|SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-QSB
|------------------------------------------------------------------------

| |  |  |  | [X] |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934
| |  |  |  | --- |  | -----------------------------------------------------------------------------------------------------

|For the Quarterly
Period Ended January 31, 2001
|-----------------------------------------------

| |  |  |  | [   ] |  | 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(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 March 14, 2001, the registrant had 49,239,778 shares of Common Stock outstanding.
| | ---------------------------------------------------------------------------------------

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

|        |  | PAGE                                                                                              
|------- |  | --------------------------------------------------------------------------------------------------
|PART I  |  | FINANCIAL INFORMATION                                                                             
|       
|ITEM 1  |  | Consolidated Financial Statements                                                                 
|       
|        |  | Consolidated Balance Sheets as of January 31, 2001 and July 31, 2000                              
|       
|        |  | Consolidated Statements of Operations for the Three and Six Months ended January 31, 2001 and 2000
|       
|        |  | Consolidated Statements of Cash Flowsfor the Six Months ended January 31, 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


JANUARY 31, 2001 AND JULY 31, 2000
|---------------------------------------------------------------------------------------------------------------------

|ASSETS                                                 | January 31,2001 | July 31,2000
|------------------------------------------------------ | --------------- | ------------
|
|Current assets:                                        |                 |             
|Cash and cash equivalents                              |                 | $    5,499  
|Accounts receivable, net of allowance for doubtful     |                
|accounts of $10,000 at January 31, 2001  and           |                
|July 31, 2000, respectively                            |                 | 97,070      
|Inventories, net                                       |                 | 180,326     
|Other current assets                                   |                 | 24,967      
|                                                      
|Total current assets                                   |                 | 307,862     
|Property and equipment, net of accumulated             |                
|depreciation and amortization of $596,936 and $723,583 |                
|at January 31, 2001 and July 31, 2000, respectively    |                 | 135,887     
|Other assets                                           |                 | 171,228     
|                                                      
|Assets of discountined operations                      |                 |            
|                                                      
|                                                       |                 | $614,977    
|                                                      

|The accompanying notes
are an integral part of these consolidatd financial statements.


Page 3
|-----------------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
BALANCE SHEETS-CONTINUED
JANUARY 31, 2001 AND JULY 31, 2000
|--------------------------------------------------------------------------------------------------------------------------

|LIABILITIES AND STOCKHOLDERS DEFICIT                         | January 31,2001 | July 31,2000  
|------------------------------------------------------------- | --------------- | --------------
|
|Current liabilities:                                          |                 |               
|Accounts payable                                              |                 | $      507,591
|Accrued interest payable                                      |                 | 364,688       
|Accrued payroll and related liabilities                       |                 | 315,927       
|Accrued professional fees                                     |                 | 254,388       
|Other accrued liabilities                                     |                 | 185,224       
|Amounts due to related parties                                |                 | 390,621       
|Notes payable                                                 |                 | 219,800       
|Current portion of convertible debentures                     |                 | 2,125,000     
|Liabilities of discontinued operations                        |                 |              
|                                                             
|Total current liabilities                                     |                 | 4,363,239     
|Convertible debentures, net of current portion                |                 | 803,519       
|Deferred gain on sale-leaseback                               |                 | 259,436       
|                                                             
|Total liabilities                                             |                 | 5,426,194     
|                                                             
|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; 49,239,778 (including 40,000 of committed shares) |                
|and 44,955,772 shares issued and outstanding at               |                
|January 31, 2001 and July 31, 2000, respectively              |                 | 49,240        
|Additional paid-in capital                                    |                 | 52,374,344    
|Stock subscriptions                                           |                 | 6,750         
|Prepaid consulting expenses                                   |                 |              
|Accumulated deficit                                           |                 | (57,241,929   
|                                                             
|Total stockholders deficit                                   |                 | (4,811,217    
|                                                             
|                                                              |                 | $      614,977
|                                                             

|The accompanying notes are an integral part of these consolidatd financial statements.


Page 4
|-----------------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES
GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2001 AND 2000
(Unaudited)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | Three Months Ended January 31, | Six Months Ended January 31,
|--------------------------------------------- | ------------------------------ | ----------------------------
|
|Revenues:                                     |                                |                             
|Technology products                           |                                | $        93,048             
|Other                                         |                                |                            
|                                             
|Total operating revenues                      |                                | 93,048                      
|                                             
|Operating Expenses:                           |                               
|General and administrative                    |                                | 449,535                     
|Marketing and product development             |                                | 359,744                     
|Research and development                      |                                | 81,589                      
|Amortization of technology rights             |                                |                            
|                                             
|Total operating expenses                      |                                | 890,868                     
|                                             
|Other (Expense) Income:                       |                               
|Interest expense, net                         |                                | (385,678                    
|Amortization of deferred gain                 |                               
|on sale-leaseback                             |                                | 13,344                      
|                                             
|                                              |                                | (372,334                    
|                                             
|Net loss from continuing operations           |                                | (1,170,154                  
|                                             
|Discontinued Operations:                      |                               
|Income (loss) from discontinued operations    |                                | (27,942                     
|Loss from disposal of discontinued operations |                                | (958,536                    
|                                             
|Total discontinued operations                 |                                | (986,478                    
|                                             
|Net loss                                      |                                | $(2,156,632                 
|                                             
|Basic and diluted net loss per share          |                               
|Continuing operations                         |                                | $         (0.02             
|Discontinued operations                       |                                | (0.02                       
|                                             
|Net loss                                      |                                | $         (0.04             
|                                             
|Weighted average number of                    |                               
|common shares outstanding                     |                                | 49,199,778                  
|                                             

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


Page 5
|----------------------------------------------------------------------------------------------------------

|AMERICAN TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JANUARY 31, 2001 AND 2000
(Unaudited)
|-------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                        | Six Months Ended January 31, |                
|----------------------------------------------------------------------- | ---------------------------- | ---------------
|
|Cash flows from operating activities:                                   |                              |                
|Net loss                                                                |                              | $(3,162,313    
|Adjustments to reconcile net loss to net cash used                      |                             
|in operating activities:                                                |  
;                     
|Depreciation and amortization                                           |                              | 54,383         
|Amortization of prepaid consulting expenses                             |                              | 173,901        
|Amortization of deferred gain on sale-leaseback                         |                              | (26,689        
|Stock issued and subscribed as consideration for services               |                              | 87,800         
|Imputed interest income on notes receivable                             |                              |               
|Imputed and accrued interest expense on convertible debentures          |                              | 534,967        
|Stock options issued to consultants and employees                       |                              | 145,361        
|Loss from disposal of discontinued operations                           |                              | 958,536        
|Changes in operating assets and liabilities:                            |                             
|Accounts receivable                                                     |                              | 21,926         
|Inventories                                                             |                              | (6,387         
|Other current assets                                                    |                              | 3,033          
|Accounts payable and accrued liabilities                                |                              | 41,220         
|Amounts due to related parties                                          |                              | (23,196        
|                                                                       
|Net cash used in operating activities                                   |                              | (1,197,458     
|                                                                       
|Cash flows from financing activities:                                   |                             
|Proceeds from issuance of convertible debentures                        |                              | 784,975        
|Net proceeds from dispositon of assets                                  |                              | 126,527        
|Proceeds from notes payable                                             |                              | 44,800         
|Payments on notes payable                                               |                              | (47,250        
|Payments on short-term loan to an officer                               |                              | (5,000         
|Net proceeds from issuance of stock and stock subscriptions             |                              | 263,368        
|                                                                       
|Net cash provided by financing activities                               |                              | 1,167,420      
|                                                                       
|Net cash flows from discontinued operations                             |                              | 31,653         
|Net change in cash and cash equivalents                                 |                              | 1,615          
|Cash and cash equivalents, beginning of period                          |                              | 3,884          
|                                                                       
|Cash and cash equivalents, end of period                                |                              | $        5,499 
|                                                                       
|Supplemental disclosure of non-cash investing and financing activities: |                             
|Conversion of debentures                                                |                              | $             
|                                                                       
|Cancellation of debt by repricing of option                             |                              | $    125,000   
|                                                                       
|Stock issued as payment of note                                         |                              | $        5,000 
|                                                                       
|Sale price of land and buildings, net                                   |                              | $ 1,237,692    
|Less:  Repayment of a note to a mortgage holder                         |                              | (877,500       
|Repayment of a note to a related party                                  |                              | (50,000        
|Pepayment of expenses related to the property                           |                              | (164,443       
|Deposit on lease of the building                                        |                              | (19,222        
|                                                                       
|Net proceeds                                                            |                              | $    126,527   
|                                                                       

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


Page 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 six month periods ended January 31, 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 960,234 and 270,000 for the
six months ended January 31, 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. 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 $17,512 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | These
debentures have registration rights and antidilution 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 January 31, 2001.
Therefore, these debentures are classified as a long-term liability in the accompanying consolidated
balance sheet at January 31, 2001.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Page 8
|------

|
|

| | The
conversion rights of the Companys debentures may qualify as imbedded derivatives as
defined in Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting
for Derivative Instruments and Hedging Activities. Based on initial investigations,
management believes the effect of applying SFAS 133 is not significant to the financial
statements of the Company at January 31, 2001 and for the six months then ended.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 $122,776 of option compensation expense was recorded over the vesting period
during the six months ended January 31, 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
subsequent to the quarter.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 $154,526 and $157,433 for the three
months ended January 31, 2001 and 2000, respectively, and $173,901 and $590,233 for the
six months ended January 31, 2001 and 2000, respectively, in the accompanying
Consolidated Statements of Operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | As
of January 31, 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 $745,000) is estimated at $958,500, which is included
in discontinued operations in the accompanying Statement of Operations in accordance with
EITF 95-18, Accounting and Reporting for a Discontinued Business Segment When the
Measurement Date Occurs After Balance Sheet Date Before Issuance of Financial Statements. Operating
Loss of New Concept Mining for the three and six months ended January 31, 2001 and
January 31 200 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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Page 9
|------

|
|

|10. |  | 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 six months-ended January 31, 2001
and 2000, respectively, is as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------

|                                        | Six Months Ended January 31,
|--------------------------------------- | ----------------------------
|
|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 10
|-------

|Item 2.
Managements Discussion and Analysis


Management continued its
efforts to refocus the Companys activities on 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 1 and 2. The table top distiller is ready for
tooling. Management anticipates these efforts will result in significant revenue
commencing in the third or fourth quarters of fiscal 2001, although there can be
no assurance to this effect.


RESULTS OF OPERATIONS FOR THE THREE
MONTHS ENDED JANUARY 31, 2001 AND 2000


Total revenue increased by
$15,300 from $77,700 to $93,000 for the three months ended January 31, 2000 and
January 31, 2001, respectively, principally due to an increase in sales of
technology products of $29,600 offset by a decrease in other income of $14,300.


Operating expenses
decreased by $396,400 from $1,287,300 to $890,900 for the three months ended
January 31, 2000 and January 31, 2001, respectively. The decrease was
principally due to decreased general and administrative expenses of $503,100,
research and development expenses of $51,100 and amortization of technology
rights of $100,000, offset by an increase in marketing and product development
expenses of $257,800. The decrease in general and administrative expenses was
principally the result of a decrease in consulting expenses of $254,000 and
option compensation expense of $136,000.


Other expenses decreased by
$158,900 from $531,200 to $372,300 for the three months ended January 31, 2000
and January 31, 2001, respectively, principally due to a decrease in interest
expense of $145,500 which during the earlier period included significant
non-cash imputed interest related to a convertible debenture.


The Companys net loss
increased by $429,700 from $1,726,900 to $2,156,600 for the three months ended
January 31, 2000 and January 31, 2001, respectively, principally due to a loss
from disposal of discontinued operations of $958,500, offset by decreased
operating expenses of $346,400 and decreased interest expense of $158,900. This
reflects managements continuing efforts to refocus on marketing of its
technology products.


RESULTS OF OPERATIONS FOR THE SIX
MONTHS ENDEDJANUARY 31, 2001 AND 2000


Revenue decreased by
$56,300 from $156,600 to $100,300 for the six months ended January 31, 000 and
January 31, 2001, respectively, principally due to a decrease in sales of
technology products of $28,100 and other income of $28,200.


Operating expenses
decreased by $991,200 from $2,607,200 to $1,616,000 for the six months ended
January 31, 2000 and January 31, 2001, respectively. The decrease was
principally due to decreased general and administrative expenses of $922,300,
research and development expenses of $91,500 and amortization of technology
rights of $200,000, offset by an increase in marketing and product development
expenses of $222,600. The decrease in general and administrative expenses was
principally the result of decreases in officers compensation expense of
$179,800, consulting expense of $363,100 and the non-cash amortization of
prepaid consulting expense of $416,300 as a result of significant shares issued
in late fiscal 1999 to consultants for long-term agreements that were amortized
in the six months ended January 31, 2000; such equivalent consultant shares were
not issued at the end of fiscal 2000.
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|Other expenses for the six
months ended January 31, 2001 decreased by $449,900 to $632,200 from $1,082,100
for the corresponding period of fiscal 2000 due to a decrease in interest
expense of $423,300 which during the earlier period included significant
non-cash imputed interest related to convertible debentures.


The Companys net loss
decreased by $356,200 from $3,518,500 to $3,162,300 at January 31, 2000 and
January 31, 2001, respectively, principally due to decreased operating expenses
of $ 99142000 and other expenses of $449,900, offset by a decrease in revenues
of $56,300 and an increase in loss from disposal of discontinued operations of
$958,500.


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 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
$2,712,300 from $3,327,300 to $615,000 at July 31, 2000 and January 31, 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 $950,000
and disposal of assets of $1,749,200 of discontinued operations.


The Company divested itself
of all of its mining operations. In 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 mine brokers, the Company was not able to divest these properties
without significant loss.


Total liabilities decreased
by $866,900 from $6,293,100 to $5,426,200 at July 31, 2000 and January 31, 2001,
respectively. This decrease was principally due to decreases in notes payable of
$880,000, amount due to related parties of $208,200 and disposal of liabilities
of discontinued operations of $718,500, offset by an increase in convertible
debentures of $803,500. 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 $140,400 from $1,337,900 to $1,197,500 for the six
months ended January 31, 2000 and January 31, 2001, respectively. The principal
source of working capital during the six months ended January 31, 2001 was net
proceeds of $785,000 from the issuance of $900,000 of principal amount of
secured 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 $712,900 from the issuance of $750,000 of principal amount of
convertible debentures.



The Company's current cash monthly
operating expenses are approximately $200,000. Management believes the Company's current
cash reserves plus funds which may be available from 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.




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|Based on the fact that the
Company has now received two orders for The Force from the domestic trucking
industry, and based upon projections provided by the Companys existing
customers, management believes that 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. There can be no assurance that actual sales will be
generated as projected and sufficient to meet the Companys cash operating
requirements. If sufficient revenues are not attained, the Company may not be
able to continue as a going concern.


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.
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|PART II



OTHER
INFORMATION



Item 2  Changes
in Securities


(a)  Not applicable.


(b)  Not applicable.


(c)  During November 2000,
the Company sold $250,000 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 250,000
shares of common stock at $0.10.


During
January 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.


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.
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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: Lawrence J. Brady 
Lawrence J. Brady Chief Executive OfficerActing Chief Financial OfficerDate:  March 26, 2001
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------