subsequent event disclosures, if any, have been made in notes to our Consolidated Financial Statements.



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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Discussions of certain matters in this Quarterly Report on Form 10-Q may contain forward-looking statements which relate to future events or our future financial performance. In this Form 10-Q, forward-looking statements are generally identified by the words anticipate, plan, believe, expect, estimate, and the like. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including the risks in the section entitled Risk Factors in the Companys Annual Report, Form 10-K, filed for the year ended July 31, 2009.



The following discussion is intended to provide a better understanding of the significant changes in trends relating to the Companys financial conditions and results of operations. Managements Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto.



GENERAL OVERVIEW



General



We are a Nevada corporation. We were formed on September 27, 1988. Prior to 2001 we engaged in the development, commercialization and sale of products and systems using patented and proprietary technologies including catalyst technology and water purification.



We largely ceased operations during 2001 and began focusing efforts on restructuring and refinancing. In fiscal year ended July 31, 2005, we successfully continued these efforts by settling various pending law suits and reducing outstanding liabilities. In September 2005, we entered into various financing transactions and acquired North Texas Steel Company Inc. (North Texas).



On October 20, 2008, at a special meeting of shareholders, we received the approval of our shareholders to sell substantially all of the assets of Omaha Holdings Corp., to a subsidiary of Laurus Master Fund as described in our Definitive Proxy of September 16, 2008. The transaction as described in the Definitive Proxy was closed on October 21, 2008 resulting in the satisfaction of $13,580,810 plus accrued interest and fees payable to Laurus Fund and/or its affiliates and the satisfaction of the outstanding Gryphon Debt. Following consummation of the sale of substantially all of the assets, the Company was left without an operating business.



The Company is currently a shell company which is organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. The Companys principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.



Overview



THE DISCUSSION BELOW REFLECTS THE FACT THAT THE COMPANY OWNED 100% OF OMAHA HOLDINGS INCLUDING THE OPERATING ASSETS OF, NORTH TEXAS AND WHITCO THROUGH OCTOBER 20, 2008, BUT SHOULD BE READ WITH CAUTION AS THE COMPANY NO LONGER OWNS ANY INTEREST IN THE OPERATING BUSINESSES OF NORTH TEXAS OR WHITCO.



North Texas is an AISC (American Institute of Steel Construction) Certified structural steel fabrication company based in Fort Worth, Texas. North Texas is certified by AISC to have the personnel, organization, experience, capability and commitment meeting the requirements of Conventional Steel Building Structures, Complex Steel Building Structures, Simple Steel Bridges and Major Steel Bridges categories as set forth in the AISC Certification Program. North Texas provides fabrication and detailing of structural steel components for commercial buildings, office buildings, convention centers, sports arenas, airports, schools, churches and bridges. Customers are general construction contractors who are building projects for owners, developers and government agencies.



The trade of steel fabrication is closely connected with both construction and industrial trades in the pre-fabricating of frames, plates, girders and chutes to be used later in the assembly or erection process. The work is conducted primarily indoors, in small fabricating shops or large factories. A structural steel fabricator works from drawings and sketches to perform the following functions to both ferrous and non-ferrous metals:




        Lay out steel for cutting





        Burn the metal






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
        Saw, cut, shear and punch holes in metal using drills and other power tools





        Shape, form and straighten metal with the use of heat and flame





        Fit and ream metal to specifications





        Rivet, bolt and grind metal





        Weld, with both electric arc and oxyacetylene welding equipment





        Prepare, prime and paint structural pieces and plates of steel.




North Texas' customers are general contractors who build large commercial buildings and other structures requiring precision-engineered components. Projects developed by North Texas include commercial buildings, office buildings, convention centers, sports arenas, airports, schools, churches and bridges.



Past North Texas projects include The American Airlines Center, DFW Airport Expansion, Dallas Convention Center Expansion, the sky boxes (suites) in the Texas Stadium, the bridges over the 1-35/1-20 Interchange in Fort Worth, Texas and the People Mover at DFW Airport. Recently completed projects include the Dallas Market Center Expansion, Advanced Micro Devices Office Complex, LCRA Redbud Center, Almetris Duren Residence Hall / University of Texas, Samsung C.U.B., Brewer High School/WSISD. Current projects include LockheedMartin STOVL, Trinity Terrace Expansion , Omni Hotel , Ft Worth, Red Oak Ranch, TCU Stadium Expansion, Alamo Community College Lakeside Campus, WSISD Stadium, JW Marriott, San Antonio, Hall D2 Office Building, BNSF Bridge, .80 Rehab, Kansas City, Holcim Cement, and Bexar & Wise County TxDOT Bridges.



North Texas sells to large general contractors. The North Texas customer list includes most of the leading contractors in northern Texas such as Austin Commercial, Inc., Thomas S. Byrne, Inc and Hensel Phe1ps. North Texas also works closely over the years with engineering firms such as Carter Burgess, Inc., HKS, Inc., Datum Engineering, L.A. Fuess Partners and Freese & Nichols.



North Texas considers its current general market area to be Texas and the four contiguous states of New Mexico, Oklahoma, Arkansas and Louisiana.  North Texas' focus has generally focused on the Fort Worth area due to the positive dynamics of the Dallas-Fort Worth metropolitan area and North Texas' very close relationships with the leading contractors in the area.  The Company's focus is naturally is in its own backyard. In the past year North Texas has expanded into the Austin and San Antonio areas by working closely with its contractor base.



North Texas owns 17.8 acres of land in an industrial area that is transitioning to retail and residential.



Operations/Processes



North Texas pursues potential customer projects on both a bid and negotiated basis. In either case, North Texas is invited by the general contractor for the project to present its proposal. North Texas' management believes that its reputation for fabricating complex structures and delivering projects on time is the key to being a contender for new projects in its market area.



The production capacity of North Texas depends on the complexity and mix of projects coming through the plant. Generally speaking, North Texas can produce approximately 12,000 tons of production output per year. Typically, projects of 1,000 tons or less are completed within 12 months whereas larger, more complex projects may take considerably longer. Pricing is typically "lump sum, firm" and includes transportation to the job site and erection, which is performed by an erection subcontractor.



Industry and Market



The structural steel fabrication industry is made up of many well-established, often family run, businesses that concentrate on specialized segments of the industry, i.e. commercial, industrial, bridges, etc. While some of the companies do business throughout the United States, and a few export, the most common market approach is to focus on a geographical area of about 500 miles radius of their plant facility. Production capacity and certifications play an all-important role in the size and nature of projects that are pursued by a fabricator. The health of the general economy, the level of commercial building activity and the general economic growth of the region drive demand for structural steel components. North Texas is known as the leading heavy structural steel fabricator in the Dallas-Ft. Worth Market.



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Whitco Transaction



On April 25, 2006, we purchased certain assets of Whitco Company, LP, a business conducting the sale and distribution of steel and aluminum lighting poles throughout the globe, in exchange for 3,750,000 common stock purchase warrants, valued at $1,875,000. In addition, we made cash payments totaling $465,253 to Whitco Company, LPs creditors and incurred $70,000 in other costs related to the transaction. The Whitco assets are held in a separate subsidiary called Whitco Poles, Inc. The integration of the Whitco assets has gone well, but we have not fully realized the sales we originally projected.



Critical Accounting Policies



The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various others assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments:



Revenue Recognition



Significant portions of North Texas' revenues are derived from construction and service projects. Revenues from fixed-price, cost-plus-fee, time and material and unit-price contracts are recognized using the percentage-of-completion method of accounting which recognizes income as work on a contract progresses. Recognition of revenues and profits generally are related to costs incurred in providing the services required under the contract. Earned revenue is the amount of cost incurred on the contract in the period plus the proportional amount of gross profit earned during the same period. This method is used because management considers total cost to be the best available measure of completion of construction contracts in progress. Provisions for estimated losses on construction contracts in progress are made in their entirety in the period in which such losses are determined without reference to the
percentage complete. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to revenue and costs, and are recognized in the period in which the revisions are determined. Claims for additional revenue are not recognized until the period in which such claims are allowed. Direct contract costs include all direct labor, direct materials and some estimating costs and shop and equipment costs. Whitco revenues and product costs are recognized as the products are shipped to their customers.



Allowance For Doubtful Accounts



We estimate the collectability of our trade receivables. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past due balances. In order to assess the collectability of these receivables, we perform ongoing credit evaluations of our customers' financial condition. Through these evaluations we may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability or bankruptcy. The reserve requirements are based on the best facts available to us and are reevaluated and adjusted as additional information is received. Our reserves are also based on amounts determined by using percentages applied to certain aged receivable categories. These percentages are determined by a variety of factors including, but are not
limited to, current economic trends, historical payment and bad debt write-off experience. We are not able to predict changes in the financial condition of our customers and if circumstances related to our customers deteriorate, our estimates of the recoverability of our receivables could be materially affected and we may be required to record additional allowances. Alternatively, if we provided more allowances than are ultimately required, we may reverse a portion of such provisions in future periods based on our actual collection experience.



Comparison of the Quarter Ended January 31,2010 to the Quarter Ended January 31, 2009



Selling, General and Administrative Expenses



For the three months ended January 31, 2010, selling, general and administrative expenses totaled approximately $20,000, consisting primarily of administrative expenses and other expenses.  For the three months ended January 31, 2009, selling, general and administrative expenses totaled approximately $366,000, consisting primarily of administrative expenses and other expenses.  The $346,000 decrease from 2008 is due to the virtual suspension of operations.



The Company's present selling, general and administrative expenses are professional and administrative fees and expenses associated with the preparation of its filings with the SEC and other regulatory requirements. In the event that the Company engages in any merger or other business combination with an operating company, it will have additional material commitments. Although the Company from time to time may engage in discussions regarding a merger or other combination with an operating company, we



17





cannot offer any assurances that we will engage in any merger or other combination with an operating company within the next twelve months.



Comparison of the Six Months Ended January 31, 2010 to the Six Months Ended January 31, 2009



Selling, General and Administrative Expenses



For the six months ended January 31, 2010, selling, general and administrative expenses from continuing operation totaled approximately $78,634, consisting primarily of administrative expenses and other expenses.  For the six months ended January 31, 2009, selling, general and administrative expenses totaled approximately $386,511, consisting primarily of administrative expenses and other expenses.  The $307,877 decrease from 2009 is due to the virtual suspension of operations.



Gain on Sale of Assets, net of taxes



During the six months ended January 31, 2009, the Company recorded a gain on sale of assets in the amount of $3,542,000 in connection with its October 21, 2008 sale of its Omaha Holdings Corp. assets to a subsidiary of Laurus Master Fund.  See Note 6 of the Notes to Condensed Consolidated Financial Statements for further information of this gain.





Liquidity and Capital Resources



The Company currently has no operations and without new financing will not have sufficient resources to continue as a public enterprise.



As a result of our failure to timely pay our current obligations due to Laurus Master Fund, Ltd. ("Laurus") under our Secured Convertible Term B Note in the amount of $2,000,000, we received notification on January 31, 2008 from Laurus that certain events of default had occurred and are continuing beyond any applicable cure or grace period with respect to all of our secured obligations due to Laurus. We also received a letter from LV Administrative Services, Inc. ("LV Administrative Services"), acting in the capacity of administrative and collateral agent for Laurus, that demands the immediate payment of all past due amounts owed to Laurus by February 1, 2008. The amounts demanded totaled $13,580,810 ($10,350,000 in principal amortization, $96,777 in accrued interest, and $3,434,033 in Default Fees). We did not make such payments, and, accordingly, Laurus (as well as Gryphon Master Fund, LTD ("GMF"), and
GSSF Master Fund, LP ("GSSF")) may take all steps it deems necessary to protect their interests, including the enforcement and exercise of any and all of its rights, remedies, liens and security interests available to it.



In connection with our financing with Laurus, we executed a pledge agreement in favor of Laurus granting them a first priority security interest in the common stock of each of our subsidiaries. We also executed a security agreement that granted Laurus a first priority security interest in all the respective goods, inventory, contractual rights and general intangibles, receivables, documents, instruments, chattel paper, intellectual property owned by us and each of our subsidiaries. The security agreement and stock pledge agreement state that if an "event of default" occurs under any agreement with Laurus, it has the right to take possession of the collateral, to operate our business using the collateral, and has the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the collateral, at public or private sale or otherwise to satisfy its obligations under these agreements. As a
consequence of our default, Laurus has the right to pursue any of the remedies set forth in the pledge and security agreements. Likewise, GMF and GSSF have similar remedies available to them.



As a result of our default and ongoing losses, our Board and management has determined that it is advisable and in the best interests of the Company and its stockholders to sell all or substantially all of the assets of Omaha Holdings Corp., a wholly owned subsidiary of Company to a subsidiary of Laurus Master Fund, which assets consist primarily of the issued and outstanding stock of two wholly owned subsidiaries of Omaha Holdings Corp. (Sale). Thus, on April 4, 2008, the Board approved the Sale by majority vote and resolved to refer the matter to our stockholders for their approval.



The purpose of the Sale is to eliminate in excess of $13.5 principal amount of indebtedness and accrued and unpaid interest thereon owed by us to Laurus Master Fund, as well as over $800,000 of indebtedness due to Gryphon Fund for a total value of indebtedness of approximately $14.3 million as of June 1, 2008. We have not generated adequate revenues with which to service such debt and we have no realistic independent ability to do so. Absent the Sale, we would have faced a foreclosure proceeding which would have put a further strain on our otherwise very limited available financial resources.



On October 20, 2008, at a special meeting of shareholders, we received the approval of our shareholders to sell substantially all of the assets of Omaha Holdings Corp., to a subsidiary of Laurus Master Fund as described in our Definitive Proxy of September 16, 2008. The transaction as described in the Definitive Proxy was closed on October 21, 2008 resulting in the satisfaction of $13,580,810 plus accrued interest and fees payable to Laurus Fund and/or its affiliates and the satisfaction of the outstanding Gryphon Debt. As a result of the transaction, the Company is without operating assets.



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The independent auditor's report on the Company's July 31, 2009 financial statements included in our Annual Report states that the Company's recurring losses raise substantial doubts about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared assuming that the Company continues as a going concern that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses.



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Off- Balance Sheet Arrangements



We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.



Inflation



The effect of inflation on our revenue and operating results was not significant. Our operations are located in North America and there are no seasonal aspects that would have a material effect on our financial condition or results of operations.



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Fair Value of Financial Instruments  The estimated fair values of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies.

The Company has not entered into, and does not expect to enter into, financial instruments for trading or hedging purposes. The Company does not currently anticipate entering into interest rate swaps and/or similar instruments.



The Company's carrying values of cash, marketable securities, accounts receivable, accounts payable and accrued expenses are a reasonable approximation of their fair value.



ITEM 4.  CONTROLS AND PROCEDURES



a)
        Disclosure controls and procedures.  As of the end of the Companys most recently completed fiscal quarter covered by this report, the Company carried out an evaluation, with the participation of the Companys management, including the Companys chief executive officer and vice president of finance, of the effectiveness of the Companys disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15.  Based upon that evaluation, the Companys chief executive officer and vice president of finance concluded that the Companys disclosure controls and procedures were ineffective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the SECs rules and forms.




b.)
        Changes in internal controls over financial reporting:  There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's last fiscal quarter to which this report relates that have materially affected, or are reasonable likely to materially affect, the Companys internal control over financial reporting.








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PART II



OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Companys business. The Company is currently not aware of nor has any knowledge of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



None.



ITEM 3. DEFAULTS ON SENIOR SECURITIES



None.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



None.



ITEM 5. OTHER INFORMATION



None.



ITEM 6. EXHIBITS



(a)
        Exhibits.




31.1
        Certification by Principal Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 302




32.1
        Certification by Principal Officer and Chief Financial Officer pursuant to 18 U.S. C. Section 1350






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SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





AMERICAN TECHNOLOGIES GROUP, INC.





/s/ Thomas E. Durkin, III

_______________________________________________________________________________________________________________________________________________________________________




President





DATE: March 22, 2010



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EXHIBIT INDEX



Exhibit 31.1 - Certification by Principal Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 302

Exhibit 32.1 - Certification by Principal Officer and Chief Financial Officer pursuant to 18 U.S. C. Section 1350



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