**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 October 31, 2007




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 December 14, 2007 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


-2-




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.





-3-




**PART
      I. FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**




AMERICAN
      TECHNOLOGIES GROUP,
      INC.


CONDENSED CONSOLIDATED
      BALANCE SHEET


OCTOBER
      31, 2007


(UNAUDITED)




ASSETSCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              459,576Accounts
                  receivable, net of allowance for doubtfulaccounts
                  of $153,312
              
              
              6,634,752Inventory
              
              
              4,445,927Cost
                  and estimated earnings in excess of billings
              
              
              806,136Prepaid
                  expenses
              
              
              64,619Total
                  current assets
              
              
              12,411,010Cash
                  surrender value of officers' life insurance
              
              
              101,413Property
                  and equipment, net
              
              
              2,418,944Goodwill
              
              
              3,390,370Total
                  assets
              
              $
              18,321,737LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities:Accounts
                  payable
              
              $
              3,556,508Accrued
                  expenses
              
              
              3,565,126Billings
                  in excess of costs and estimated earnings
              
              
              3,575,514Notes
                  payable, current portion, net ofdiscount
                  of $1,987,103
              
              
              8,818,889Total
                  current liabilities
              
              
              19,516,037Total
                  liabilities
              
              
              19,516,037Stockholders'
                  equity:Preferred
                  stock, series A
              
              
              377Preferred
                  stock, series E
              
              
              2Common
                  stock
              
              
              9,701Common
                  stock to be issued
              
              
              14Stock
                  subscription
              
              
              6,750Additional
                  paid-in capital
              
              
              78,562,994Accumulated
                  deficit
              
              
              (79,774,138
              )Total
                  stockholders' equity
              
              
              (1,194,300
              )Total
                  liabilities and stockholders' equity
              
              $
              18,321,737


The
      accompanying footnotes are an integral part of this unaudited
      condensedconsolidated financial statement.




-4-




AMERICAN
        TECHNOLOGIES GROUP,
        INC.
 CONDENSED CONSOLIDATED
        STATEMENTS OF
        OPERATIONS
 FOR
        THE QUARTERS ENDED OCTOBER 31, 2007 AND
        2006
 (UNAUDITED)


2007
              
              2006Net
                  sales
              
              $
              8,737,320
              
              $
              7,631,961Cost
                  of sales
              
              
              7,689,952
              
              
              6,594,524Gross
                  profit
              
              
              1,047,368
              
              
              1,037,437Selling,
                  general and administrative expenses
              
              
              894,026
              
              
              975,237Operating
                  income
              
              
              153,342
              
              
              62,200Other
                  income (expense)Interest
                  income
              
              
              3,216
              
              
              16,325Interest
                  expense
              
              
              (325,072
              )
              
              (349,186
              )Financing
                  costs
              
              
              (587,825
              )
              
              (975,646
              )Total
                  other income (expense)
              
              
              (909,681
              )
              
              (1,308,507
              )Loss
                  before income taxes
              
              
              (756,339
              )
              
              (1,246,307
              )Provision
                  for income taxes
              
              
              10,000
              
              
              -Net
                  loss
              
              
              (766,339
              )
              
              (1,246,307
              )Preferred
                  dividend
              
              
              3,000
              
              
              3,000Net
                  loss attributable to common shareholders
              
              $
              (769,339
              )
              $
              (1,249,307
              )Loss
                  per share, basic and diluted
              
              $
              (0.05
              )
              $
              (0.11
              )Loss
                  per share attributable to commonshareholders,
                  basic and diluted
              
              $
              (0.05
              )
              $
              (0.11
              )Weighted
                  average shares outstanding
              
              
              16,399,835
              
              
              11,330,766


The
        accompanying footnotes are an integral part of this unaudited condensed
        consolidated financial statement.
  -5-
  AMERICAN
          TECHNOLOGIES GROUP,
          INC.
 CONDENSED CONSOLIDATED
          STATEMENTS OF
          STOCKHOLDERS' DEFICIT
 FOR
          THE QUARTERS ENDED
 OCTOBER
          31, 2007
 (UNAUDITED)
  Common
                    StockPreferred
                    Stock Series A
                
                Preferred
                    Stock Series E
                
                Common
                    Stock
                
                To
                    be Issued
                
                Additional
                
                Stock
                
                AccumulatedShares
                
                Amount
                
                Shares
                
                Amount
                
                Shares
                
                Amount
                
                Shares
                
                Amount
                
                Paid
                    in Capital
                
                Subscriptions
                
                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
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (3,000
                )
                
                (3,000
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (766,339
                )
                
                (766,339
                )**Balance,
                    October 31, 2007**
                
                
                376,794
                
                $
                377
                
                
                1,500
                
                $
                2
                
                
                9,701,166
                
                $
                9,701
                
                
                13,719
                
                $
                14
                
                $
                78,562,994
                
                $
                6,750
                
                $
                (79,774,138
                )
                $
                (1,194,300
                )
 The
          accompanying footnotes are an integral part of this unaudited
          condensed consolidated financial statement.
  -6-
  AMERICAN
            TECHNOLOGIES GROUP,
            INC.
 CONDENSED CONSOLIDATED
            STATEMENTS OF CASH
            FLOWS
 FOR
            THE QUARTERS ENDED OCTOBER 31, 2007 AND
            2006
 (UNAUDITED)
 2007
                
                2006CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    (loss)
                
                $
                (766,339
                )
                $
                (1,246,307
                )Adjustments
                    to reconcile net loss to net cashused
                    in operating activities:Depreciation
                    and amortization
                
                
                46,580
                
                
                41,364Amortization
                    of discount
                
                
                587,825
                
                
                975,646Changes
                    in operating assets and liabilities:(Increase)
                    decrease in:Accounts
                    receivable
                
                
                26,782
                
                
                (1,491,555
                )Restricted
                    cash
                
                
                -
                
                
                280,000Inventory
                
                
                656,459
                
                
                (603,529
                )Costs
                    and earnings in excess of billings
                
                
                (567,687
                )
                
                (57,300
                )Prepaid
                    expenses
                
                
                45,437
                
                
                78,250Increase
                    (decrease) in:Accounts
                    payable and accrued expenses
                
                
                34,420
                
                
                115,119Billings
                    in excess of costs
                
                
                311,833
                
                
                612,657Net
                    cash provided by (used in) operating activities
                
                
                375,310
                
                
                (1,295,655
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Purchases
                    of property and equipment
                
                
                (19,347
                )
                
                (12,506
                )Net
                    cash used in investing activities
                
                
                (19,347
                )
                
                (12,506
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Payments
                    on notes
                
                
                (606,508
                )
                
                (899,319
                )Net
                    cash used in financing activities
                
                
                (606,508
                )
                
                (899,319
                )Net
                    decrease in cash
                
                
                (250,545
                )
                
                (2,207,480
                )Cash
                    and cash equivalents, beginning of quarter
                
                
                710,121
                
                
                2,337,540Cash
                    and cash equivalents, end of quarter
                
                $
                459,576
                
                $
                130,060Cash
                    paid for:Interest
                
                $
                317,264
                
                $
                388,061
 The
          accompanying footnotes are an integral part of this unaudited condensed
          consolidated financial statement.


-7-




**AMERICAN
      TECHNOLOGIES GROUP, INC.**


**NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
        31, 2007 and 2006
 
 (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.





-8-




**AMERICAN
      TECHNOLOGIES GROUP, INC.**


**NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
        31, 2007 and 2006
 
 (UNAUDITED)


**Basis
      of Presentation**




The
      accompanying unaudited condensed consolidated financial statements as of October
      31, 2007 and for the three month periods ended October 31, 2007 and 2006 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 ended October 31, 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.





-9-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


These
      amounts are reflected in the accompanying balance sheet as follows:




**October 31,**
              **2007**Costs
                and estimated earnings onuncompleted
                contracts in excess of billings
            
            $
            806,136Billings
                on uncompleted contracts inexcess
                of costs and estimated earnings
            
            
            (3,575,514
            )$
            (2,769,378
            )





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 October 31, 2007.




**Liquidity**




As
      shown
      in the accompanying unaudited condensed consolidated financial statements,
      the
      Company incurred net loss of $766,339 and $1,246,307 for the quarters ended
      October 31, 2007 and 2006, respectively. The Company's current liabilities,
      on a
      consolidated basis, exceeded its current assets by $7,105,027 as of October
      31,
      2007.




**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.





-10-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (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:





**2007**
            
            **2006**Common
                shares outstanding
            
            
            9,714,885
            
            
            10,395,766Options
                shares deemed outstanding
            
            
            4,685,000
            
            
            935,000Total
                shares outstanding for computation
            
            
            14,399,885
            
            
            11,330,766








-11-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


**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.




**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 quarter ended October
      31, 2007, we incurred a net loss of $766,339. Since its inception, the Company
      has incurred significant operating losses totaling in excess of





-12-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


$80
      million. 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
      - 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 year ended October 31, 2007
      included an aggregate of 60% from three customers and for the quarter ended
      October 31, 2006 included an aggregate of 52% from two customers. One supplier
      accounted for 18% of our purchases for the quarter ended October 31, 2007 and
      one supplier accounted for 15% of our purchases for the quarter ended October
      31, 2007. Two customers account for 42% of our accounts receivable at October
      31, 2007 and two customers account for 50% of our accounts receivable at October
      31, 2006.





**NOTE 5
      - CONVERTIBLE DEBENTURES AND OTHER NOTES PAYABLE**





At
      October 31, 2007, our current outstanding borrowings were:


Notes
                Payable to Laurus:Secured
                revolving note
            
            $
            6,674,742Secured
                convertible term note A
            
            
            1,631,250Secured
                convertible term note B
            
            
            2,000,000Notes
                Payable to Gryphon:Secured
                convertible term note - North Texas
            
            
            500,000Subtotal
            
            
            10,805,992Less:
                Discount on Debt
            
            
            (1,987,103
            )Net
                current convertible debentures and other notes payable
            
            $
            8,818,889








-13-




**AMERICAN
      TECHNOLOGIES GROUP, INC.**


**NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


**Laurus
      Financings**





In
      connection with the acquisition of North Texas, we entered into agreements
      with
      Laurus Master Funds, Ltd., a Cayman Islands corporation ("Laurus"), pursuant
      to
      which we issued convertible debt, a warrant and an option to purchase shares
      of
      our common stock to Laurus in a private offering pursuant to exemption from
      registration under Section 4(2) of the Securities Act of 1933, as amended.
      The
      securities sold to Laurus include the following:





·
            Secured
                revolving note in the original principal amount of
                $7,000,000;·
            Secured
                convertible term note A in the original principal amount of
                $3,000,000;·
            Secured
                convertible term note B in the original principal amount of
                $2,000,000;·
            Common
                stock purchase warrant to purchase 2,865,116 shares of our common
                stock at a purchase price of $.99 per share, exercisable until September
                6, 2012; and·
            A
                common stock purchase warrant to purchase 2,865,116 shares of common
                stock
                of the Company, at a purchase price of $.99 per share, exercisable
                until
                September 6, 2012; and an option to purchase 10,340,000 shares of
                common
                stock of the Company, at a purchase price of $.033 per
                share.





Each
      of
      the securities issued to Laurus are convertible into shares of Series D
      Preferred Stock, and the Series F Preferred Stock with respect to the secured
      convertible term note B, until such time that we amend our certificate of
      incorporation to provide for available shares of common stock and the shares
      of
      Series D Convertible Preferred Stock and the Series F Convertible Preferred
      Stock are only convertible into shares of common stock as long as there are
      no
      available shares for conversion.





*Secured
      revolving note*


We
      are
      permitted to borrow an amount based upon our eligible accounts receivable,
      as
      defined in the agreements with Laurus. We must pay certain fees for any unused
      portion of the credit facility or in the event the facility is terminated prior
      to expiration. Our obligations under all notes are secured by all of the assets
      of the North Texas Steel Company, including but not limited to inventory,
      accounts receivable and a pledge of the stock of Omaha and North Texas. The
      minimum borrowing notes, the secured revolving notes and the secured convertible
      term note A mature on September 6, 2008. Annual interest on the minimum
      borrowing notes, the secured revolving notes and the secured convertible term
      note A is equal to the "prime rate" published in The Wall Street Journal from
      time to time, plus 2.0%, provided, that, such annual rate of interest may not
      be
      less than 8.25%, subject to certain downward adjustments resulting from certain
      increases in the market price of our common stock. Interest on the minimum
      borrowing notes, the secured revolving notes and the secured convertible term
      note A is payable monthly in arrears on the first day of each month, commencing
      on October 1, 2005.





The
      principal amount of the secured convertible minimum borrowing note, together
      with accrued interest thereon is payable on September 6, 2008. The secured
      convertible minimum borrowing note may be redeemed by us in cash by paying
      the
      holder 120% of the principal amount, plus accrued interest. The holder of the
      secured convertible minimum borrowing note may require us to convert all or
      a
      portion of the term note, together with interest and fees thereon at any time.
      The number of shares to be issued shall equal the total amount to be converted,
      divided by $.333, subject to adjustment as described below.





*Secured
      convertible term note A*


The
      principal amount of the secured convertible term note A is repayable at the
      rate
      of $50,000 per month together with accrued but unpaid interest, commencing
      on
      January 1, 2006, which such principal payment increases to $93,750 on April
      1,
      2006 with a maturity date of September 6, 2008. The monthly amounts shall
      automatically convert into shares of our common stock in the event that there
      is
      an effective





-14-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


registration
      statement, the average market price for the five days preceding the payment
      date
      is equal to or greater than 120% of the fixed conversion price and the amount
      of
      such conversion does not exceed 25% of the aggregate dollar trading volume
      of
      our common stock for the 22 trading days immediately preceding the prepayment
      date (the "Laurus Trading Volume Limit"). In the event that the conversion
      exceeds the Laurus Trading Volume Limit, then Laurus will only be required
      to
      convert the portion of the secured convertible term note A up to the Laurus
      Trading Volume Limit and we will be required to pay off the remaining balance
      of
      the monthly amount. The secured convertible term note A may be redeemed by
      the
      Company in cash by paying the holder 120% of the principal amount, plus accrued
      interest. The holder of the term note may require us to convert all or a portion
      of the secured convertible term note A, together with interest and fees thereon
      at any time. If paid in shares of common stock the number of shares to be issued
      shall equal the total amount due, divided by $.99, subject to adjustment as
      described below.





We
      received an additional advance of $70,000 pursuant to the term note A, during
      the third quarter of 2006. The proceeds were applied to costs incurred in
      connection with the Whitco transaction. The additional advance bears interest
      at
      the rate of 24% per year. By July 31, 2006, the additional advance was
      repaid.





*Secured
      convertible term note B*


Our
      secured term note B with Laurus in the principal amount of $2,000,000
      convertible into up to 6,006,006 shares of our common stock originally matured
      and was fully payable on March 6, 2007. We did not pay the amount due on that
      date. Rather we received a written extension of the maturity date of the Term
      B
      note on the condition that we agree to pay a $300,000 extension fee. In
      addition, as part of the extension of the maturity date to May 7, 2007, Laurus
      also agreed to extend the time for the effectiveness of the Form SB-2
      Registration Statement we filed as required by our Registration Rights Agreement
      with Laurus to May 7, 2007 and then to July 31, 2007. As of May 7, 2007 and
      July
      31, 2007, we have neither paid the amounts due under the Term B note or caused
      or registration statement to be effective. On October 31, 2007, Laurus has
      again
      agreed, without an additional extension fee, to extend the time to pay and
      to
      cause our registration statement to be effective from July 31, 2007 to December
      31, 2007.





As
      of
      July 31, 2007, the Company has accrued, but not paid, the $300,000 extension
      fee
      related to the March 6, 2007 extension.  Prior to December 31,
      2007, we will seek to refinance our debt with Laurus. If we cannot
      refinance our debt in the time allowed, we will have to negotiate for additional
      extensions.




Interest
      on the secured convertible term note B accrues at the rate of 12% during the
      first year outstanding and 18% thereafter until maturity. On the maturity date,
      all principal and interest shall automatically convert into shares of our common
      stock in the event that there is an effective registration statement, the
      average market price for the five days preceding the payment date is equal
      to or
      greater than 120% of the fixed conversion price and the amount of such
      conversion does not exceed 25% of the Laurus Trading Volume Limit. In the event
      that the conversion exceeds the Laurus Trading Volume Limit, then Laurus will
      only be required to convert the portion of the secured convertible term note
      A
      up to the Laurus Trading Volume Limit and we will be required to pay off the
      remaining balance of the monthly amount. The secured convertible term note
      B may
      be redeemed by the Company in cash by paying the holder 100% of the principal
      amount, plus accrued interest. The holder of the secured convertible term note
      B
      may require us to convert all or a portion of the secured convertible term
      note
      B, together with interest and fees thereon at any time. If paid in shares of
      common stock the number of shares to be issued shall equal the total amount
      due,
      divided by $.333.





Upon
      an
      issuance of shares of common stock below the fixed conversion price, the fixed
      conversion price of the notes will be reduced accordingly. The conversion price
      of the secured convertible notes may be adjusted in certain circumstances such
      as if we pay a stock dividend, subdivide or combine outstanding





-15-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


shares
      of
      common stock into a greater or lesser number of shares, or take such other
      actions as would otherwise result in dilution.





**Gryphon
      Financing**





In
      connection with the acquisition of North Texas Steel, we entered into Security
      Agreements (the "Security Agreements") with GSSF Master Fund, L.P. ("GSSF")
      and
      Gryphon Master Fund L.P. ("GMF") for the sale of an aggregate of (i) $500,000
      in
      convertible term notes (the "Gryphon Term Notes"), (ii) common stock purchase
      warrants to purchase 5,999,880 shares of common stock (the "Gryphon
      Warrants") expiring February 28, 2007 and (iii) options to purchase 935,000
      shares of common stock (the "Gryphon Options"). GSSF and GMF are hereinafter
      collectively referred to as "Gryphon". The Gryphon Notes, the Gryphon Warrants
      and the Gryphon Options are convertible into shares of Series F Preferred Stock
      until such time as we amend our certificate of incorporation to provide for
      available shares of common stock and the shares of Series F Convertible
      Preferred Stock are only convertible into shares of common stock as long as
      there are available shares for conversion.




Each
      of
      the securities issued to GSSF and GMF are convertible into shares of Series
      E
      Preferred Stock until such time that we amend our certificate of incorporation
      to increase its authorized shares of common stock to 15,000,000,000 and the
      shares of Series E Convertible Preferred Stock are only convertible into shares
      of common stock as long as there are available shares for
      conversion.





The
      Gryphon Notes bear interest at 12%, mature one year from the date of issuance,
      and are convertible into our common stock, at Gryphon's option, at a conversion
      price of $.333. Based on this conversion price, the Gryphon Notes in the amount
      of $500,000 excluding interest, are convertible, upon the Company increasing
      its
      authorized shares of common stock, into 1,501,501 shares of our common
      stock. On the maturity date of September 30, 2007, the Gryphon Notes shall
      automatically convert into shares of common stock in the event that the average
      market price for the five days preceding the maturity date is equal to or
      greater than 120% of the fixed conversion price and the amount of such
      conversion does not exceed 25% of the aggregate dollar trading volume of the
      Company's common stock for the 22 trading days immediately preceding the
      maturity date (the "Trading Volume Limit"). In the event that the conversion
      exceeds the Trading Volume Limit, then Gryphon will only be required to convert
      the portion of the Gryphon Notes up to the Trading Volume Limit and we will
      be
      required to pay off the remaining balance.





We
      may
      prepay the Gryphon Notes. In addition, we have granted Gryphon a security
      interest in substantially all of the Company's assets as well as registration
      rights. Gryphon's rights to any security interest are subordinated to that
      of
      Laurus Master Fund, Ltd.





The
      Gryphon Warrants are exercisable from the date of issuance through February
      28,
      2007 at an exercise price of $.333 per share. The Gryphon Options are
      exercisable from the date of issuance through expriration date of the Notes
      at
      an exercise price of $.003 per share .





On
      November 12, 2007, GMF and GSSS agreed to extend the maturity dates of their
      convertible term notes in the total amount of $500,000 payable to GMF and GSSF
      from September 30, 2007 to December 31, 2007.





**Gryphon
      April 2006 Financing**





On
      April
      21, 2006, we executed a secured term note with GMF in the amount of $500,000.
      We
      received proceeds from the note in the amount of $395,367, and an aggregate
      of
      $104,633 was used to pay a





-16-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (UNAUDITED)


commitment
      fee and legal costs. In conjunction with the note, we issued a common stock
      purchase warrant for an aggregate of 675,000 shares, with an exercise price
      of
      $0.01 per share expiring April 26, 2011. The note bears interest at 12% per
      year
      and is due upon the earlier of demand, or August 21, 2006. The note is secured
      by certain assets acquired from Whitco Company L.P. and by the assets of Whitco
      Poles, Inc. As of July 31, 2006, the principal balance of the notes was repaid
      and the notes were retired.





**Discount
      on Debt**





The
      Company has valued the warrants and options issued with the Laurus and Gryphon
      financings using the Black Sholes pricing model. The value has been recorded
      at
      $7,322,936, based on the warrants and options relative fair value. We have
      also
      recorded a beneficial conversion feature of $2,173,455 in connection with the
      convertible notes. The resulting discount of $9,496,391 is being amortized
      over
      the terms of the related debt instruments.





The
      Company has valued the warrants issued with the Gryphon April 2006 financing
      using the Black Sholes pricing model. The value has been recorded at $201,493,
      based on the warrants relative fair value. The resulting discount of $201,493
      is
      being amortized over the term of the debt instrument.




**Laurus,
      GMF, and GSSF Defaults and Waiver of Defaults**





Pursuant
      to the terms of its registration rights agreements with Laurus, GSSF, and GMF,
      we are obligated to file a registration statement registering the resale of
      shares of the Company's common stock issuable upon conversion of the convertible
      notes, exercise of the warrant and exercise of the options issued in connection
      with the Laurus and Gryphon financings and the Whitco transactions. Pursuant
      to
      the original terms of registration rights agreements, if the registration
      statement was not filed by October 31, 2005 or declared effective by January
      7,
      2006, or if the registration was suspended other than as permitted the Company
      was obligated to pay Laurus certain fees and the obligations pursuant to the
      Laurus and Gryphon financings described above may be deemed to be in default.





On
      October 31, 2006 we filed a Notification of Late Filing on Form 12-b(25) stating
      that we would not file our Annual Report on Form 10-KSB for the fiscal year
      ended July 31, 2006 by the October 30, 2006 filing deadline, but that we would
      undertake to complete such filing by November 14, 2006, fifteen days from the
      original October 30, 2006 filing deadline. We did not complete the filing within
      the timeline specified and such failure constitutes an “event of default”
pursuant to our agreements with Gryphon, GMF, and GSSF.




In
      connection with the security agreements we entered into in September 2005 with
      Laurus, GMF, and GSSF we executed a stock pledge agreement granting them an
      interest in the common stock of our subsidiaries all of our and our
      subsidiaries' goods, inventory, contractual rights and general intangibles,
      receivables, documents, instruments, chattel paper, and intellectual property.
      The security agreement and stock pledge agreement state that if an "event of
      default" occurs under any agreement with Laurus, GSSF and GMF, that they have
      the right to take possession of the collateral, to operate our business using
      the collateral, and have 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 our obligations under these agreements. Our failure to
      timely file the Form 10-KSB and our failure to file a registration statement
      as
      described above each separately constituted an event of default under the
      security agreements.





Due
      to
      our defaults, we have obtained waivers and extension agreements from Laurus,
      GSSF, and GMP. The extensions and waivers waive any defaults that have occurred
      related to our failure to file a registration statement and failure to fully
      pay
      our obligations upon the stated maturity dates. Laurus, GMF and GSSF also agreed
      to waive any claims for default and damages that would have otherwise accrued
      through the date of the waiver agreement. Further, the extensions and waivers
      waived any claim for default as a result of our failure to meet the past
      financial reporting requirements of the security agreements.





-17-




**AMERICAN
        TECHNOLOGIES GROUP, INC.**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 October
          31, 2007 and 2006
 
 (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:




2007
            
            2006Sales
                to external customers:North
                Texas
            
            $
            7,868,504
            
            $
            6,342,972Whitco
            
            
            868,768
            
            
            1,288,313Other
            
            
            48
            
            
            676Total
                sales to external customers:
            
            $
            8,737,320
            
            $
            7,631,961Capital
                expenditures:North
                Texas
            
            $
            19,347
            
            $
            12,506Whitco
            
            
            -
            
            
            -Total
                capital expenditures
            
            $
            19,347
            
            $
            12,506Operating
                income (loss):North
                Texas
            
            $
            328,717
            
            $
            183,825Whitco
            
            
            1,839
            
            
            56,128Corporate
            
            
            (177,214
            )
            
            (177,753
            )Total
                operating income (loss)
            
            $
            153,342
            
            $
            62,200Segment
                assets:North
                Texas
            
            $
            15,660,062
            
            $
            14,200,084Whitco
            
            
            2,658,839
            
            
            3,903,215Corporate
            
            
            2,836
            
            
            51,983Total
                segment assets
            
            $
            18,321,737
            
            $
            18,155,282




-18-




**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:


-19-




·
            Lay
                out steel for cutting




·
            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.





-20-




**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:


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**Revenue
      Recognition**




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




**Allowance
      For Doubtful Accounts**




We
      estimate the 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 October 31, 2007 to the Quarter Ended October 31,
      2006**




**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 October 31, 2007 were approximately $ 7,868,000 earned
      by
      North Texas and $ 869,000 earned
      by
      Whitco. Revenues for the quarter ended October 31, 2006 were approximately
      $ 6,343,000 earned
      by North Texas and $ 1,288,000 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 October 31, 2007 was approximately $6,915,000
      for North Texas and resulted in a gross margin of approximately $953,000 or
      approximately 12.1% of revenues.  Cost of sales for the quarter ended
      October 31, 2007 was approximately $775,000 for Whitco and resulted in a
      gross margin of approximately $94,000 or approximately 10.8% of
      revenues. Cost of sales for the quarter ended October 31, 2006 was
      approximately $5,518,000 for North Texas and resulted in a gross margin of
      $825,000 or approximately 16% of revenues. Cost of sales for the quarter ended
      October 31, 2006 was approximately $1,077,000 for Whitco and resulted in a
      gross
      margin of $211,000 or 16.4% of revenues.





**Selling,
      General and Administrative Expenses**




For
      the
      quarter ended October 31, 2007, selling, general and administrative
      expenses totaled approximately $904,000, consisting primarily of administrative
      expenses and other expenses. For the quarter ended October 31,
      2006, selling, general and administrative expenses were approximately
      $975,000 which consist primarily of administrative expenses and other
      expenses.




-22-




**Interest
      Expense**




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





Interest
      expense decreased by $24,000 for the quarter ended October 31 2007 to $325,000
      when compared to the quarter ended October 31, 2006. Financing expense was
      $588,000 and $976,000 for the quarter ended October 31, 2007 and 2006,
      respectively. Included in financing expenses was non-cash amortization related
      to notes payable discount of $588,000 and $976,000 for the quarters ended
      October 31, 2007 and 2006, respectively.




**Liquidity
      and Capital Resources**




As
      of
      October 31, 2007, we had $460,000 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.





We
      have
      negotiated various extensions with Laurus Master Fund, LTD, (“Laurus”) Gryphon
      Master Fund, LP (“GMF”), and GSSF Master Fund, LP (“GSSF”) to extend the
      time we have to make payments under the $2,000,000 Term B Note and the $500,000
      in notes payable to GMF and GSSF, to waive prior defaults, and extend the time
      for the effectiveness of the SB-2 registration statement that we are required
      to
      file. The current extension we obtained on October 31, 2007 from Laurus extends
      the payment date for the Term B note and the effectiveness date of our
      registration statement to December 31, 2007. With respect to the indebtedness
      we
      owe to Gryphon and GSSF, on November 12, 2007, GMF and GSSS agreed to extend
      the
      maturity dates of their convertible term notes from September 30, 2007 to
      December 31, 2007.




We
        believe that we will be successful in meeting the working capital needs to
        fund
        the current level of operating activities, capital expenditures and debt
        and
        other obligations through December 31, 2007. However, if during that period
        or
        thereafter, we are not successful in generating sufficient capital resources,
        on
        terms acceptable to us, this could have a material adverse effect on the
        Company's business, results of operations liquidity and financial
        condition.
 
 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.
 
 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


-23-




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.


-24-




**PART
      II**





**OTHER
      INFORMATION**




**ITEM
      1. LEGAL PROCEEDINGS**




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




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





None.




**ITEM
      3. DEFAULTS ON SENIOR SECURITIES**





None.




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





None.




**ITEM
      5. OTHER INFORMATION**





None.




**ITEM
      6. EXHIBITS**





(a)
            Exhibits.




31.1
            Certification
                by Principal Officer & 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







-25-




**SIGNATURES**




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






**AMERICAN
      TECHNOLOGIES GROUP, INC.**






/s/
      Thomas E. Durkin, III


President









DATE:
      December 21, 2007


-26-