**UNITED
      STATES**


**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, 2008




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




For
      the
      transition period from __________ to ____________




Commission
      file number 0-23268




**AMERICAN
      TECHNOLOGIES GROUP, INC.**


(Name
      of
      small business issuer in its charter)




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




412
      W
      Bolt St.


Ft.
      Worth, TX 76113


(Address
      of principal executive offices) (zip code)




Issuer's
      telephone number: (817) 927-5333




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





Title
      of
      each class Name of exchange on which registered





None




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 o




**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**





**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**




Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court. Yes o No o




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the registrant's classes of common
      equity, as of the latest practicable date: As of March 24, 2008 the registrant
      had 9,701,166 shares of common stock outstanding, 1,500 shares of Series E
      Stock
      issued and outstanding, and 376,794 shares of Series A Stock
      outstanding.




Transitional
      Small Business Disclosure Format (Check one): Yes o No x




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


Yes o No x












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




2





**PART
      I. FINANCIAL INFORMATION**




AMERICAN
          TECHNOLOGIES GROUP, INC.
 CONDENSED
          CONSOLIDATED BALANCE SHEETS
 JANUARY
          31, 2008 (UNAUDITED) and JULY 31, 2007 (AUDITED)
  January
                  31, 2008
              
              July
                  31, 2007ASSETS
              
              (unaudited)Current
                  assets:Cash
                  and cash equivalents
              
              $
              1,200,463
              
              $
              710,121Accounts
                  receivable, net of allowance for doubtfulaccounts
                  of $153,312
              
              
              6,450,588
              
              
              6,661,534Inventory
              
              
              3,899,880
              
              
              5,102,386Cost
                  and estimated earnings in excess of billings
              
              
              338,588
              
              
              238,449Prepaid
                  expenses
              
              
              13,726
              
              
              110,056Total
                  current assets
              
              
              11,903,245
              
              
              12,822,546Cash
                  surrender value of officers' life insurance
              
              
              -
              
              
              101,413Property
                  and equipment, net
              
              
              2,453,573
              
              
              2,446,177Goodwill
              
              
              3,390,370
              
              
              3,390,370Total
                  assets
              
              $
              17,747,188
              
              $
              18,760,506LIABILITIES
                  AND DEFICIENCY IN STOCKHOLDERS' EQUITYCurrent
                  liabilities:Accounts
                  payable
              
              $
              2,974,902
              
              $
              3,979,613Accrued
                  expenses
              
              
              3,362,057
              
              
              3,104,601Billings
                  in excess of costs and estimated earnings
              
              
              3,335,250
              
              
              3,263,681Notes
                  payable, current portion, netof
                  discount of $0 as of January 31, 2008 and $2,578,928 as of July
                  31,
                  2007
              
              
              14,080,810
              
              
              8,837,572Total
                  current liabilities
              
              
              23,753,019
              
              
              19,185,467Total
                  liabilities
              
              
              23,753,019
              
              
              19,185,467Deficiency
                  in Stockholders' equity:Preferred
                  stock, series A; 10,000,000 shares authorized;376,974
                  shares issued and outstanding
              
              
              377
              
              
              377Preferred
                  stock, series B; 500,000 shares authorized; no shares issued and
                  outstanding
              
              
              -
              
              
              -Preferred
                  stock, series C; 2,000 shares authorized; no shares issued and
                  outstanding
              
              
              -
              
              
              -Preferred
                  stock, series D; 900,000 shares authorized; no shares issued and
                  outstanding
              
              
              -
              
              
              -Preferred
                  stock, series E; 25,000 shares authorized; 1,500 shares issued
                  and
                  outstanding
              
              
              2
              
              
              2Preferred
                  stock, series F; 900,000 shares authorized; no shares issued and
                  outstanding
              
              
              -
              
              
              -Preferred
                  stock; 50,000,000 shares authorized; no shares issued and
                  outstanding
              
              
              -
              
              
              -Common
                  stock; 1,000,000,000 shares authorized $.001 par value;9,701,166
                  shares issued and outstanding
              
              
              9,701
              
              
              9,701Common
                  stock to be issued
              
              
              14
              
              
              14Stock
                  subscription
              
              
              6,750
              
              
              6,750Additional
                  paid-in capital
              
              
              78,562,994
              
              
              78,562,994Accumulated
                  deficit
              
              
              (84,585,669
              )
              
              (79,004,799
              )Total
                  deficiency in stockholders' equity
              
              
              (6,005,831
              )
              
              (424,961
              )Total
                  liabilities and deficiency in stockholders' equity
              
              $
              17,747,188
              
              $
              18,760,506
 The
          accompanying footnotes are an integral part of these unaudited condensed
          consolidated financial statements.
  3
 AMERICAN
          TECHNOLOGIES GROUP, INC.
 CONDENSED
          CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR
          THE
          THREE MONTHS AND SIX MONTHS ENDED JANUARY 31, 2008 AND 2007
 (UNAUDITED)
 Three
                    Months ended January 31,
                
                Six
                    Months ended January 31,2008
                
                2007
                
                2008
                
                2007Net
                    sales
                
                $
                8,728,762
                
                $
                8,715,054
                
                $
                17,466,082
                
                $
                16,347,015Cost
                    of sales
                
                
                7,188,410
                
                
                7,441,035
                
                
                14,878,362
                
                
                14,035,559Gross
                    profit
                
                
                1,540,352
                
                
                1,274,019
                
                
                2,587,720
                
                
                2,311,456Selling,
                    general and administrative expenses
                
                
                930,509
                
                
                807,911
                
                
                1,824,535
                
                
                1,783,148Operating
                    income (loss)
                
                
                609,843
                
                
                466,108
                
                
                763,185
                
                
                528,308Other
                    income (expense)Interest
                    income
                
                
                2,636
                
                
                (876
                )
                
                5,852
                
                
                15,449Interest
                    expense
                
                
                (302,374
                )
                
                (333,955
                )
                
                (627,446
                )
                
                (683,141
                )Financing
                    costs
                
                
                (5,121,136
                )
                
                (923,591
                )
                
                (5,708,961
                )
                
                (1,899,237
                )Total
                    other income (expense)
                
                
                (5,420,874
                )
                
                (1,258,422
                )
                
                (6,330,555
                )
                
                (2,566,929
                )Loss
                    before income taxes
                
                
                (4,811,031
                )
                
                (792,314
                )
                
                (5,567,370
                )
                
                (2,038,621
                )Provision
                    for income taxes
                
                
                (2,500
                )
                
                -
                
                
                7,500
                
                
                -Net
                    loss
                
                
                (4,808,531
                )
                
                (792,314
                )
                
                (5,574,870
                )
                
                (2,038,621
                )Preferred
                    dividend
                
                
                3,000
                
                
                3,000
                
                
                6,000
                
                $
                6,000Net
                    loss attributable to common shareholders
                
                $
                (4,811,531
                )
                $
                (795,314
                )
                $
                (5,580,870
                )
                $
                (2,044,621
                )Loss
                    per share, basic and diluted
                
                $
                (0.33
                )
                $
                (0.05
                )
                $
                (0.39
                )
                
                (0.14
                )Loss
                    per share attributable to commonshareholders,
                    basic and diluted
                
                $
                (0.33
                )
                $
                (0.05
                )
                $
                (0.39
                )
                
                (0.14
                )Weighted
                    average shares outstanding
                
                
                14,386,166
                
                
                15,080,766
                
                
                14,386,166
                
                
                15,080,766
  The
          accompanying footnotes are an integral part of these unaudited condensed
          consolidated financial statements.
 4
 AMERICAN
          TECHNOLOGIES GROUP, INC.
 CONDENSED
          CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY
 FOR
          THE
          SIX MONTHS ENDED
 JANUARY
          31, 2008
 (UNAUDITED)
 Preferred
                  Stock
                
                Preferred
                    Stock
                
                
                
                
                
                Common
                    Stock
                
                AdditionalSeries
                    A
                
                Series
                    E
                
                Common
                    Stock
                
                To
                    be Issued
                
                Paid
                      in
                
                Stock
                
                AccumulatedShares
                
                Amount
                
                Shares
                
                Amount
                
                Shares
                
                Amount
                
                Shares
                
                Amount
                
                Capital
                
                Subscription
                
                Deficit
                
                Total**Balance,
                    July 31, 2007**
                
                
                376,794
                
                $
                377
                
                
                1,500
                
                $
                2
                
                
                9,701,166
                
                $
                9,701
                
                
                13,719
                
                $
                14
                
                $
                78,562,994
                
                $
                6,750
                
                $
                (79,004,799
                )
                $
                (424,961
                )Preferred
                    dividend
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,000
                )
                
                (6,000
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (5,574,870
                )
                
                (5,574,870
                )**Balance,
                    January 31, 2008**
                
                
                376,794
                
                $
                377
                
                
                1,500
                
                $
                2
                
                
                9,701,166
                
                $
                9,701
                
                
                13,719
                
                $
                14
                
                $
                78,562,994
                
                $
                6,750
                
                $
                (84,585,669
                )
                $
                (6,005,831
                )
 The
          accompanying footnotes are an integral part of these unaudited condensed
          consolidated financial statements.
 5
 AMERICAN
          TECHNOLOGIES GROUP, INC.
 CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR
          THE
          SIX MONTHS ENDED JANUARY 31, 2008 AND 2007
 (UNAUDITED)
 2008
                
                2007CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    (loss)
                
                $
                (5,574,870
                )
                $
                (2,038,621
                )Adjustments
                    to reconcile net loss to net cashprovided
                    by operating activities:Depreciation
                    and amortization
                
                
                88,610
                
                
                83,354Default
                    fee
                
                
                3,283,666Amortization
                    of discount
                
                
                2,574,928
                
                
                1,899,237Changes
                    in operating assets and liabilities:(Increase)
                    decrease in:Accounts
                    receivable
                
                
                210,946
                
                
                (254,619
                )Restricted
                    cash
                
                
                -
                
                
                280,000Inventory
                
                
                1,202,506
                
                
                (652,570
                )Costs
                    and earnings in excess of billings
                
                
                (100,139
                )
                
                (74,918
                )Prepaid
                    expenses
                
                
                93,643
                
                
                118,966Increase
                    (decrease) in:Accounts
                    payable and accrued expenses
                
                
                (753,255
                )
                
                (916,899
                )Billings
                    in excess of costs
                
                
                71,569
                
                
                (28,143
                )Net
                    cash provided by (used in) operating activities
                
                
                1,097,604
                
                
                (1,584,213
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Proceeds
                    from cancellation of life insurance's cash surrender
                
                
                104,100
                
                
                -Purchases
                    of property and equipment
                
                
                (96,006
                )
                
                (12,506
                )Net
                    cash provided by (used in) investing activities
                
                
                8,094
                
                
                (12,506
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Net
                    (repayments) proceeds on revolving line of credit
                
                
                (334,106
                )
                
                8,372Payments
                    on notes
                
                
                (281,250
                )
                
                (187,500
                )Net
                    cash used in financing activities
                
                
                (615,356
                )
                
                (179,128
                )Net
                    increase (decrease) in cash
                
                
                490,342
                
                
                (1,775,847
                )Cash
                    and cash equivalents, beginning of quarter
                
                
                710,121
                
                
                2,337,540Cash
                    and cash equivalents, end of quarter
                
                $
                1,200,463
                
                $
                561,693Cash
                    paid for:Interest
                
                $
                611,777
                
                $
                719,200
 The
          accompanying footnotes are an integral part of these unaudited condensed
          consolidated financial statements.
  6
  **AMERICAN
            TECHNOLOGIES GROUP, INC.**
  **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
            31, 2008 and 2007
 
 (UNAUDITED)
 **NOTE
          1 - ORGANIZATION AND LINE OF BUSINESS**
  American
          Technologies Group, Inc. (the "Company", "ATG", “we”, “us”, “our”), a Nevada
          corporation, was engaged in the development, commercialization and sale
          of
          products and systems using its patented and proprietary technologies. The
          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.
 
 The
          Company largely ceased operations during 2001 and had begun focusing efforts
          on
          restructuring and refinancing. In fiscal year ended July 31, 2005, we
          successfully continued these efforts to settle various pending lawsuits,
          reduce
          outstanding liabilities, acquire an equity funding facility to finance
          acquisition of new products, entities and technologies, and otherwise strengthen
          the business.
 
 On
          September 7, 2005, ATG, through a newly formed wholly owned subsidiary,
          Omaha
          Holdings Corp. ("Omaha"), entered into a Share Purchase Agreement ("Agreement")
          with the stockholders of North Texas Steel Company, Inc. ("North Texas"),
          a
          privately-held company. Effective with the Agreement, all previously outstanding
          common stock owned by North Texas's shareholders was exchanged for $11,000,000.
          The transaction is accounted for using the purchase method of accounting
          in
          accordance with Statement of Financial Accounting Standards (SFAS) No.141,
          “Business Combinations.” The results of operations for North Texas have been
          included in the audited consolidated statements of operations since the
          date of
          acquisition.
 
 North
          Texas Steel Company, Inc., is an American Institute of Steel Construction
          certified structural steel fabrication company and provides fabrication
          and
          detailing of structural steel components for commercial buildings, office
          buildings, convention centers, sports arenas, airports, schools, churches
          and
          bridges. North Texas fabricates structural steel from two locations in
          Fort
          Worth, Texas. It contracts with and grants credit to customers primarily
          located
          in southwestern United States.
 
 On
          April
          25, 2006, ATG, through a newly formed wholly owned subsidiary, Whitco Poles,
          Inc. (“Whitco”), acquired certain assets of Whitco Company, LP. The transaction
          is accounted for using the purchase method of accounting in accordance
          with SFAS
          No.141, “Business Combinations.” The results of operations for the Whitco
          Company, LP assets have been included in the audited consolidated statements
          of
          operations since the date of acquisition.
 
 Whitco
          Company has been a provider of light poles to commercial and industrial
          markets
          worldwide. Whitco provides marketing expertise and engineering knowledge
          to a
          nationwide contracted lighting representative base as well as Original
          Equipment
          Manufacturer (OEM) customers.
 
 The
          accompanying financial statements present on a consolidated basis the accounts
          of the Company and its wholly owned subsidiaries. All significant intercompany
          accounts and transactions have been eliminated in consolidation.
  A
          summary
          of the significant accounting policies applied in the preparation of the
          accompanying financial statements follows.
  7
 
 **AMERICAN
          TECHNOLOGIES GROUP, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
          31, 2008 and 2007
 
 (UNAUDITED)
 
 **Basis
          of Presentation**
  The
          accompanying unaudited condensed consolidated financial statements as of
          January
          31, 2008 and for the three month and six month periods ended January 31,
          2008
          and 2007 have been prepared by the Company pursuant to the rules and regulations
          of the Securities and Exchange Commission, including Form 10-QSB and Regulation
          S-B. The information furnished herein reflects all adjustments (consisting
          of
          normal recurring accruals and adjustments), which are, in the opinion of
          management, necessary to fairly present the operating results for the respective
          periods. Certain information and footnote disclosures normally present
          in annual
          financial statements prepared in accordance with accounting principles
          generally
          accepted in the United States of America have been omitted pursuant to
          such
          rules and regulations. The Company believes that the disclosures provided
          are
          adequate to make the information presented not misleading. These financial
          statements should be read in conjunction with the audited consolidated
          financial
          statements and explanatory notes for the year ended July 31, 2007 as disclosed
          in the company's 10-KSB for that year as filed with the SEC, as it may
          be
          amended.
  The
          results of the three months and six months ended January 31, 2008 and,
          2007 are
          not necessarily indicative of the results to be expected for the pending
          full
          year ending July 31, 2008.
 
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Basis
          of Consolidation**
 
 Our
          consolidated financial statements and the accompanying notes, which are
          prepared
          in accordance with U.S. generally accepted accounting principles (“GAAP”),
          include American Technologies Group, Inc. and all subsidiaries. We consolidate
          all majority-owned and controlled subsidiaries as well as variable interest
          entities in which we are the primary beneficiary as defined by Financial
          Accounting Standards Board (“FASB”) Interpretation No. 46R,
“Consolidation of Variable Interest Entities, an interpretation of ARB
          No. 51.”  We did not participate in any variable interest entities for
          the period presented.
 
 The
          accompanying financial statements present on a consolidated basis the accounts
          of the Company and its wholly owned subsidiaries. All significant intercompany
          accounts and transactions have been eliminated in consolidation.
 
 **Revenue
          Recognition**
 
 For
          financial reporting purposes the major constructions contracts completed
          by
          North Texas, profits are recognized using the percentage of completion
          method.
          Under this method, revenues are recognized based on the percentage of costs
          incurred to date to estimated total cost for each contract. Revisions in
          estimated contract profits are made in the period in which circumstances
          requiring the revisions become known. These estimates are subject to change
          in
          the near-term and could significantly impact the financial statements.
          Provision
          for estimated losses on uncompleted contracts is made in the period in
          which
          such losses are determined. Contract costs include all direct material
          and labor
          costs and those indirect costs related to contract performance, such as
          indirect
          labor, supplies, tools and repairs. Selling, general and administrative
          costs
          are charged to expense as incurred.
 
 On
          contracts where costs and estimated earnings are in excess of billings,
          the
          excess is treated as a current asset. Where billings are in excess of costs
          and
          estimated earnings, the excess is treated as a current liability.
 8
  **AMERICAN
            TECHNOLOGIES GROUP, INC.**
  **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
            31, 2008 and 2007
 
 (UNAUDITED)
 These
          amounts are reflected in the accompanying balance sheet as follows:
  **January
                    31,**
                  **2008**Costs
                    and estimated earnings onuncompleted
                    contracts in excess of billings
                
                $
                338,588Billings
                    on uncompleted contracts inexcess
                    of costs and estimated earnings
                
                
                (
                    3,335,250
                )$
                (
                    2,996,662
                )
 
 Whitco
          revenues and product costs are recognized as their products are shipped
          to their
          customers. Whitco’s product lines, while requiring similar manufacturing
          processes, such as welding and forming metal assemblies, as North Texas,
          are
          primarily catalog specified products with much shorter lead and production
          times.
 
 **Accounts
          Receivable**
  The
          Company provides an allowance for doubtful accounts equal to the estimated
          uncollectible amounts. The Company’s estimate is based on historical collection
          experience and a review of the current status of trade accounts receivable.
          It
          is reasonably possible that the Company’s estimate of the allowance for doubtful
          accounts will change. Accounts receivable are presented net of an allowance
          for
          doubtful accounts of $153,312 as of January 31, 2008.
  **Liquidity**
  As
          shown
          in the accompanying unaudited condensed consolidated financial statements,
          the
          Company incurred net loss of $5,574,870 and $2,038,621 for the six
          months ended January 31, 2008 and 2007, respectively. The Company's
          current  liabilities,
          on a consolidated basis, exceeded its current assets by $ 11,849,774
          as of January 31, 2008.
  **Inventory**
  Inventory,
          consisting primarily of raw materials, is valued at the lower of cost or
          market on average cost basis.
 
 **Income
          Taxes**
 
 In
          accordance with SFAS No. 109, deferred income taxes are the result of the
          expected future tax consequences of temporary differences between the financial
          statement and tax bases of assets and liabilities. Generally, deferred
          income
          taxes are classified as current or non-current in accordance with the
          classification of the related asset or liability. Those not related to
          an asset
          or liability are classified as current or non-current depending on the
          periods
          in which the temporary differences are expected to reverse. A valuation
          allowance is provided against deferred income tax assets in circumstances
          where
          management believes the recoverability of a portion of the assets is not
          reasonably assured.
 9
  **AMERICAN
            TECHNOLOGIES GROUP, INC.**
  **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
            31, 2008 and 2007
 
 (UNAUDITED)
 **Long-Lived
          Assets**
  ATG
          reviews, as circumstances dictate, the carrying amount of our property
          and
          equipment and goodwill. The purpose of these reviews is to determine whether
          the
          carrying amounts are recoverable. Recoverability is determined by examining
          and
          comparing respective carrying amounts versus expected revenue streams from
          the
          related businesses. The amount of impairment, if any, is measured based
          on the
          excess of the carrying value over the fair value.
  **Property
          and Equipment**
 
 Property
          and equipment are stated at cost. Depreciation is computed principally
          by the
          straight-line method at rates based on estimated useful lives as
          follows:
 
 Office
                    furniture and equipment
                
                5
                    -
                    10 yearsBuildings
                    and improvements
                
                5
                    -
                    40 yearsMachinery
                    and equipment
                
                3
                    -
                    12 years
  **Cash
          Flows Presentation**
 
 For
          purposes of the statement of cash flows, time deposits that mature in three
          months or less are considered cash and cash equivalents.
 
 **Use
          of Estimates**
 
 In
          the
          normal course of preparing financial statements in conformity with accounting
          principles generally accepted in the United States of America, management
          is
          required to make estimates and assumptions that affect the reported amounts
          of
          assets and liabilities and disclosure of contingent assets and liabilities
          at
          the date of the financial statements and the reported amounts of revenues
          and
          expenses during the reporting period. Significant estimates made by management
          include the collectibility of accounts receivable, the realizability of
          inventories, the amounts due under accounts payable, the valuation allowance
          of
          deferred tax assets and the fair value of our equity instruments. Actual
          results
          could differ from those estimates.
 
 **Basic
          and Diluted Income (Loss) Per Share**
 
 Basic
          and
          diluted loss per common share is based upon the weighted average number
          of
          common shares outstanding during the fiscal year computed under the provisions
          of SFAS No. 128, Earnings Per Share. Common share equivalents were not
          considered as they would be anti-dilutive and had no impact on loss per
          share
          for any periods presented. The number of shares outstanding in the computation
          of loss per share is comprised of the following:
 
 **Three
                    months ended**
                
                **Six
                    months ended**January
                    31, 2008
                
                January
                    31, 2007
                
                January
                    31, 2008
                
                January
                    31, 2007Common
                    shares outstanding
                
                
                9,701,166
                
                
                10,395,766
                
                
                9,701,166
                
                
                10,395,766Options
                    shares deemed outstanding
                
                
                4,685,000
                
                
                4,685,000
                
                
                4,685,000
                
                
                4,685,000Total
                    shares outstanding for computation
                
                
                14,386,166
                
                
                15,080,766
                
                
                14,386,166
                
                
                15,080,766
  10
  **AMERICAN
            TECHNOLOGIES GROUP, INC.**
  **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
            31, 2008 and 2007
 
 (UNAUDITED)
 We
          use
          SFAS No. 128, Earnings Per Share for calculating the basic and diluted loss
          per share. We compute basic loss per share by dividing net loss and net
          loss
          attributable to common shareholders by the weighted average number of common
          shares outstanding. Diluted loss per share is computed similar to basic
          loss per
          share except that the denominator is increased to include the number of
          additional common shares that would have been outstanding if the potential
          shares had been issued and if the additional shares were dilutive. Common
          equivalent shares are excluded from the computation of net loss per share
          if
          their effect is anti-dilutive. There were 19,879,996 common share equivalents
          at
          January 31, 2008 and January 31, 2007. For the years ended
          January 31, 2008 and 2007, these potential shares were excluded from
          the shares used to calculate diluted earnings per share as their inclusion
          would
          reduce net loss per share.
  **Goodwill
          and Other Intangibles**
  In
          June
          2001, SFAS 142 “Goodwill and Other Intangible Assets” was issued. Under
          SFAS 142, goodwill is no longer amortized after December 31, 2001.
          However, it must be evaluated for impairment at least annually and any
          losses
          due to impairment are recognized in earnings. SFAS 142 became effective for
          the Company on January 1, 2002.
 
 In
          August
          2001, SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived
          Assets” was issued. Under SFAS 144, the Company is required to test
          long-lived assets other than goodwill for impairment whenever events or
          changes
          in circumstances indicate that their carrying value may not be recoverable.
          The
          Company evaluates the recoverability of long-lived assets based upon forecasted
          discounted cash flows. Should an impairment in value be indicated, the
          carrying
          value of intangible assets will be adjusted, based on estimates of future
          discounted cash flows resulting from the use and ultimate disposition of
          the
          asset. SFAS No. 144 also requires assets to be disposed of be reported
          at the
          lower of the carrying amount or the fair value less costs to sell.
  **Segment
          Information**
 
 SFAS
          131,
          "Disclosures about Segments of an Enterprise and Related Information"
          establishes standards for reporting information regarding operating segments
          in
          annual financial statements and requires selected information for those
          segments
          to be presented in interim financial reports issued to stockholders.  SFAS
          131 also establishes standards for related disclosures about products and
          services and geographic areas.  Operating segments are identified as
          components of an enterprise about which separate discrete financial information
          is available for evaluation by the chief operating decision maker, or
          decision-making group, in making decisions how to allocate resources and
          assess
          performance. Our operations are comprised of one business segment focusing
          its
          operations and management on the cutting, welding and assembling of metal
          components. The Company operates in two industry segments. The Company’s
          management makes financial decisions and allocates resources based on the
          information it receives from its internal management system.
 
 **Reclassifications**
 
 Certain
          reclassifications have been made in prior year's financial statements to
          conform
          to classifications used in the current year.
 11
  **AMERICAN
            TECHNOLOGIES GROUP, INC.**
  **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
            31, 2008 and 2007
 
 (UNAUDITED)
 **NOTE
          3 - FINANCIAL CONDITION AND GOING CONCERN**
 
 To
          date,
          ATG has been unable to generate significant cash flows from operations.
          As a
          result, we have funded our operations through investor financing, including
          sales of common stock and the exercise of warrants and options. The Company
          has
          also used debt to fund its operations. Until such time as we are able to
          generate significant cash flows from operations through increased sales
          of our
          products, we will be required to continue our reliance on investor financing
          and
          debt to fund our operations.
 
 Our
          financial statements have been presented on the basis that we are a going
          concern, which contemplates the realization of assets and the satisfaction
          of
          liabilities in the normal course of business. As shown in the unaudited
          condensed consolidated financial statements, during the three months and
          six
          months ended January 31, 2008, we incurred a net loss of $4,808,531 and
          $5,574,870. Since its inception, the Company has incurred significant operating
          losses totaling in excess of $85 million. In addition, we also received
          a letter
          from LV Administrative Services, Inc. ("LV Administrative Services"), acting
          in
          the capacity of administrative and collateral agent for Laurus, that demands
          the
          immediate payment of all past due
 amounts
          owed to Laurus by February 1, 2008. These factors, among others, raise
          substantial doubt about our ability to continue as a going concern.
  The
          financial statements do not include any adjustments relating to the
          recoverability and classification of recorded asset amounts or the amounts
          and
          classification of liabilities that might be necessary should we be unable
          to
          continue as a going concern. Our continuation as a going concern is dependent
          upon our ability to generate sufficient cash flow to meet our obligations
          on a
          timely basis, to obtain additional financing, and ultimately to attain
          successful operations. Management is continuing its efforts to obtain additional
          funds so that we can meet our obligations and sustain operations. Management
          continues to focus on improving the Company’s results of operations by
          increasing sales and decreasing its cost structure to improve cash flows
          from
          operations.
 
 **NOTE 4
          - CONVERTIBLE DEBENTURES AND OTHER NOTES PAYABLE**
 
 At
          January 31, 2008, our current outstanding borrowings were:
 Notes
                    Payable to Laurus:Secured
                    revolving note
                
                $
                7,000,000Secured
                    convertible term note A
                
                
                1,350,000Secured
                    convertible term note B
                
                
                2,000,000Notes
                    Payable to Gryphon:Secured
                    convertible term note - North Texas
                
                
                500,000Subtotal
                
                
                10,850,000Plus:
                    Default fees and accrued interest
                
                
                3,230,810Net
                    current convertible debentures and other notes payable
                
                $
                14,080,810
  12
 
 **AMERICAN
          TECHNOLOGIES GROUP, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
          31, 2008 and 2007
 
 (UNAUDITED)
 
 NOTE 4
          - CONVERTIBLE DEBENTURES AND OTHER
          NOTES PAYABLE (CONT’D)
  **TRIGGERING
          EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL
          OBLIGATION**
 
 As
          a
          result of our failure to timely pay our current obligations due to Laurus
          Master
          Fund, Ltd. ("Laurus") under our Secured Convertible Term B Note in the
          amount of
          $2,000,000, we received notification on January 31, 2008 from Laurus that
          certain events of default had occurred and are continuing beyond any applicable
          cure or grace period with respect to all of our secured obligations due
          to
          Laurus. We also received a letter from LV Administrative Services, Inc.
          ("LV
          Administrative Services"), acting in the capacity of administrative and
          collateral agent for Laurus, that demands the immediate payment of all
          past due
          amounts owed to Laurus by February 1, 2008. The amounts demanded totaled
          $13,580,810 ($10,350,000 in principal amortization, $96,777 in accrued
          interest,
          and $3,134,033 in Default Fees). We did not make such payments, and,
          accordingly, Laurus may take all steps it deems necessary to protect Laurus'
          interests, including the enforcement and exercise of any and all of its
          rights,
          remedies, liens and security interests available to it.
 
 In
          connection with our financing with Laurus, we executed a pledge agreement
          in
          favor of Laurus granting them a first priority security interest in the
          common
          stock of each of our subsidiaries. We also executed a security agreement
          that
          granted Laurus a first priority security interest in all the respective
          goods,
          inventory, contractual rights and general intangibles, receivables, documents,
          instruments, chattel paper, intellectual property owned by us and each
          of our
          subsidiaries. The security agreement and stock pledge agreement state that
          if an
          "event of default" occurs under any agreement with Laurus, it has the right
          to
          take possession of the collateral, to operate our business using the collateral,
          and has the right to assign, sell, lease or otherwise dispose of and deliver
          all
          or any part of the collateral, at public or private sale or otherwise to
          satisfy
          its obligations under these agreements. As a consequence of our default,
          Laurus
          has the right to pursue any of the remedies set forth in the pledge and
          security
          agreements. Likewise, GMF and GSSF have similar remedies available to
          them.
 
 Prior
          to
          the receipt of notice of default, and continuing through the date of this
          filing, we have been in ongoing negotiations with Laurus concerning our
          obligations to them. Since
          the
          receipt of the term sheet the parties have been conducting due diligence
          with
          respect to the proposed transaction.
 We
            now
            believe that due diligence is substantially complete and that that we
            will soon
            execute definitive agreements related to the transaction. Drafts of these
            documents prepared by Laurus’ counsel have been distributed to us and the terms
            of the transaction provide that (a) the Company will cause its subsidiary,
            Omaha
            Holdings, Inc., to transfer all of its stock in its operating subsidiaries
            (North Texas and Whitco) to Laurus’ assignee and, as a result of such transfer,
            the Company will no longer own any operating assets, and (b), in exchange
            for
            such transfer, Laurus will forgive all outstanding debt obligations and
            reduce
            the amount of options and warrants it owns so that Laurus would hold
            no more
            than twenty five percent (25%) of the fully diluted shares of the Company.
 
 In
            addition, we have requested, that funds be set aside from the transaction
            for
            payment of the GSF and GSSF debt on a compromised basis, payment of
            professionals fees for this transaction and the creation of a reserve
            for such
            reasonable fees after the closing of any such transaction and transition
            agreements to ensure that the Company’s financial records, personnel, and
            professional advisers are available as may be needed to continue to meet
            the
            Company’s reporting requirements under the Securities Exchange Act of 1934 for
            a
            reasonable period after closing.
 
 We
            believe that this transaction, if completed, will have a positive effect
            on the
            Company because it will release the Company of debt obligations that
            our capital
            resources have not been able to service therefore allowing the Company
            to pursue
            other lines of business. At the same time, the transactions would allow
            the
            Company to avoid prolonged legal proceedings and liquidation in bankruptcy.
 
 We
            anticipate that the final documentation, when signed, will substantially
            conform
            to the terms described above. However, while we are optimistic that such
            documents will be executed in the next several days, there can be no
            assurances
            that this will occur.
 13
 
 **AMERICAN
          TECHNOLOGIES GROUP, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
          31, 2008 and 2007
 
 (UNAUDITED)
 NOTE 4
          - CONVERTIBLE DEBENTURES AND OTHER
          NOTES PAYABLE (CONT’D)
  Since
            the
            receipt of the term sheet the parties have been conducting due diligence
            with
            respect to the proposed transaction.
 
 We
            now
            believe that due diligence is substantially complete and that that we
            will soon
            execute definitive agreements related to the transaction. Drafts of these
            documents prepared by Laurus’ counsel have been distributed to us and the terms
            of the transaction provide that (a) the Company will cause its subsidiary,
            Omaha
            Holdings, Inc., to transfer all of its stock in its operating subsidiaries
            (North Texas and Whitco) to Laurus’ assignee and, as a result of such transfer,
            the Company will no longer own any operating assets, and (b), in exchange
            for
            such transfer, Laurus will forgive all outstanding debt obligations and
            reduce
            the amount of options and warrants it owns so that Laurus would hold
            no more
            than twenty five percent (25%) of the fully diluted shares of the Company.
 
 In
            addition, we have requested that funds be reserved out of the transaction
            for
            (a) payment of the GSF and GSSF debt on a compromised basis, payment
            of
            professionals fees for this transaction and the creation of a reserve
            for such
            fees after the closing of any such transaction and (c) transition agreements
            to
            ensure that the Company’s financial records, personnel, and professional
            advisers are available as may be needed to continue to meet the Company’s
            reporting requirements under the Securities Exchange Act of 1934 for
            a
            reasonable period after closing.
 
 We
            believe that this transaction, if completed, will have a positive effect
            on the
            Company because it will release the Company of debt obligations that
            our capital
            resources have not been able to service therefore allowing the Company
            to pursue
            other lines of business. At the same time, the transactions would allow
            the
            Company to avoid prolonged legal proceedings and liquidation in bankruptcy.
  We
          anticipate that the final documentation, when signed,
          will substantially conform to the terms described above. However, while
          we are
          optimistic that such documents will be executed in the next several days,
          there
          can be no assurances that this will occur.
 14
  **AMERICAN
              TECHNOLOGIES GROUP, INC.**
  **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
              31, 2008 and 2007
 
 (UNAUDITED)   **NOTE 5
                - CONCENTRATIONS**
 
 Financial
                instruments which potentially subject us to concentrations of credit
                risk
                consist principally of cash, and cash equivalents and accounts
                receivable.
 
 We
                maintain our cash and cash equivalents in bank deposit accounts which,
                at times,
                exceed federally insured limits. The Company has not experienced
                any losses in
                these accounts. ATG believes it is not exposed to any significant
                credit risk on
                cash and cash equivalents.
 
 Concentration
                of credit risk with respect to accounts receivable is limited due
                to the
                geographic distribution of the entities comprising the Company's
                customer base.
                The Company's revenues earned on contracts for the six months ended
                January 31,
                2008 included an aggregate of 40% from two customers and for the
                six months
                ended January 31, 2007 included an aggregate of 57% from one customer.
                One
                supplier accounted for 25% of our purchases for the six months ended
                January 31,
                2008. Three customers account for 44% of our accounts receivable
                at January 31,
                2008 and one customer accounts for 62% of our accounts receivable
                at January 31,
                2007.
 15
  **AMERICAN
            TECHNOLOGIES GROUP, INC.**
  **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 January
            31, 2008 and 2007
 
 (UNAUDITED)
 **NOTE 6
          - SEGMENT INFORMATION**
  The
          Company currently operates two business segments (excluding corporate):
          (1)
          Steel Fabrication and (2) Pole Fabrication. Intercompany receivable and
          payable
          are subtracted from the total assets and liabilities for the segments,
          that are
          eliminated in consolidation and therefore, do not themselves impact consolidated
          results.
  The
          following table summarizes segment asset and operating balances by reportable
          segment:
  Six
                    Months Ended
                  January
                    31, 2008
                
                Six
                      Months Ended
                    January
                      31, 2007Sales
                    to external customers:North
                    Texas
                
                $
                16,082,368
                
                $
                14,098,118Whitco
                
                
                1,383,666
                
                
                2,247,241Other
                
                
                48
                
                
                1,656Total
                    sales to external customers:
                
                $
                17,466,082
                
                $
                16,347,015Capital
                    expenditures:North
                    Texas
                
                $
                96,006
                
                $
                12,506Whitco
                
                
                -
                
                
                -Total
                    capital expenditures
                
                $
                96,006
                
                $
                12,506Operating
                    income (loss):North
                    Texas
                
                $
                1,177,871
                
                $
                796,196Whitco
                
                
                (14,470
                )
                
                8,376Corporate
                
                
                (400,216
                )
                
                (276,264
                )Total
                    operating income (loss)
                
                $
                763,185
                
                $
                528,308January
                    31, 2008
                
                
                January
                    31, 2007Segment
                    assets:North
                    Texas
                
                $
                15,196,840
                
                $
                13,287,352Whitco
                
                
                2,543,396
                
                
                4,025,547Corporate
                
                
                6,952
                
                
                21,033Total
                    segment assets
                
                $
                17,747,188
                
                $
                17,333,932
  16




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





**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF**


**FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS**




Discussions
      of certain matters in this Quarterly Report on Form 10-QSB may contain
      forward-looking statements which relate to future events or our future financial
      performance. In this Form 10-QSB, forward-looking statements are generally
      identified by the words “anticipate”, “plan”, “believe”, “expect”, “estimate”,
      and the like. These statements are only predictions and involve known and
      unknown risks, uncertainties, and other factors, including the risks in the
      section entitled “Risk Factors” on pages 6 through 10 of the Company’s Annual
      Report, Form 10-KSB, filed for the year ended July 31, 2007.





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




**GENERAL
      OVERVIEW**




**General**




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




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




**Overview**




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




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




·
            Lay
                out steel for cutting




17




·
            Burn
                the metal




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




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




·
            Fit
                and ream metal to specifications




·
            Rivet,
                bolt and grind metal




·
            Weld,
                with both electric arc and oxyacetylene welding
                equipment




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




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




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




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




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




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


18




**Operations/Processes**




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




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





**Industry
      and Market**




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




While
      North Texas does not actively pursue the industrial market, we have begun to
      book work in this segment and believe it represents another avenue for
      growth.





**Whitco
      Transaction**




On
      April
      25, 2006, we purchased certain assets of Whitco Company, LP (“Whitco”), a
      business conducting the sale and distribution of steel and aluminum lighting
      poles throughout the globe, in exchange for 3,750,000 common stock purchase
      warrants, valued at $1,875,000. In addition, we made cash payments totaling
      $465,253 to Whitco Company, LP’s creditors and incurred $70,000 in other
      costs related to the transaction. The Whitco assets are held in a
      separate subsidiary called Whitco Poles, Inc. The integration of the Whitco
      assets has gone well, but we have not fully realized the sales we originally
      projected. The cash portion of the Whitico financing has been paid and we are
      currently evaluating what alternative strategies we are available for realizing
      the full potential from the Whitco assets.




**Critical
      Accounting Policies**




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




**Revenue
      Recognition**




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




19




**Allowance
      For Doubtful Accounts**




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




**Comparison
      of the Quarter Ended January 31, 2007 to the Quarter Ended January 31,
      2008.**




**Results
      of Operations**




For
      the
      period prior to the acquisition date (September 7, 2005) of North Texas, the
      Company had limited operations.  The acquisition was accounted for in
      accordance with the purchase method of accounting and its results of operations
      are included in the accompanying statements of operations from the acquisition
      date.





Our
      acquisition of Whitco in April, 2006 was also accounted for in accordance with
      the purchase method of accounting and its operating results have been
      consolidated with ours since its acquisition.





**Revenues**




Revenues
      for the quarter ended January 31, 2008 were approximately $8,213,864 earned
      by
      North Texas and $514,898 earned by Whitco. Revenues for the quarter ended
      January 31, 2007 were approximately $7,755,146 earned by North Texas and
      $958,928 earned by Whitco.




**Cost
      of Sales**




Our
      cost
      of sales predominantly consists of labor, raw materials, outsourcing costs
      and
      absorbed indirect manufacturing costs.




Cost
      of
      sales for the quarter ended January 31, 2008 was approximately $6,713,698
      for North Texas and resulted in a gross margin of approximately $1,500,166
      or
      approximately 18.3% of revenues.  Cost of sales for the quarter ended
      January 31, 2008 was approximately $474,712 for Whitco and resulted in a
      gross margin of approximately $40,186 or approximately 7.8% of
      revenues. Cost of sales for the quarter ended January 31, 2007 was
      approximately $6,545,595 for North Texas and resulted in a gross margin of
      $1,209,551 or approximately 15.6% of revenues. Cost of sales for the quarter
      ended January 31, 2007 was approximately $895,440 for Whitco and resulted in
      a
      gross margin of $63,488 or 6.6% of revenues.





**Selling,
      General and Administrative Expenses**




For
      the
      quarter ended January 31, 2008, selling, general and administrative
      expenses totaled approximately $930,509, consisting primarily of administrative
      expenses and other expenses. For the quarter ended January 31,
      2007, selling, general and administrative expenses were approximately
      $807,911 which consist primarily of administrative expenses and other
      expenses.




20




**Interest
      Expense**




As
      the
      result of acquiring North Texas and Whitco in a highly leveraged transaction
      the
      Company’s interest expenses are significant.





Interest
      expense was $302,374 for the quarter ended January 31, 2008, staying the
      same as interest expense for the quarter ending January 31, 2008. Financing
      expense was $5,121,136 and $923,591 for the quarter ended January 31, 2008
      and
      2007, respectively. Included in financing expenses was the default expenses
      due
      to Laurus.




**Liquidity
      and Capital Resources**




As
      of
      January 31, 2008, we had $1,200,463 in cash and equivalents. While in prior
      periods, we have had sufficient cash on hand to meet our obligations, as a
      result of the recapitalization, we may not have funds to meet our future working
      capital and financing needs. As a result, additional financing will be required
      in order to meet our current and projected cash flow deficits from operations
      and development. Although we are seeking financing to support our working
      capital needs, we have no commitments or assurances that it will be successful
      in raising the funds required.





The
      Company has utilized both its base of assets and its equity securities to
      finance the acquisitions of North Texas and Whitco. The North Texas acquisition
      transaction was highly leveraged. We have indebtedness totaling in $10,806,000
      payable in the form of convertible term notes $2,500,000 of which are due and
      payable on December 31, 2007.





The
      Company’s current operations are insufficient to service its existing debt and
      pay the administrative expenses incurred in connection with being a public
      enterprise, including legal and accounting services.




As
      a
      result of our failure to timely pay our current obligations due to Laurus Master
      Fund, Ltd. ("Laurus") under our Securied Convertible Term B Note in the amount
      of $2,000,000, we received notification on January 31, 2008 from Laurus that
      certain events of default had occurred and are continuing beyond any applicable
      cure or grace period with respect to all of our secured obligations due to
      Laurus. We also received a letter from LV Administrative Services, Inc. ("LV
      Administrative Services"), acting in the capacity of administrative and
      collateral agent for Laurus, that demands the immediate payment of all past
      due
      amounts owed to Laurus by February 1, 2008. The amounts demanded totaled
      $13,580,810 ($10,350,000 in principal amortization, $96,777 in accrued interest,
      and $3,134,033 in Default Fees). We did not make such payments, and,
      accordingly, Laurus (as well as Gryphon Master Fund, LTD ("GMF"), and GSSF
      Master Fund, LP ("GSSF")) may take all steps it deems necessary to protect
      their
      interests, including the enforcement and exercise of any and all of its rights,
      remedies, liens and security interests available to it.





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





Prior
      to
      the receipt of notice of default, and continuing through the date of this
      filing, we have been in ongoing negotiations with Laurus, GSF and GSSF
      concerning our obligations to them. With respect to Laurus negotiations have
      resulted our receipt of nonbinding term sheets from Laurus outlining a
      transaction which would result in the satisfaction of our obligations to Laurus. Since
      the
      receipt of the term sheet the parties have been conducting due diligence with
      respect to the proposed transaction.


We
        now
        believe that due diligence is substantially complete and that that we will
        soon
        execute definitive agreements related to the transaction. Drafts of these
        documents prepared by Laurus’ counsel have been distributed to us and the terms
        of the transaction provide that (a) the Company will cause its subsidiary,
        Omaha
        Holdings, Inc., to transfer all of its stock in its operating subsidiaries
        (North Texas and Whitco) to Laurus’ assignee and, as a result of such transfer,
        the Company will no longer own any operating assets, and (b), in exchange
        for
        such transfer, Laurus will forgive all outstanding debt obligations and reduce
        the amount of options and warrants it owns so that Laurus would hold no more
        than twenty five percent (25%) of the fully diluted shares of the Company.
 
 In
        addition, we have requested, that funds be set aside from the transaction
        for
        payment of the GSF and GSSF debt on a compromised basis, payment of
        professionals fees for this transaction and the creation of a reserve for
        such
        reasonable fees after the closing of any such transaction and transition
        agreements to ensure that the Company’s financial records, personnel, and
        professional advisers are available as may be needed to continue to meet
        the
        Company’s reporting requirements under the Securities Exchange Act of 1934 for a
        reasonable period after closing.
 
 We
        believe that this transaction, if completed, will have a positive effect
        on the
        Company because it will release the Company of debt obligations that our
        capital
        resources have not been able to service therefore allowing the Company to
        pursue
        other lines of business. At the same time, the transactions would allow the
        Company to avoid prolonged legal proceedings and liquidation in bankruptcy.
 
 We
        anticipate that the final documentation, when signed, will substantially
        conform
        to the terms described above. However, while we are optimistic that such
        documents will be executed in the next several days, there can be no assurances
        that this will occur.


If
      in the
      future, if we are not capable of generating sufficient revenues from operations
      and our capital resources are insufficient to meet future requirements, we
      may
      have to raise funds to continue our operations.




21




The
      Company's independent certified public accountants have stated in their report
      included in the Company's Form 10-KSB for the year ended July 31, 2007, that
      the
      Company has incurred operating losses in the last two years, and that the
      Company is dependent upon management's ability to develop profitable operations.
      These factors among others may raise substantial doubt about the Company's
      ability to continue as a going concern.




**Off-
      Balance Sheet Arrangements**





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





**Inflation**





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





**Recent
      Accounting Pronouncements**




In
      June
      2006, the FASB issued Interpretation No. 48, *"Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109,"* (FIN
      48). FIN 48 clarifies the accounting for uncertainty in tax positions and
      requires that a Company recognize in its financial statements the impact of
      a
      tax position, if that position is more likely than not of being sustained on
      audit, based on the technical merits of the position. The provisions of FIN
      48
      are effective for fiscal years beginning after December 15, 2006. The Company
      does not expect adoption of FIN 48 will have a material impact on its financial
      position, operations or cash flows




22




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a
      framework for measuring fair value, and expands disclosures about fair value
      measurements. This Statement focuses on creating consistency and comparability
      in fair value measurements. SFAS No. 157 is effective for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years.  We are currently evaluating the impact of adopting SFAS 157 on our
      financial statements.





SFAS
      158.
      In September 2006 the FASB issued its Statement of Financial Accounting
      Standards 158 “Employers' Accounting for Defined Benefit Pension and Other
      Postretirement Plans”. This Statement improves financial reporting by requiring
      an employer to recognize the overfunded or underfunded status of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a
      not-for-profit organization. This Statement also improves financial reporting
      by
      requiring an employer to measure the funded status of a plan as of the date
      of
      its year-end statement of financial position, with limited exceptions. The
      effective date for an employer with publicly traded equity securities is as
      of
      the end of the fiscal year ending after December 15, 2006. The Company does
      not
      expect adoption of this standard will have a material impact on its financial
      position, operations or cash flows





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an amendment of FASB
      Statement No. 115” (“SFAS 159”). This statement permits all entities to
      choose, at specified election dates, to measure eligible items at fair value
      (the “fair value option”). A business entity must report unrealized gains
      and losses on items for which the fair value option has been elected in earnings
      at each subsequent reporting date. Upfront costs and fees related to items
      for which the fair value option is elected must be recognized in earnings as
      incurred and not deferred. This statement is effective as of the beginning
      of an
      entity’s first fiscal year that begins after November 15, 2007. The Company
      is currently evaluating the impact, if any, of the adoption of SFAS
      159.




**ITEM
        3. CONTROLS AND PROCEDURES**
 
 **Evaluation
          of Controls and Procedures.**
 
 The
          Company maintains a set of disclosure controls and procedures designed
          to ensure
          that information required to be disclosed by us in our reports filed under
          the
          Securities Exchange Act, is recorded, processed, summarized, and reported
          within
          the time periods specified by the SEC's rules and forms. Disclosure controls
          are
          also designed with the objective of ensuring that this information is
          accumulated and communicated to our management, as appropriate, to allow
          timely
          decisions regarding required disclosure.
 
 Our
          president (Principal Executive and Financial Officer) evaluated our disclosure
          controls and procedures. Based upon this evaluation, our president (Principal
          Executive and Financial Officer) concluded that
          our
          disclosure controls and procedures have not been effective to ensure that
          information required to be included in our periodic SEC filings is recorded,
          processed, summarized, and reported within the time periods specified in
          the SEC
          rules and forms. However, at this time, our resources and size prevent
          us from
          being able to employ sufficient resources to enable us to have adequate
          segregation of duties within our internal control system. The Company intends
          to
          remedy the material weakness by hiring additional employees and reallocating
          duties, including responsibilities for financial reporting, among the Company's
          employees as soon as the Company has the financial resources to do so.
          Management is required to apply its judgment in evaluating the cost benefit
          relationship of possible changes in our disclosure controls and
          procedures.
 
 **Changes
          in Internal Controls.**
 
 There
          were no changes in the Company’s internal controls or in other factors that
          could have significantly affected those controls subsequent to the date
          of the
          Company’s most recent evaluation.
  23





**PART
      II**





**OTHER
      INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**




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





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





None.





**ITEM
      3. DEFAULTS ON SENIOR SECURITIES**





See
        defaults as to Laurus, GMF and GSSF noted in our last 8-K filing and in Part
        I,
        Sect. 2 (Liquidity and Capital Resources)





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





None.





**ITEM
      5. OTHER INFORMATION**





See
      Part
      I, Sect. 2 (Liquidity and Capital Resources) concerning pending sale to
      Laurus.





**ITEM
      6. EXHIBITS**





(a)
            Exhibits.




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




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




24





**SIGNATURES**




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


**AMERICAN
                TECHNOLOGIES GROUP, INC.**/s/
                Thomas E. Durkin, IIIPresident
              (Principal
                Executive and Financial
                Officer)




DATE: March
      24, 2008


25