|SECURITIES
AND EXCHANGE COMMISSIONWashington,
D.C. 20549


FORM 10-QSB


[X]     QUARTERLY REPORT
UNDER SECTION 13 OR 15(D) OF THESECURITIES EXCHANGE ACT OF 1934


For the quarterly
period ended April 30, 2001



[_]     TRANSITION REPORT
UNDER SECTION 13 OR 15(D) OF THESECURITIES 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(State or other jurisdiction ofincorporation or organization) | 95-4307525(IRS EmployerIdentification No.)
|------------------------------------------------------------------- | ------------------------------------------

|1017 South Mountain
Avenue, Monrovia, CA. 91016(Address of principal executive offices) (zip code)


Issuers telephone
number: (626) 357-5000


Check
whether the issuer (1) filed all reports to be filed by Section 13 or 15(d) of
the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No ____


As
of June 11, 2001, the registrant had 61,642,446 shares of Common Stock
outstanding.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|TABLE OF
CONTENTS
|-----------------

|        |  | PAGE                                                                   
|------- |  | -----------------------------------------------------------------------
|PART I  |  | FINANCIAL INFORMATION                                                  
|        |  |                                                                        
|ITEM 1  |  | Consolidated Financial Statements                                      
|        |  |                                                                        
|        |  | Consolidated Balance Sheets      as of April 30, 2001 and July 31, 2000
|        |  |                                                                        
|        |  | Consolidated Statements of Operations                                  
|        |  | for the Three and Nine Months ended April 30, 2001 and 2000            
|        |  |                                                                        
|        |  | Consolidated Statements of Cash Flows                                  
|        |  | for the Nine Months ended April 30, 2001 and 2000                      
|        |  |                                                                        
|        |  | Notes to Consolidated Financial Statements                             
|        |  |                                                                        
|ITEM 2  |  | Managements Discussion and Analysis                                   
|        |  |                                                                        
|PART II |  | OTHER INFORMATION                                                      
|        |  |                                                                        
|ITEM 2  |  | Changes in Securities                                                  
|        |  |                                                                        
|ITEM 6  |  | Exhibits and Reports on Form 8-K                                       
|        |  |                                                                        
|        |  | Signatures                                                             

|FORWARD-LOOKING
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 RELFECT
EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.
Page 2
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


APRIL 30, 2001 AND
JULY 31, 2000
|-------------------------------------------------------------------------------------------------------------------

|                                                       | April 30,2001(Unaudited) | July 31,2000
|------------------------------------------------------ | ------------------------ | ------------
|ASSETS                                                 |                          |             
|Current assets:                                        |                         
|Cash and cash equivalents                              |                          | $     17,633
|Accounts receivable, net of allowance for doubtful     |                         
|accounts of $10,000 at April 30, 2001  and             |                         
|July 31, 2000, respectively                            |                          | 45,554      
|Inventories, net                                       |                          | 191,297     
|Other current assets                                   |                          | 23,729      
|                                                       |                          |             
|Total current assets                                   |                          | 278,213     
|Property and equipment, net of accumulated             |                         
|depreciation and amortization of $612,218 and $723,583 |                         
|at April 30, 2001 and July 31, 2000, respectively      |                          | 120,605     
|Other assets                                           |                          | 162,504     
|Assets of discountined operations                      |                          |            
|                                                       |                          |             
|                                                       |                          | $   561,322 
|                                                       |                          |             

|The accompanying notes
are an integral part of these consolidated financial statements.3
|----------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE
SHEETS-CONTINUED


APRIL 30, 2001 AND
JULY 31, 2000
|-----------------------------------------------------------------------------------------------------------------------------

|                                                              | April 30,2001(Unaudited) | July 31,2000  
|------------------------------------------------------------- | ------------------------ | --------------
|LIABILITIES AND STOCKHOLDERS DEFICIT                         |                          |               
|Current liabilities:                                          |                         
|Accounts payable                                              |                          | $      543,366
|Accrued interest payable                                      |                          | 421,360       
|Accrued payroll and related liabilities                       |                          | 444,639       
|Accrued professional fees                                     |                          | 340,639       
|Other accrued liabilities                                     |                          | 209,480       
|Amounts due to related parties                                |                          | 390,621       
|Notes payable                                                 |                          | 189,097       
|Current portion of convertible debentures                     |                          | 2,125,000     
|Liabilities of discontinued operations                        |                          |              
|                                                              |                          |               
|Total current liabilities                                     |                          | 4,664,202     
|Convertible debentures, net of current portion                |                          | 921,253       
|Deferred gain on sale-leaseback                               |                          | 246,092       
|                                                              |                          |               
|Total liabilities                                             |                          | 5,831,547     
|                                                              |                          |               
|Commitments and contingencies                                 |                         
|Stockholders deficit:                                        |                         
|Series A convertible preferred stock, $.001 par value;        |                         
|10,000,000 shares authorized; 378,061 shares                  |                         
|Issued and outstanding                                        |                          | 378           
|Series B convertible preferred stock, $.001 par value;        |                         
|500,000 shares authorized; liquidation value at $8.00         |                         
|per share; none issued and outstanding                        |                          |              
|Series C convertible preferred stock, $.001 par value;        |                         
|2,000 shares authorized; liquidation value at $1,000          |                         
|per share; none issued and outstanding                        |                          |              
|Common stock, $.001 par value; 100,000,000 shares authorized; |                         
|50,447,778 and 44,955,772 shares issued and outstanding       |                         
|at April 30, 2001 and July 31, 2000, respectively             |                          | 50,448        
|Additional paid-in capital                                    |                          | 52,521,154    
|Stock subscriptions                                           |                          | 6,750         
|Prepaid consulting expenses                                   |                          |              
|Accumulated deficit                                           |                          | (57,848,955   
|                                                              |                          |               
|Total stockholders deficit                                   |                          | (5,270,225    
|                                                              |                          |               
|                                                              |                          | $      561,322
|                                                              |                          |               

|The accompanying notes
are an integral part of these consolidated financial statements.4
|----------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR THE THREE AND NINE
MONTHS ENDED APRIL 30, 2001 AND 2000


(Unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | Three Months Ended April 30, | Nine Months Ended April 30,
|--------------------------------------------- | ---------------------------- | ---------------------------
|
|Revenues:                                     |                              |                            
|Technology products                           |                              | $        18,467            
|Other                                         |                              | 5,100                      
|                                              |                              |                            
|Total operating revenues                      |                              | 23,567                     
|                                              |                              |                            
|Operating Expenses:                           |                             
|General and administrative                    |                              | 423,076                    
|Marketing and product development             |                              | 24,405                     
|Research and development                      |                              | 46,923                     
|Amortization of technology rights             |                              |                           
|                                              |                              |                            
|Total operating expenses                      |                              | 494,404                    
|                                              |                              |                            
|Other (Expense) Income:                       |                             
|Interest expense, net                         |                              | (129,805                   
|Amortization of deferred gain                 |                             
|on sale-leaseback                             |                              | 13,345                     
|                                              |                              |                            
|                                              |                              | (116,460                   
|                                              |                              |                            
|Net loss from continuing operations           |                              | (587,297                   
|                                              |                              |                            
|Discontinued Operations:                      |                             
|Income (loss) from discontinued operations    |                              | (3,159                     
|Loss from disposal of discontinued operations |                              | (16,570                    
|                                              |                              |                            
|Total discontinued operations                 |                              | (19,729                    
|                                              |                              |                            
|Net loss                                      |                              | $    (607,026              
|                                              |                              |                            
|Basic and diluted net loss per share          |                             
|Continuing operations                         |                              | $         (0.01            
|Discontinued operations                       |                              |                           
|                                              |                              |                            
|Net loss                                      |                              | $         (0.01            
|                                              |                              |                            
|Weighted average number of                    |                             
|common shares outstanding                     |                              | 49,544,277                 
|                                              |                              |                            

|The accompanying notes
are an integral part of these consolidated financial statements.5
|----------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR THE NINE MONTHS
ENDED APRIL 30, 2001 AND 2000


(Unaudited)
|------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                        | Nine Months Ended April 30,
|----------------------------------------------------------------------- | ---------------------------
|
|Cash flows from operating activities:                                   |                            
|Net loss                                                                |                            
|Adjustments to reconcile net loss to net cash used                      |                            
|in operating activities:                                                |  
;                    
|Depreciation and amortization                                           |                            
|Amortization of prepaid consulting expenses                             |                            
|Amortization of deferred gain on sale-leaseback                         |                            
|Stock issued and subscribed as consideration for services               |                            
|Stock issued for convertible debenture interest                         |                            
|Imputed interest income on notes receivable                             |                            
|Imputed and accrued interest expense on convertible debentures          |                            
|Stock options issued to consultants and employees                       |                            
|Loss from disposal of discontinued operations                           |                            
|Changes in operating assets and liabilities:                            |                            
|Accounts receivable                                                     |                            
|Inventories                                                             |                            
|Other current assets                                                    |                            
|Accounts payable and accrued liabilities                                |                            
|Amounts due to related parties                                          |                            
|                                                                        |                            
|Net cash used in operating activities                                   |                            
|                                                                        |                            
|Cash flows from financing activities:                                   |                            
|Proceeds from issuance of convertible debentures                        |                            
|Net proceeds from dispositon of assets                                  |                            
|Proceeds from notes payable                                             |                            
|Payments on notes payable                                               |                            
|Payments on short-term loan to an officer                               |                            
|Net proceeds from issuance of stock and stock subscriptions             |                            
|                                                                        |                            
|Net cash provided by financing activities                               |                            
|                                                                        |                            
|Net cash flows from discontinued operations                             |                            
|Net change in cash and cash equivalents                                 |                            
|Cash and cash equivalents, beginning of period                          |                            
|                                                                        |                            
|Cash and cash equivalents, end of period                                |                            
|                                                                        |                            
|Supplemental disclosure of non-cash investing and financing activities: |                            
|Conversion of debentures                                                |                            
|                                                                        |                            
|Cancellation of debt by repricing of option                             |                            
|                                                                        |                            
|Stock issued as payment of note                                         |                            
|                                                                        |                            
|Sale price of land and buildings, net                                   |                            
|Less:    Repayment of a note to a mortgage holder                       |                            
|Repayment of a note to a related party                                  |                            
|Pepayment of expenses related to the property                           |                            
|Deposit on lease of the building                                        |                            
|                                                                        |                            
|Net proceeds                                                            |                            
|                                                                        |                            

|The accompanying notes
are an integral part of these consolidated financial statements.6
|----------------------------------------------------------------------------------------

|AMERICAN
TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


(unaudited)
|-------------------------------------------------------------------------------------------------------------

|1. |  | Basis
of Presentation
|-- |  | ---------------------

| | The
accompanying unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information and with
the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods ended April 30, 2001 are
not necessarily indicative of the results that may be expected for the year ended July
31, 2001. For further information, please refer to the consolidated financial statements
and notes thereto included in the Companys Annual Report on Form 10-KSB for the year
ended July 31, 2000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Organization,
Line of Business and Significant Business Risks
|-- |  | -------------------------------------------------------------

| |  | a. |  | Organization
and Line of Business
| |  | -- |  | ---------------------------------

| | American
Technologies Group, Inc. (the Company or ATG), a Nevada corporation, is engaged in
the development, commercialization and sale of products and systems using its patented
and proprietary technologies. The resulting products are intended to offer cost-effective
solutions to reduce, and in some cases eliminate, hazardous chemical by-products or
emissions resulting from industrial and combustion processes. The Companys proprietary
catalyst technology may improve many commercial products including detergents and
cosmetics.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | b. |  | Significant
Business Risks
| |  | -- |  | --------------------------

| | Since
its inception, the Company has incurred significant operating losses. The ability of the
Company to operate as a going concern is dependent upon its ability (1) to obtain
sufficient additional debt and/or equity capital, and (2) generate significant revenues
through its existing assets and operating business. The Company plans to raise additional
working capital through private offerings of debt and equity. The successful outcome of
future activities cannot be determined at this time and there are no assurances that if
achieved, the Company will have sufficient funds to execute its business plans or
generate positive operating results. These issues, among others, raise substantial doubt
about the ability of the Company to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | c. |  | Net
Loss Per Share
| |  | -- |  | ------------------

| | Net
loss per common share is based upon the weighted average number of common shares
outstanding during the fiscal year under the provisions of Statement of Financial
Accounting Standards No. 128, Earnings Per Share. Common share equivalents were not
considered as they would be anti-dilutive and had no impact on earnings per share for any
periods presented. However, the impact under the treasury method of dilutive stock
options would have been incremental shares of 409,439 and 472,504 for the nine months
ended April 30, 2001 and 2000, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Page 7
|------

|
|

|3. |  | Property
and equipment
|-- |  | ----------------------

| | On
August 25, 2000, the Company sold its land and buildings with a net book value of
approximately $950,000 to an unrelated third party in a sale-leaseback transaction for
total consideration of $1,300,000, recognizing a deferred gain of $286,125. As a result
of the sale, the Company paid its note payable of $877,500 and the related accrued
interest. The deferred gain will be amortized over the maximum life of the lease. For the
three and nine months ending April 30, 2001, the amortization of the gain was $13,345 and
$40,034, respectively. The lease calls for minimum monthly payments of $9,222 through
August, 2001 with annual increases through August, 2005 totaling approximately $595,000,
and is cancelable by either party with six months notice.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | Debentures
|-- |  | ----------

| | In
September, 2000, the Company issued $500,000 of 8% convertible debentures, maturing
September 5, 2002, for proceeds of $432,500. The Company recorded debt issuance costs of
$67,500 as an offset to convertible debentures related to this transaction which will be
amortized to interest expense over the life of the debentures. Accrued interest on these
convertible debentures is due on the earlier of conversion or maturity. The conversion
price is the lower of 75% of the average of the lowest three trading prices during the
fifteen trading days prior to issuance or 80% of the average of the lowest three trading
prices during ninety days prior to conversion. In connection with these convertible
debentures, 500,000 stock warrants to acquire stock at an exercise price of $0.09 per
share were issued to a finder. The conversion feature and the warrants vest immediately.
In connection with the discount conversion feature and the fair value of the warrants,
the Company has recorded imputed interest expense of $204,696 which is included in
interest expense in the accompanying Statements of Operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
November, 2000, the Company issued $250,000 of 8% convertible debentures, maturing
November 15, 2002, for proceeds of $219,988. The Company recorded debt issuance costs of
$30,012 as an offset to convertible debentures related to this transaction which will be
amortized to interest expense over the life of the debentures. Accrued interest on these
convertible debentures is due on the earlier of conversion or maturity. The conversion
price is the lower of $0.068 or 80% of the average of the lowest three trading prices
during ninety days prior to conversion. In connection with these convertible debentures,
250,000 stock warrants to acquire stock at an exercise price of $0.10 per share were
issued to a finder. The conversion feature and the warrants vest immediately. In
connection with the discount conversion feature and the fair value of the warrants, the
Company has recorded imputed interest expense of $255,794 which is included in interest
expense in the accompanying Statements of Operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January, 2001, the Company issued $150,000 of 8% convertible debentures, maturing January
5, 2003, for proceeds of $132,487. The Company recorded debt issuance costs of $17,513 as
an offset to convertible debentures related to this transaction which will be amortized
to interest expense over the life of the debentures. Accrued interest on these
convertible debentures is due on the earlier of conversion or maturity. The conversion
price is the lower of $0.068 or 80% of the average of the lowest three trading prices
during ninety days prior to conversion. In connection with these convertible debentures,
150,000 stock warrants to acquire stock at an exercise price of $0.05 per share were
issued to a finder. The conversion feature and the warrants vest immediately. In
connection with the discount conversion feature and the fair value of the warrants, the
Company has recorded imputed interest expense of $60,413 which is included in interest
expense in the accompanying Statements of Operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
March, 2001, the Company issued $150,000 of 8% convertible debentures, maturing March 29,
2003, for net proceeds of $132,487. The Company recorded debt issuance costs of $17,513
as an offset to convertible debentures related to this transaction which will be
amortized to interest expense over the life of the debentures. Accrued interest on these
convertible debentures is due on the earlier of conversion or maturity. The conversion
price is the lower of $0.068 or 80% of the average of the lowest three trading prices
during ninety days prior to conversion. In connection with these convertible debentures,
150,000 stock warrants to acquire stock at an exercise price of $0.05 per share were
issued to a finder. The conversion feature and the warrants vest immediately. In
connection with the discount conversion feature and the fair value of the warrants, the
Company has recorded imputed interest expense of $54,126 which is included in interest
expense in the accompanying Statements of Operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Page 8
|------

|
|

| | These
debentures have registration rights and anti-dilution rights related to any conversions
to common stock as discussed in the agreements. In addition, these debenture agreements
contain loan covenants with which the Company was in compliance at April 30, 2001.
Therefore, these debentures are classified as a long-term liability in the accompanying
consolidated balance sheet at April 30, 2001.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the nine months ended April 30, 2001, $32,503 of the convertible debentures including
related interest expenses of $453 were converted into 1,208,000 shares of common stock of
the Company. The conversion price ranged from $0.015 to 0.03 per share (80% of the
average of the lowest three trading prices during the ninety days prior to conversion),
as provided in the agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Capital
Stock
|-- |  | -------------

| |  | a. |  | Common
Stock
| |  | -- |  | ------------

| | On
August 4, 2000, the Company issued 125,000 restricted shares of common stock in exchange
for $10,000 to an outside party.
| | ----------------------------------------------------------------------------------------------------------------------------

| | On
September 6, 2000, the board of directors granted the non-employee directors 750,000
shares valued at $0.12 per share as compensation for services rendered as board members
recognizing $90,000 of compensation expense. The Company granted options to employees to
purchase 1,300,000 shares at an exercise price of $0.12 per share, recognizing $13,000 of
compensation expense under APB Opinion 25. In addition, the Company recognized option
expense of $9,585 in connection with an option to purchase 125,000 shares at an exercise
price of $0.12 per share granted to an officer in consideration of short term loan to the
Company.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
total of $184,164 of option compensation expense was recorded over the vesting period
during the nine months ended April 30, 2001.
| | ------------------------------------------------------------------------------------------------------------------------------------

| | On
September 14, 2000, warrant holders exercised 3,369,006 warrants at exercise prices
ranging from $0.072 to $0.09 per share in exchange for $253,368.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2001, a note holder agreed to accept 50,000 shares of common stock for payment of
loan of $5,000. The Company issued 10,000 shares in fiscal 2000 and 40,000 shares in
fiscal 2001.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
fiscal 2000, the Company entered into several consulting agreements for services. Under
the terms of the agreements, the Company issued shares of common stock for services, the
value of which was recorded to prepaid consulting expenses and is being amortized on a
straight-line basis over the terms of the agreements. General and Administrative expenses
include prepaid consulting amortization expense of $0 and $25,833 for the three months
ended April 30, 2001 and 2000, respectively, and $173,901 and $616,066 for the nine
months ended April 30, 2001 and 2000, respectively, in the accompanying Consolidated
Statements of Operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | b. |  | Stock
Subscriptions
| |  | -- |  | -------------------

| | As
of April 30, 2001, the Company had not issued 15,000 shares of Common Stock owed for
services rendered prior to July 31, 2000, valued at $6,750 which is included within stock
subscriptions in the accompanying Consolidated Balance Sheets.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Page 9
|------

|
|

|6. |  | Discontinued
Operations
|-- |  | -----------------------

| | On
March 8, 2001, the Company entered into a stock purchase agreement with Overseas
Investment, an unrelated company, to sell its entire interest in New Concept Mining, Inc.
for $40,000. The Company received $25,000 and will receive the balance of $15,000 in
December 2002. Loss from disposal, after the release of all liabilities associated with
New Concept Mining (approximately $733,500) is estimated at $975,106, which is included
in discontinued operations in the accompanying Statement of Operations. Operating Loss of
New Concept Mining for the three and nine months ended April 30, 2001 and April 30, 2000
have been reclassified for presentation purposes; assets and liabilities of New Concept
Mining at July 31, 2000 have been reclassified to assets and liabilities of discontinued
operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. |  | Related
Party Transactions
|-- |  | --------------------------

| | In
August, 2000, upon the sale of the buildings, the Company used $50,000 of the proceeds to
pay the related party note holder in exchange for releasing the security in the property.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September, 2000, the Company made payment of $5,000 due to an officer on a short term
borrowing.
| | ---------------------------------------------------------------------------------------------------

| | In
October, 2000, the Company entered into an agreement with a related party to reprice an
option to purchase 50,000 shares to $0.10 per share from $0.50 per share in exchange for
forgiveness of $125,000 due to the option holder. The value of the repriced options
($2,592) and the difference between the value of the repriced options and the $125,000
note balance of $122,408 was recorded as a contribution of capital as the transaction was
between related parties.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. |  | Subsequent
Events
|-- |  | -----------------

| | Subsequent
to April 30, 2001, the Company issued an aggregate of $350,000 of 8% secured convertible
debentures, maturing May 2002, for proceeds of $286,520. The Company will record debt
issuance costs of $63,480 as an offset to convertible debentures related to this
transaction which will be amortized to interest expense over the life of the debentures.
Accrued interest on these convertible debentures is due quarterly commencing September
2001. The conversion price is the lower of 80% of the average of the three lowest closing
price during thirty trading days prior to the issuance or 80% of the average of the three
lowest closing prices during sixty days prior to conversion. In connection with these
convertible debentures, 350,000 stock warrants were issued to acquire stock at an
exercise price of the lesser of $0.01133 per share or 100% of the average of the three
lowest closing bid prices for the 10 trading days prior to exercise. The conversion
feature and the warrants vest immediately. In connection with the discount conversion
feature and the fair value of the warrants, the Company will record imputed interest
expense in the quarter ended July 31, 2001. The convertible debentures are secured with
patents and pending patents relating to a certain technology of the Company.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Subsequent
to the end of the quarter, $102,945 of the convertible debentures plus related interest
expenses of $2,266 were converted into 11,194,668 shares of common stock of the Company.
The conversion price ranged from $.0075 to .015 per share (80% of the average of the
lowest three trading prices during ninety days prior to conversion), as provided in the
agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Subsequent
to April 30, 2001, Messrs. Odom and Schad have resigned from the Board of Directors.
| | -----------------------------------------------------------------------------------------------

|Page 10
|-------

|
|

|9. |  | Industry
Segment Information
|-- |  | ----------------------------

| | The
Companys principal remaining business segment is Technology Products (The Force®).
| | ---------------------------------------------------------------------------------------

| | Financial
information about industry segments as of and for the nine months ended April 30, 2001
and 2000, respectively, is as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------

|                                        | Nine Months Ended April 30,
|--------------------------------------- | ---------------------------
|
|Operating revenues:                     |                            
|Technology products                     |                            
|Corporate                               |                            
|                                        |                            
|Total operating revenues                |                            
|                                        |                            
|Operating loss:                         |                            
|Technology products, including research |                            
|and development                         |                            
|Corporate                               |                            
|                                        |                            
|Net operating loss                      |                            
|                                        |                            
|Identifiable assets:                    |                            
|Technology products                     |                            
|Mining assets held for sale             |                            
|Corporate and other                     |                            
|                                        |                            
|Total                                   |                            
|                                        |                            

| | Operating
loss is revenues minus operating expenses.
| | ----------------------------------------------------

| | Identifiable
assets by segment are assets used in or otherwise identifiable with the Companys
operations in each segment.
| | --------------------------------------------------------------------------------------------------------------------------

|Page 11
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|Item 2.
Managements Discussion and Analysis


Management continued its
efforts to refocus the Companys activities on those that it believes to be commercially liable among its core technologies, along
with new product development and commercialization. As a result of the
divestiture of New Concept Mining, Inc., the last of the non-core businesses,
ATG is now totally focused on the marketing and sales of the products
commercialized from its core technologies. The catalyst technology is
incorporated in a newly re-designed and independently tested and verified truck
fleet pack and in The Force Formula 1 and Formula 2. The infomercial has been totally made over and
modified for the Japanese market and will run in that country. Additionally, we have received small orders from other foreign markets
and additional sales look very promising. The table top distiller is ready for
tooling. The Company will proceed with the tooling and manufacturing of the
product when sufficient funds become available. Additionally, the Company is
discussing with foreign entities the licensing of manufacture and marketing
rights to the distiller for specific foreign countries. Management anticipates
these efforts will result in significant revenue commencing in fiscal year 2002,
although there can be no assurance to this effect, notwithstanding considerable marketing efforts direct toward that end.


RESULTS OF OPERATIONS FOR THE THREE
MONTHS ENDEDAPRIL 30, 2001 AND 2000


Total revenue decreased by
$13,600 from $37,200 to $23,600 for the three months ended April 30, 2000 and
April 30, 2001, respectively, principally due to an decrease in sales of
technology products of $4,400 and other income of $9,200.


Operating expenses
decreased by $338,900 from $833,300 to $494,400 for the three months ended April
30, 2000 and April 30, 2001, respectively. The decrease was principally due to
decreased general and administrative expenses of $142,500, marketing and product
development expenses of $41,100, research and development expenses of $55,300
and amortization of technology rights of $100,000.


Other expenses decreased by
$214,600 from $331,100 to $116,500 for the three months ended April 30, 2000 and
April 30, 2001, respectively, principally due to a decrease in interest expense
of $201,300 which during the earlier period included significant non-cash
imputed interest related to a convertible debenture.


The Companys net loss
decreased by $502,100 from $1,109,100 to $607,000 for the three months ended
April 30, 2000 and April 30, 2001, respectively, principally due to decreased
operating expenses of $338,900 and decreased interest expense of $201,300.


RESULTS OF OPERATIONS FOR THE NINE
MONTHS ENDEDAPRIL 30, 2001 AND 2000


Revenue decreased by
$70,000 from $193,800 to $123,800 for the nine months ended April 30, 2000 and
April 30, 2001, respectively, principally due to a decrease in sales of
technology products of $32,600 and other income of $37,400.


Operating expenses
decreased by $1,330,100 from $3,440,500 to $2,110,400 for the nine months ended
April 30, 2000 and April 30, 2001, respectively. The decrease was principally
due to decreased general and administrative expenses of $1,064,800, research and
development expenses of $146,900 and amortization of technology rights of
$300,000, offset by an increase in marketing and product development expenses of
$181,600. The decrease in general and administrative expenses was principally
the result of decreases in officers compensation expense of $225,400, consulting
expense of $204,000 and the non-cash amortization of prepaid consulting expense
of $442,200 as a result of significant shares issued in late fiscal 1999 to
consultants for long-term agreements that were amortized in the nine months
ended April 30, 2000; such equivalent consultant shares were not issued at the
end of fiscal 2000.


Other expenses for the nine
months ended April 30, 2001 decreased by $664,600 to $748,600 from $1,413,200
for the corresponding period of fiscal 2000 due to a decrease in interest
expense of $624,500 which during the earlier period included significant
non-cash imputed interest related to convertible debentures.


Page 12
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|The Companys net loss
decreased by $858,300 from $4,627,600 to $3.769,300 at April 30, 2000 and April
30, 2001, respectively, principally due to decreased operating expenses of
$1,330,100 and other expenses of $664,500, offset by a decrease in revenues of
$70,000 and an increase in loss from disposal of discontinued operations of
$1,066,400.


LIQUIDITY AND CAPITAL RESOURCES


Since its inception, the
Company has incurred significant operating losses. The ability of the Company to
operate as a going concern is dependent upon its ability to (1) obtain
sufficient additional capital and (2) generate significant revenues through its
existing assets and revenues from our operating business. The Company plans to raise additional
working capital through private offerings of debt and equity. The successful
outcome of future activities cannot be determined at this time and there are no
assurances that if achieved, the Company will have sufficient funds to execute
its business plans or generate positive operating results. These issues, among
others, raise substantial doubt about the ability of the Company to continue as
a going concern.


Total assets decreased by
$2,766,000 from $3,327,300 to $561,300 at July 31, 2000 and April 30, 2001,
respectively. This decrease was the principal result of the sale of the
Companys land and building with a net book value of approximately $975,100
and disposal of assets of $1,748,700 of discontinued operations.


The Company divested itself
of all of its mining and publishing operations. With regard to the former, the intervening years between the
acquisition of the mines and today the mining industry has become severely
depressed due, in part, to a significant reduction in the price of gold and
tungsten and although the Company engaged experienced brokers , the Company was
not able to divest these properties without significant loss.


Total liabilities decreased
by $461,500 from $6,293,100 to $5,831,500 at July 31, 2000 and April 30, 2001,
respectively. This decrease was principally due to decreases in notes payable of
$910,700, amount due to related parties of $208,200 and disposal of liabilities
of discontinued operations of $733,500, offset by an increase in accrued payroll
liabilities of $170,700 and convertible debentures of $921,300. The decrease in
notes payable principally resulted from the payment of the $877,500 note secured
by the building sold by the Company.


The Company decreased the
cash used in operations by $367,500 from $1,638,000 to $1,270,500 for the nine
months ended April 30, 2000 and April 30, 2001, respectively. The principal
source of working capital during the nine months ended April 30, 2001 was net
proceeds of $917,451 from the issuance of $1,050,000 of principal amount of
convertible debentures, net proceeds of $263,400 from issuance of stock and net
proceeds of $126,500 from sale of the land and building. During the comparable
period in 2000, the principal source of working capital was net proceeds of
$934,800 from the issuance of $1,000,000 of principal amount of convertible
debentures.


The Companys current
cash monthly operating expenses are approximately $150,000. Management believes
the Companys current cash reserves plus funds which may be available from
modest revenues and additional convertible notes issued pursuant to the subscription agreements
discussed below and in connection with the recently effective registration
statement on Form SB-2 filed with the Securities and Exchange Commission, along
with anticipated minimum projected revenues for the remainder of fiscal 2001,
will be sufficient for the Company to operate in the normal course for the next
12 months.


The Company received two orders
for The Force from the domestic trucking industry. Only one order has been paid for.
The buyer of the second order apparently decided not to use The Force, attempted to
return the order and has not paid for it in violation of his contract with our distributor,
Express Success.  Not withstanding the setbacks the Company has had in marketing The Force
products, management believes there is sufficient and verifiable evidence to support a projection
of sufficient minimum revenues, significantly exceeding historical revenues, to provide
the Company with enough working capital to continue to operate. This includes anticipated revenues
from overseas sales, including as a result of the infomercial in Japan.  However, there
can be no assurance that actual sales will be generated as projected or sufficient to meet
the Companys cash operating requirements.  We have experienced significant difficulty in marketing
The Force products, partly because of skepticism of a water-based catalyst and partly because of
its delivery system i.e., in the air filter.  Also, in some cases, the Company was misled by
its customers as to the circumstances surrounding their orders.  This was the case in Costa Rica.
The Company continues its efforts to collect on the Costa Rican order.  If sufficient
revenues are not attained, the Company may not be able to continue as a going concern.
Page 13
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|Statements included in this
Managements Discussion and Analysis and elsewhere in this Form 10-QSB, in
future filings by the Registrant with the Securities and Exchange Commission and
in the Registrants press releases and oral statements made with the
approval of authorized executive officers, if the statements are not historical
or current facts, should be considered forward-looking statements.
These statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. Registrant wishes to caution the reader not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made.

Page 14
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|PART II


OTHER
INFORMATION



Item 2  Changes
in Securities


(a) Not applicable.


(b) Not applicable.


(c) During March 2001, the
Company sold $150,000 principal amount of 8% convertible debentures to two
sophisticated investors. The debentures are convertible at the rate of the lower
of $0.068 or 80% of the average of the lowest three trading prices during the
ninety days prior to conversion. A finder received warrants to purchase 150,000
shares of common stock at $0.05 per share.


The foregoing transactions
are claimed to be exempt from registration under the Securities Act of 1933, as
amended, pursuant to Section 4(2) thereof, as a transaction not involving a
public offering, in that the purchasers had full access to all material
information concerning the Company and were acquiring the securities for
investment and not with a view to distribution. There were no underwriting
discounts or commissions paid in connection with the transactions nor was any
advertising or other form of general solicitation used by the Company.



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


(a)  Exhibits.


27     Financial Data Schedule


(b)  Reports on Form 8-K.


None.


Page 15
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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.By:  /s/ Lawrence J. Brady       
       Lawrence J. Brady       Chairman of the Board,
       Chief Executive Officer
       Acting Chief Financial OfficerDate:  June 19, 2001
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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