<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 0549

                                  FORM 10-K/A
                                AMENDMENT NO. 1

  [X]   Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
        Act of 1934.
        For the fiscal year ended December 31, 1998.

  [_]   Transition report pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934.
        For the transition period from ________ to _________.


                        Commission File Number 0-23781


                                   ATG INC.
            (Exact name of registrant as specified in its charter)

                     California                           94-2657762
           (State or other jurisdiction of                (IRS Employer
       incorporation or organization)               Identification Number)

                            47375 Fremont Boulevard
                          Fremont, California  94538
                   (Address of principal executive offices)


                                (510) 490-3008
             (Registrant's telephone number, including area code)


 Securities registered pursuant to Section 12(g) of the Act: Common Stock, No
                                   par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days:

                           Yes [X]         No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K (Paragraph 229.405 of this Chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
                                              [_]

On March 12, 1999, there were issued and outstanding 14,042,333 shares of Common
Stock. The aggregate market value of Common Stock held by non-affiliates of the
Registrant on that date was approximately $84,345,000 based on the closing sale
price of the Common Stock, as reported by the NASDAQ National Market.


                      Documents Incorporated By Reference

Portions of the registrant's definitive proxy statement for its 1999 Annual
Meeting of Shareholders are incorporated by reference into Part III hereof.
<PAGE>

INTRODUCTION

ATG Inc. hereby amends its Form 10-K for the fiscal year ended December 31, 1998
by: adding to Part II, Item 6, Selected Consolidated Financial Data, the section
entitled "Financial Results By Fiscal Quarter (Unaudited);" adding to Part II,
Item 8, Consolidated Financial Statements And Supplementary Data, a fifth
paragraph at the end of the section thereof entitled "Notes To Consolidated
Financial Statements - Note 3 - Acquisition of MMT Assets;" and adding to Part
IV, Item 14(b), Reports on Form 8-K, a second paragraph thereof in reference to
Form 8-K/A, Amendment No. 1.


                                    PART II

Item 6.  Selected Consolidated Financial Data (In Thousands, Except Per Share
Data)

The following selected consolidated financial data should be read in conjunction
with the consolidated financial statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                         -----------------------------------------------------
                                                                 1998      1997     1996     1995      1994
                                                                 ----      ----     ----     ----      ----
<S>                                                              <C>      <C>       <C>      <C>       <C>
Statement of Operations Data (1):
Revenue..................................................        $35,900  $19,107   $18,235  $16,070   $11,723
Cost ofrevenue...........................................         19,816   11,172    11,082    9,659     7,194
                                                                 -------  -------   -------  -------   -------
Gross profit.............................................         16,084    7,935     7,153    6,411     4,529
Sales, general and administrative expenses...............          7,952    7,020     6,656    6,202     4,876
                                                                 -------  -------   -------  -------   -------
Operating income (loss)..................................          8,132      915       497      209      (347)
Interest income (expense), net...........................            173       58        13     (141)      (19)
                                                                 -------  -------   -------  -------   -------
Income (loss) before income taxes........................          8,305      973       510       68      (366)
Net Income tax expense(benefit)..........................          3,156      (45)        2        2        (2)
                                                                 -------  -------   -------  -------   -------
Net income (loss)........................................        $ 5,149  $ 1,018   $   508  $    66   $  (364)
                                                                 =======  =======   =======  =======   =======
Net income per share (2)
   Basic.................................................        $  0.40  $  0.09
   Diluted...............................................        $  0.38  $  0.08
Weighted average shares outstanding (2)
   Basic.................................................         12,975   11,516
                                                                  13,698   12,284
   Diluted...............................................
</TABLE>

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                         -------------------------------------------------------------------------
                                                               1998            1997           1996          1995          1994
                                                           -------------  --------------  ------------  ------------  ------------
<S>                                                        <C>            <C>             <C>           <C>           <C>
Balance Sheet Data (1):
Working capital..........................................        $ 1,645        $  (151)       $ 4,333       $ 3,903       $ 2,359
Total assets.............................................         79,569         37,227         26,976        21,182        15,699
Total long-term debt.....................................         11,246          6,202          2,930         4,080         4,007
Mandatorily redeemable preferred stock...................            ---         19,416         16,319         9,403         5,444
Total shareholder's equity...............................         40,745            296            630           890         1,491
</TABLE>

<PAGE>

___________________________
(1)  See Note 3 of Notes to Consolidated Financial Statements for a discussion
     of the acquisition of significant assets and businesses.  The acquisition
     was completed December 1, 1998.
(2)  See Note 2 of Notes to Consolidated Financial Statements--Computation of
     Net Income Per Share. Historic net income (loss) per share and net income
     (loss) available to common shareholders have not been presented in
     Statement of Operations Data since such amounts are not deemed meaningful
     due to the automatic conversion immediately prior to the closing of the
     initial public offering of the Company's Common Stock in May 1998 of all
     shares of preferred stock issued by the Company and ATG Richland
     Corporation, a subsidiary of the Company. Historic net income (loss) per
     share for the fiscal years ended December 31, 1994, 1995, 1996 and 1997 was
     $(0.10), $(0.10), $(0.10) and $(0.06), respectively. Net income (loss)
     available to common shareholders for the fiscal years ended December 31,
     1994, 1995, 1996 and 1997 was $(730), $(770), $(780) and $(451),
     respectively.


                Financial Results By Fiscal Quarter (Unaudited)
           (all dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                         Three     Months      Ended
                                   -----------------------------------------------------------------------------------------
                                      Mar. 31     Jun. 30    Sep. 30    Dec. 31    Mar. 31    Jun. 30    Sep. 30    Dec. 31
                                        1997       1997       1997       1997       1998       1998       1998       1998
                                        -----      ----       ----       ----       ----      -----       ----       ----
<S>                                   <C>         <C>        <C>        <C>        <C>        <C>        <C>        <C>
Revenue............................    $2,751      $3,581     $4,424     $8,351     $5,495     $6,773     $9,021    $14,612
Gross Profit.......................     1,332       1,565      2,633      2,404      2,865      3,426      4,226      5,567
Net income (loss)..................      (266)         72        692        520        670        879      1,529      2,071
Net income (loss) per share........
     Basic.........................     (0.09)       0.01       0.06       0.05       0.05       0.07       0.11       0.15
Diluted...........................      (0.09)       0.01       0.06       0.04       0.05       0.07       0.11       0.14
</TABLE>


Item 8.  Consolidated Financial Statements And Supplementary Data

See pages 31 through 48.

Next page is 31.
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders of
ATG Inc. and Subsidiaries:

          In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
ATG Inc. and its subsidiaries at December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.  These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards, which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for the opinion expressed above.



                                                 PRICEWATERHOUSECOOPERS LLP


San Jose, California
February 26, 1999

                                       31
<PAGE>

                                   ATG INC.
                          CONSOLIDATED BALANCE SHEETS
                         (dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                             ------------
                                                                                          1998           1997
                                                                                          ----           ----
<S>                                                                                   <C>           <C>
                                    ASSETS
Current assets:
       Cash and cash equivalents..................................................       $ 3,789       $ 2,586
       Accounts receivable, net of allowance for doubtful
            accounts of $305 at December 31, 1998 and
            $119 at December 31, 1997.............................................        22,561         5,935
       Prepayments and other current assets.......................................         2,096         2,174
                                                                                         -------       -------
           Total current assets...................................................        28,446        10,695
Property and equipment, net.......................................................        42,988        22,104
Other assets......................................................................         8,135         4,428
                                                                                         -------       -------
                 Total assets.....................................................      $ 79,569      $ 37,227
                                                                                        ========      ========

                                  LIABILITIES
Current liabilities:
       Short term borrowings......................................................       $ 6,750       $ 3,996
       Current portion of long term debt and capitalized leases...................         4,733         1,380
       Accounts payable...........................................................         6,096         3,246
       Accrued liabilities........................................................         9,222           944
       Payable to related parties.................................................            --         1,280
                                                                                         -------       -------
                 Total current liabilities........................................        26,801        10,846
Long term debt and capitalized leases, net of current portion.....................        11,246         6,202
Deferred income taxes.............................................................           777           467
                                                                                         -------       -------
                 Total liabilities................................................        38,824        17,515
                                                                                         -------       -------

Commitments and contingencies (Note 12)
Mandatorily Redeemable Preferred Stock:
       Series A and ATG Richland Series A and B, no par value
       Authorized: 6,000,000 shares at December 31, 1997
       Issued and outstanding 3,029,291 shares at
       December 31, 1997..........................................................            --        19,416
                                                                                         -------       -------

                            SHAREHOLDERS' EQUITY
Common Stock, no par value:
       Authorized: 20,000,000 shares.  Issued and outstanding:
       13,851,709 shares and 7,532,301 shares at December 31,
       1998 and 1997, respectively................................................        41,517         6,337
Deferred compensation.............................................................          (152)         (272)
Accumulated deficit...............................................................          (620)       (5,769)
                                                                                         -------       -------
                 Total common stock, deferred compensation and
                 accumulated deficit..............................................        40,745           296
                                                                                         -------       -------
                 Total liabilities and shareholders' equity.......................       $79,569       $37,227
                                                                                         =======       =======

</TABLE>


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

                                       32
<PAGE>

                                   ATG INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 (amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                            For the Years Ended December 31,
                                                                            --------------------------------
                                                                            1998          1997          1996
                                                                            ----          ----          ----
<S>                                                                  <C>             <C>           <C>
Revenue..........................................................        $ 35,900       $ 19,107      $ 18,235
Cost of revenue..................................................          19,816         11,172        11,082
                                                                         --------       --------      --------
        Gross profit.............................................          16,084          7,935         7,153
Sales, general and administrative expenses.......................           7,832          6,903         6,487
Stock based compensation expense.................................             120            117           169
                                                                         --------       --------      --------
        Operating income.........................................           8,132            915           497
                                                                         --------       --------      --------
Interest income (expense):
    Interest income..............................................             188             58           142
    Interest expense.............................................             (15)            --          (129)
                                                                         --------       --------      --------
        Interest income, net.....................................             173             58            13
                                                                         --------       --------      --------
Income before income taxes.......................................           8,305            973           510
Provision (benefit) for income taxes.............................           3,156            (45)            2
                                                                         --------       --------      --------
        Net income...............................................           5,149          1,018           508
Accretion of mandatorily redeemable preferred stock..............              --         (1,469)       (1,288)
                                                                         --------       --------      --------
Net income (loss) available to common shareholders...............        $  5,149       $   (451)     $   (780)
                                                                         ========       ========      ========
Net income (loss) per share
    Basic........................................................        $   0.40       $  (0.06)     $  (0.10)
    Diluted......................................................        $   0.38       $  (0.06)     $  (0.10)

Shares used in calculating net income (loss)
per share
    Basic........................................................          12,975          7,532         7,532
    Diluted......................................................          13,698          7,532         7,532

</TABLE>

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

                                       33
<PAGE>

                                  ATG INC.

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                           (amounts in thousands)


<TABLE>
<CAPTION>

                                                                                                               Total common
                                                                                                             stock, deferred
                                                        Common Stock                                           compensation
                                                        ------------            Deferred      Accumulated    and accumulated
                                                   Shares          Amount     Compensation      Deficit           deficit
                                                   ------          ------     ------------    -----------    ----------------
<S>                                             <C>             <C>          <C>            <C>            <C>
Balance, January 1, 1996.....................       7,439          $ 5,598       $ (169)        $ (4,538)        $   891
     Issuance of common stock................          93              350           --               --             350
     Accretion on redeemable preferred
       stock.................................          --               --           --           (1,288)         (1,288)
     Amortized deferred compensation.........          --               --          169               --             169
     Net income..............................          --               --           --              508             508
                                                  -------          -------       ------         --------         -------
Balance, December 31, 1996...................       7,532            5,948           --           (5,318)            630
     Accretion on redeemable preferred
       stock.................................          --               --           --           (1,469)         (1,469)
     Stock based compensation................          --              389         (389)              --              --
     Amortized deferred compensation.........          --               --          117               --             117
     Net income..............................          --               --           --            1,018           1,018
                                                  -------          -------       ------         --------         -------
Balance, December 31, 1997...................       7,532            6,337         (272)          (5,769)            296
     Conversion of redeemable preferred
       stock.................................       3,984           19,416           --               --          19,416
     Issuance of common stock, on initial
       public offering, net of expenses......       2,185           15,658           --               --          15,658
     Exercise of stock options...............         147               83           --               --              83
     Issuance of common stock under
       Employee Stock Purchase Plan..........           4               23           --               --              23
     Amortized deferred compensation.........          --               --          120               --             120
     Net income..............................          --               --           --            5,149           5,149
                                                  -------          -------       ------         --------         -------
Balance, December 31, 1998...................      13,852          $41,517       $ (152)        $   (620)        $40,745
                                                  =======          =======       ======         ========         =======
</TABLE>

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

                                       34
<PAGE>

                                   ATG INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (amounts in thousands)
<TABLE>
<CAPTION>
                                                                          For the Years Ended December 31,
                                                                          ---------------------------------
                                                                          1998           1997          1996
                                                                          ----           ----          ----
<S>                                                                  <C>            <C>           <C>
Cash flows from operating activities:
  Net income....................................................        $  5,149        $ 1,018      $   508
  Adjustments to reconcile net income with cash
      flow from operations:
    Depreciation and amortization...............................             824            746          671
    Provision for doubtful accounts.............................             210             73            6
    Compensation expense for shares issued and
       options granted..........................................             120            117          169
    Income tax benefit..........................................              --            (45)          --
    Change in current assets and liabilities:
         Accounts receivable....................................         (16,836)           899          534
         Prepayments and other current assets...................              78           (140)         230
         Other assets...........................................              --             --          290
         Accounts payable and accrued liabilities...............          11,128          1,085          455
         Deferred income taxes..................................             310           (230)          --
                                                                        --------        -------      -------
           Net cash provided by
           operating activities.................................             983          3,523        2,863
                                                                        --------        -------      -------
Cash flows from investing activities:
  Property and equipment acquisitions...........................          (5,015)        (3,505)      (4,647)
  Acquisition of MMT assets.....................................         (10,731)            --           --
  Other assets..................................................          (3,763)        (3,710)         (23)
                                                                        --------        -------      -------
    Net cash used in investing activities.......................         (19,509)        (7,215)      (4,670)
                                                                        --------        -------      -------
Cash flows from financing activities:
  Loans from (payments to) related parties......................          (1,280)         1,177          (61)
  Repayment of capital leases...................................          (1,226)          (461)        (735)
  Borrowing (Repayment) of long term debt, net..................           3,717           (196)        (216)
  Short term borrowings, net of repayments......................           2,754          1,160           48
  Proceeds from issuance of preferred stock, net................              --          1,629        5,627
  Proceeds from issuance of common stock, net...................          15,764             --           --
                                                                        --------        -------      -------
    Net cash provided by financing activities...................          19,729          3,309        4,663
                                                                        --------        -------      -------
Increase (decrease) in cash and cash equivalents................           1,203           (383)       2,856
Cash and cash equivalents, beginning of period..................           2,586          2,969          113
                                                                        --------        -------      -------
Cash and cash equivalents, end of period........................        $  3,789        $ 2,586      $ 2,969
                                                                        ========        =======      =======
Supplemental Disclosures, of non cash investing and
  financing activities:
    Income taxes paid...........................................        $     64        $     2      $     2
                                                                        ========        =======      =======
    Interest paid, net of interest capitalized..................        $     15        $    --      $   622
                                                                        ========        =======      =======
    Acquisition of equipment with capital lease financing.......        $    906        $ 4,256      $    --
                                                                        ========        =======      =======
    Acquisition of MMT assets with long term debt...............        $  5,000        $    --      $    --
                                                                        ========        =======      =======
    Compensation expense for shares issued and options
      granted...................................................        $    120        $   117      $   169
                                                                        ========        =======      =======
    Conversion of notes payable to common stock.................        $     --        $    --      $   350
                                                                        ========        =======      =======
    Reclassification of machinery and equipment to
      inventory.................................................        $   (475)       $    --      $    --
                                                                        ========        =======      =======
    Conversion of redeemable prefered stock.....................        $ 19,416        $    --      $    --
                                                                        ========        =======      =======

</TABLE>

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

                                       35
<PAGE>

                                  ATG INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (all dollar amounts in thousands, except per share data)

                            --------------------


1.  Formation and Business of the Company

  ATG Inc. (the "Company" or "ATG") provides technical personnel and specialized
services and products primarily to the U.S. government and the nuclear power
industry throughout the United States.  Services principally consist of
compaction, reduction, decontamination, vitrification and disposal of low-level
dry active nuclear and other hazardous waste, dewatering and thermal treatment
of ion exchange resins and site remediation and construction projects.

  In May 1998, the Company completed an initial public offering of 1,900,000
shares of common stock and, in June 1998, sold an additional 285,000 shares of
common stock at $8.50 per share. Total proceeds to the Company, net of
underwriting discounts and other direct expenses, were approximately $15.7
million.

2. Summary of Significant Accounting Policies

 Basis of Presentation

  The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, ATG Richland Corporation ("ATG Richland") and ATG
Nuclear Services LLC ("ATG Nuclear") and its majority owned subsidiary, ATG
Catalytics LLC ("ATG Catalytics").  All significant intercompany balances and
transactions have been eliminated.

 Use of Estimates

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying disclosures. These estimates include assessing the collectibility
of accounts receivable, contracts in process and the recoverability of self-
constructed assets and provisions for contingencies. Actual results could
materially differ from the Company's estimates.

 Revenue Recognition

  Revenue includes fees for waste processing services and technology license
fees. Revenue under cost plus fixed fee and fixed unit price contracts mainly
relating to site remediation is recorded as costs are incurred or units are
completed and includes estimated fees earned according to the terms of the
contracts. Revenue from U.S. government contracts includes estimates of
reimbursable overhead and general administrative expenses, which are subject to
final determination by the U.S. federal government upon project completion.
Revisions to costs and income resulting from contract settlements, which are due
to differences between actual and budgeted performance, are recognized in the
period in which the revisions are determined. Revenue from waste processing is
generally recognized upon the substantial completion of the waste treatment
process. Revenue from licensing or technology transfer agreements is recognized
when received unless there are future commitments, in which case the revenues
are recognized over the term of the agreement. Revenues of $1,975 were
recognized pursuant to technology transfer agreements in 1997. Losses on
contracts are charged to cost of revenue as soon as such losses become known.

                                       36
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

Change orders are modifications of an original contract that effectively change
the provisions of the contract.  They may be initiated by either the Company or
the customer.  Claims for additional contract revenue resulting from change
orders are recognized if it is probable that the claims will result in
additional revenue and the amount can be reliably estimated. Change order work
may be performed prior to approval of the change order by the customer.

 Cash and Cash Equivalents

  The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.

 Property and Equipment

  Property and equipment are stated at cost and are depreciated on the straight-
line basis over the estimated useful lives of the assets, which range from three
to forty years.   Cost includes expenditures for major improvements and
replacements and the net amount of interest costs related to qualifying
construction projects.  Expenditures for major renewals and betterments are
capitalized and expenditures for maintenance and repair expenses are charged to
expense as incurred.  The Company's policy is to regularly review the carrying
amount of specialized assets and to evaluate the remaining life and
recoverability of such equipment in light of current market conditions.

  Risks and Uncertainties

  The Company operates its fixed facilities under regulations of, and permits
issued by, various state and federal agencies.  The Company, typically, is in
the process of seeking new permits, renewals and/or expansion permits. There can
be no assurance of the successful outcome of any permitting efforts. The
permitting process is subject to regulatory approval, time delays, local
opposition and potentially stricter governmental regulation. Substantial losses
which would have a material adverse effect on the Company's consolidated
financial position, could be incurred by the Company in the event a permit is
not granted, if facility construction programs are delayed or changed, or if
projects are otherwise abandonded. The Company reviews the status of permitting
projects on a periodic basis to assess realizability of related asset values. As
of December 31, 1998, management believes that assets which could currently be
affected by permitting efforts are recoverable at their recorded values.

  The market for the Company's services is substantially dependent on state and
federal legislation and regulations. The availability of new contracts depends
significantly on government authorities. In order to build or retain its market
share the Company must continue to successfully compete for new government and
private sector contracts.

 Income Taxes

  The Company accounts for income taxes under the liability method, whereby
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the

                                       37
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be realized.

Concentration of Credit Risk

  The majority of the Company's cash, cash equivalents and short-term
investments are held with major banks in the United States.  The Company's
customers consist mainly of agencies of the U.S. government and large U.S.
companies.  The Company performs ongoing credit evaluation of its customers'
financial condition.  As of December 31, 1998, agencies of the U.S. government
represented 51% of accounts receivable and 55% of total revenue for the year
then ended.  As of December 31, 1997, agencies of the U.S. government
represented 47% of accounts receivable and 71% of total revenue for the year
then ended.  As of December 31, 1996, agencies of the U.S. government
represented 70% of accounts receivable and 77% of total revenue for the year
then ended.  The Company generally does not require collateral.

Computation of  Net Income Per Share

  Basic income per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted income per share is computed giving effect to all dilutive
potential common shares that were outstanding during the period. Dilutive
potential common shares consist of the incremental common shares issuable upon
the conversion of convertible preferred stock (using the "if converted" method)
and exercise of stock options for all periods.

 Reclassifications

  Certain prior year amounts in the consolidated financial statements have been
reclassified to conform with the current year's presentation.

3.  Acquisition of MMT Assets

  Effective December 1, 1998, the Company, through its wholly-owned subsidiary,
ATG Nuclear, and through its 90% owned subsidiary, ATG Catalytics, acquired
certain assets and business lines from the trustee ("Seller") for debtors of
Molten Metal Technologies, Inc. or its affiliates, under Chapter 11 of the
United States Bankruptcy Code (the "MMT Assets").

  The assets acquired by ATG Nuclear include substantially all of the assets,
contracts, licenses and permits associated with the Seller's wet waste business
based in Oak Ridge, Tennessee, and a facility in Columbia, South Carolina. The
assets acquired by ATG Catalytics include substantially all of the assets,
contracts, licenses and permits associated with the Seller's catalytic
extraction processing business conducted substantially in Oak Ridge, Tennessee.

                                       38
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

  The total purchase price of the MMT assets and business lines acquired was
approximately $15.7 million. The purchase price was allocated as follows:
property and equipment - $15.4 million; accounts receivable - $2.8 million;
restricted cash and other assets - $2.7 million; accrued liabilities - $5.2
million. The Company paid $10.5 million in cash at closing, agreed to pay $1.0
million in cash one year from closing and agreed to make future payments of 5%
of the earnings before interest, taxes, depreciation and amortization of ATG
Catalytics, but not less than $800 annually for five years (minimum total of
$4.0 million).

  The transaction has been accounted for as a purchase and accordingly, results
of operations include the operations of the new businesses since the date of
acquisition.  The purchase price has been allocated to the assets acquired and
will be amortized over the lives of those assets.  There was no goodwill
recorded in the transaction.

  The Company has prepared unaudited pro forma combined financial information
for the year ended December 31, 1997 and the nine months ended September 30,
1998 reflecting the combined results of operations as if the transaction had
been consumated at the beginning of the respective periods. The unaudited pro
forma combined data for the year ended December 31, 1997 included revenue of
$40.3 million, net loss of $12.2 million, and net loss per share of $1.62; and
for the nine months ended September 30, 1998 included revenue of $39.0 million,
net income of $290,000, and fully diluted net income per share of $0.02. The
unaudited pro forma combined financial information does not purport to be
indicative of the results of operations which would have actually been obtained
if the acquisition had been consummated on the dates indicated or which may be
achieved in the future.

4.  Accounts Receivable

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                        ------------------------------
                                                                             1998            1997
                                                                        ---------------  -------------
<S>                                                                     <C>              <C>
U.S. Government:
     Amounts billed...........................................               $ 8,483         $3,142
     Amounts unbilled.........................................                 3,037            845
                                                                             -------         ------
          Total U.S. Government...............................                11,520          3,987
                                                                             -------         ------
Commercial customers:
     Amounts billed...........................................                 9,008          2,067
     Amounts unbilled.........................................                 2,338             --
                                                                             -------         ------
          Total commercial....................................                11,346          2,067
                                                                             -------         ------
     Total accounts receivable................................                22,866          6,054
Less: allowances for doubtful accounts........................                  (305)          (119)
                                                                             -------         ------
                                                                             $22,561         $5,935
                                                                             =======         ======
</TABLE>

  Recoverable costs and accrued profit on progress completed but not billed on
U.S. government contracts is based on estimates of reimbursable overhead and
general and administrative expenses calculated in accordance with contractually
determined methods of calculation.  These amounts are subject to final
determination by the U.S. federal government after the contracts have been
completed.  As such, the actual recoverable amounts on these contracts may
differ from these estimates.  The U.S. federal government has reviewed and
approved reimbursable expenses for contracts in progress through 1995.

5.  Restricted Investments

  The Company owns several certificates of deposit, Treasury bills and bonds,
which are collateral for performance bonds. The certificates of deposit, which
are included in intangible and other assets, have an aggregate value of $223 at
December 31, 1998 and $210 at December 31, 1997, respectively, bear interest at
5.1% per annum, and have an original maturity of twelve months. The Treasury
bills, which are included in intangible and other assets, have an aggregate
value of $254 at December 31, 1998 and 1997, bear interest at 5.8% and have an
original maturity

                                       39(1)
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

of twelve months.  The bonds, which are included in prepayments and other
current assets, have an aggregate value of $477 and $959 at December 31, 1998
and December 31, 1997, respectively, and have an original maturity of between
one and five years.

6.  Property and Equipment

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                        ------------------------------
                                                                             1998            1997
                                                                        --------------  --------------
 <S>                                                                     <C>             <C>
Land..................................................................      $ 2,310         $   761
Buildings and improvements............................................       21,205           2,848
Machinery and equipment...............................................       14,876           5,183
Office furniture and equipment........................................        1,470           1,427
                                                                            -------         -------
Property and equipment at cost........................................       39,861          10,219
Less: accumulated depreciation and amortization.......................       (3,072)         (2,840)
                                                                            -------         -------
                                                                             36,789           7,379
Construction-in-progress...............................................       6,199          14,725
                                                                            -------         -------
                                                                            $42,988         $22,104
                                                                            =======         =======
</TABLE>

  Property and equipment costs include capitalized labor and overhead, including
interest costs related to the construction of buildings, building improvements
and equipment.  Capitalized interest costs totaled $1,027, $891 and $446 in
1998, 1997 and 1996, respectively.  All property and equipment serve as
collateral to notes payable agreements to banks and other creditors.

  As of December 31, 1998 and 1997, machinery and equipment included assets
acquired under capital leases with a capitalized cost of $6,876 and $7,256,
respectively. Related accumulated amortization totaled $333 and $498 in 1998 and
1997, respectively.

7.  Accrued Liabilities

    Accrued liabilities at December 31, 1998 and 1997 consisted of:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                        ------------------------------
                                                                             1998            1997
                                                                        --------------  --------------
 <S>                                                                     <C>             <C>
Income taxes payable..................................................      $ 2,647         $     -
Legacy waste..........................................................        2,788               -
Other.................................................................        3,787             944
                                                                            -------         -------
                                                                            $ 9,222         $   944
                                                                            =======         =======
</TABLE>

  The legacy waste accrual arose out of the purchase of the assets and
businesses described in Note 3--Acquisition of Tennessee Assets.

8.   Payable to Related Parties

  The Company had a payable to its Chairman and Chief Executive Officer of
$1,280 at December 31, 1997.  The amount was repaid in 1998.

                                       40
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

  The Company has a payable to a former Director of $225 at December 31, 1998
and 1997.  The amount is repayable on July 1, 2000 and is non-interest bearing.
The amount is included in long term debt.

9.   Short-Term Borrowings

  Under a line of credit facility with a bank, the Company may borrow up to
$9,500.  Borrowings under this credit agreement were $6,750 at December 31,
1998, bear interest equal to the bank's reference rate (7.75% at December 31,
1998) and are collateralized by accounts receivable, inventory and equipment.
Borrowings under the credit agreement were $3,996 as of December 31, 1997, and
bore interest at prime plus 0.50% (9.0% at December 31, 1997).  The facility
agreement expires June 30,1999.

  The credit agreement requires the Company to comply with certain covenants
including capital asset acquisition limits, limits on additional debt, minimum
levels of tangible net worth,  dividend payment restrictions and maintenance of
certain financial ratios.  At December 31, 1998 and at various dates throughout
the year the Company was in violation of certain covenants.  The Company has
obtained waivers in respect of these violations as of December 31, 1998.

10.   Long Term Debt

  Long term debt consists of mortgage debt, notes payable and equipment notes
payable.  The mortgage debt bears interest at 9.5%, matures in 2001, and is
collateralized by certain of the Company's buildings.  The notes payable bear
interest at annual rates between 8% and 10%, mature between 1999 and 2005, and
are collateralized by certain of the Company's equipment.  Equipment notes bear
interest at annual rates between 0.9% and 9.6%, mature between 1999 and 2002,
and are collateralized by specific equipment.

  Future minimum principal payments are as follows as of December 31, 1998:

<TABLE>
<CAPTION>
                                                        Mortgage       Notes       Equipment     Total Long
                                                          Debt        Payable        Notes        Term Debt
                                                      ------------  ------------  ------------  -------------
<S>                                                   <C>           <C>           <C>           <C>
1999................................................      $  159       $ 3,374        $   26        $ 3,559
2000................................................         128         2,186            19          2,333
2001................................................       1,341         2,162             3          3,506
2002................................................          --           826             2            828
2003................................................          --           828            --            828
Thereafter..........................................          --            77            --             77
                                                          ------        ------        ------        -------
                                                           1,628         9,453            50         11,131
Less: current portion...............................         159         3,374            26          3,559
                                                          ------        ------        ------        -------
                                                          $1,469        $6,079        $   24        $ 7,572
                                                          ======        ======        ======        =======
</TABLE>


                                       41
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

11.   Capital Lease Obligations

  As of December 31, 1998, future minimum lease payments under non-cancelable
capital leases are as follows:

<TABLE>
<S>                                                                                            <C>
1999.........................................................................................     $1,623
2000.........................................................................................      1,540
2001.........................................................................................      1,203
2002.........................................................................................        998
2003.........................................................................................        619
                                                                                                  ------
Total minimum lease payments.................................................................      5,983
Less amount representing interest............................................................      1,135
                                                                                                  ------
Present value of future minimum lease payments...............................................      4,848
Less: current portion........................................................................      1,174
                                                                                                  ------
Total capital lease obligations, net of current portion......................................     $3,674
                                                                                                  ======
</TABLE>


12.  Commitments and Contingencies

  In March 1998, two civil suits were filed against the Company and a Company
subcontractor, among other persons, in connection with a contract under which
the Company acted as prime contractor and the subcontractor acted as
subcontractor to "surface clear" expended ordnance from a U.S. Army firing range
at Fort Irwin, California.  The suits arise out of an explosion which occurred
in March 1997 on the premises of a scrap metal dealer which had in the past
purchased military scrap metal from a number of military facilities, including
Fort Irwin.  One employee of the scrap metal dealer died in the accident, and
three other persons have alleged physical injuries and emotional distress
arising from this incident.  One of the suits alleges wrongful death, seeking
general damages of $3,000, special damages of $110, and exemplary damages of
$5,000.  In the other suit, the three persons alleging physical injuries and
emotional distress are seeking general damages in the aggregate amount of $800,
while reserving the right to seek punitive damages in the aggregate amount of
$1,500.  The Company has tendered the claims to its insurance carrier, and the
insurance carrier has accepted defense of these claims.  In addition, the
Company intends to seek indemnification from its subcontractor for the full
amount of costs, damages, and liabilities, if any, incurred by the Company as a
results of these suits.

  The aforementioned claims are in various stages of discovery.  Management
believes that all claims asserted against the Company in each of the suits are
without legal merit.  If the Company were to be found liable in the
aforementioned suits and the amount awarded exceeded available insurance limits
and amounts recoverable from its subcontractors, it could have a material
adverse effect on the Company's financial condition and results of operations.

  From time to time the Company is a party to litigation or administrative
proceedings relating to claims arising from its operations in the normal course
of business.  Management of the Company, on the advice of counsel, believes that
the ultimate resolution of litigation currently pending against the Company is
unlikely, either individually or in the aggregate, to have a material adverse
effect on the Company's business, financial condition or results of operations.

                                       42
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

13.  Stock Based Compensation Plans


  1994 Stock Option Plan ("1994 Plan")

  A total of 909,878 shares of common stock have been reserved for issuance
under the 1994 Plan.  Options granted under the 1994 Plan generally expire ten
years from the date of grant.  During 1998, the Company adopted new stock plans
(see below); accordingly, the Company does not plan to issue further options to
purchase common stock under the 1994 Plan.


  1998 Stock Ownership Incentive Plan ("Incentive Plan")

  A total of 500,000 shares of common stock have been reserved for issuance
under the Incentive Plan. The Board of Directors may grant incentive stock
options or non-statutory stock options to employees at 100% of the fair market
value of the stock on the date of grant. Vesting terms are to be determined by
the Board of Directors (typically three years) and options generally expire ten
years from the date of grant.


  1998 Non-Employee Directors' Stock Option Plan ("Directors' Plan")

  A total of 200,000 shares of common stock has been reserved for issuance under
the Directors' Plan.  The Directors' Plan provides for an automatic grant of
options to purchase 20,000 shares of common stock upon the date such person
becomes a non-employee director.  Twenty-five percent of the shares subject to
the option are immediately vested and twenty-five percent vest each year
thereafter.  The exercise price of the options granted under the Directors' Plan
must equal or exceed the fair market value of the Common Stock on the date of
grant.  All grants expire ten years from the date of grant.


  1998 Consultants and Advisors Stock Option Plan ("Consultants Plan")

  A total of 200,000 shares of common stock has been reserved for issuance under
the Consultants Plan.  The Consultants Plan is administered by the Board of
Directors who may grant options to purchase common stock to consultants and
advisors to the Company at prices and upon terms as determined by the Board.

                                       43
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

  The following option activity occurred in all stock option plans in the three
years ended December 31, 1998:

<TABLE>
<CAPTION>
                                                                                                           Weighted
                                                      Options                                              Average
                                                     Available          Outstanding         Exercise       Exercise
                                                     for Grant            Options            Price          Price
                                                 -----------------    ---------------     -----------    -----------
<S>                                              <C>                <C>                 <C>              <C>
Balance, January 1, 1996.......................         630,000           440,000         $0.01-$7.50        $2.08
    Granted....................................         (76,000)           76,000         $      0.10        $0.10
                                                       --------         ---------
Balance, December 31, 1996.....................         554,000           516,000         $0.01-$7.50        $1.79
    Granted....................................        (554,000)          554,000         $1.00-$5.00        $2.10
                                                       --------         ---------
Balance, December 31, 1997.....................               -         1,070,000         $0.01-$7.50        $1.95
    Authorized.................................         900,000                 -
    Granted....................................        (607,500)          607,500         $5.00-$8.56        $6.55
    Exercised..................................               -          (147,122)        $0.01-$1.00        $0.23
    Terminated.................................               -           (13,000)        $0.01-$5.00        $0.62
    Cancelled..................................         143,500          (143,500)        $8.50-$8.56        $8.54
                                                       --------         ---------
Balance, December 31, 1998                              436,000         1,373,878         $0.01-$8.50        $3.49
                                                       ========         =========
</TABLE>

  As of December 31, 1998, options to purchase 419,457 shares of Common Stock at
$0.01 to $8.50 per share were fully vested and exercisable under the Plans.
During August 1998, the Company cancelled options granted to employees to
acquire 125,500 shares of Common Stock with prices ranging from $8.50 to $8.56
and issued new options to acquire the same number of shares at a price of
$6.375.

  In connection with the grant of options for the purchase of 554,000 shares of
Common Stock to employees during the period from January 1, 1997 through
December 31, 1997, the Company recorded aggregate deferred compensation expense
of approximately $389 representing the difference between the deemed fair value
of the Common Stock and the option exercise price at date of grant.  Such
deferred compensation will be amortized over the vesting period relating to
these options, of which $120 and $117 has been amortized during the years ended
December 31, 1998 and 1997, respectively, and is included in the statement of
operations within the caption "Stock-based compensation expense".

                                       44
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

  Stock Compensation

  Effective January 1, 1996 the Company has adopted the disclosure-only
provision of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS No. 123).  The Company, however, applies APB
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its stock-based compensation.  Determination
of compensation cost for stock-based compensation based on the fair value at the
grant date for awards consistent with provisions of SFAS No. 123 would not
result in a significant difference from the reported net income for the periods
presented.

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                         ---------------------------------------------------------
                                                               1998               1997                1996
                                                         ----------------  ------------------  -------------------
<S>                                                        <C>               <C>                 <C>
Net income.............................................        $5,149            $ 1,018             $   508
Accretion on mandatorily redeemable preferred stock....           ---             (1,469)             (1,288)
                                                               ------            -------             -------
Net income (loss) available to common shareholders.....         5,149               (451)               (780)
Net income (loss) FAS 123 adjusted.....................         4,917               (593)               (780)
Earnings per share  as reported:
  Basic................................................          0.40              (0.06)              (0.10)
  Diluted..............................................          0.38              (0.06)              (0.10)
Earnings per share-FAS 123 adjusted:
  Basic................................................          0.38              (0.08)              (0.10)
  Diluted..............................................          0.36              (0.08)              (0.10)
</TABLE>

  The fair value of each option grant under the Plans is estimated on the date
of the grant using the Black-Scholes option-pricing model with weighted average
risk free interest rates of 4.89%, 6.47%, and 6.16% at December 31, 1998, 1997
and 1996, respectively, and an expected life of 5 years, no dividends and 0%
volatility in 1997 and 1996 and an expected life of 2.6 years, no dividends and
67.4 % volatility in 1998. The weighted average fair value at date of grant of
the options granted during the years ended December 31, 1998 and 1997 was $3.17
and $2.80, respectively.

  The following table summarizes the stock options outstanding at December 31,
1998:

<TABLE>
<CAPTION>
                                   Options Outstanding                  Options Exercisable
                               ---------------------------    ---------------------------------------
                                                                                            Weighted
                                  Weighted                                                   Average
                                  Average         Weighted                       Weighted      Fair
Range of                         Remaining        Average                        Average     Value at
Exercise            Number      Contractual       Exercise          Number       Exercise     Date of
Prices           Outstanding        Life            Price         Exercisable      Price       Grant
---------       -------------   ------------    ------------    --------------  ----------   ---------
<S>           <C>             <C>            <C>              <C>              <C>         <C>
$0.01               55,000          4.5             $0.01            45,000        $0.01       $0.01
$0.10              205,500          6.9             $0.10           136,355        $0.10       $0.10
$1.00              369,878          8.0             $1.00            41,644        $1.00       $2.00
$5.00-$6.50        581,500          9.3             $5.37           161,458        $5.11       $5.37
$6.75-$8.50        162,000          7.4             $7.86            35,000        $7.93       $7.86
</TABLE>

                                       45
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------


  Employee Stock Purchase Plan ("Purchase Plan")

  A total of 200,000 shares of common stock are reserved for issuance under the
Purchase Plan.  The Purchase Plan enables eligible employees to purchase common
stock at the lower of 85% of the fair market value of the Company's common stock
on the first or last day of each six-month offering period.  The first offering
period ended on October 31, 1998, whereupon 3,691 shares were purchased under
the plan.  The next offering period ends April 30, 1999.

14.   Mandatorily Redeemable Preferred Stock

  ATG issued 900,000 shares of Series A Preferred Stock in 1994 at $5.00 per
share.  ATG Richland issued 860,000 shares of Series A Preferred Stock in 1995
at $5.00 per share and 990,355 and 278,936 shares of Series B Preferred Stock in
1996 and 1997, respectively, at $6.00 per share.  All outstanding shares of the
mandatorily redeemable preferred stock were automatically converted into
3,983,595 shares of common stock on the effective date of the Company's initial
public offering.

15.   Common Stock Warrants

  Warrants to purchase 190,000 shares of Common Stock were granted upon the
completion of the Company's initial public stock offering.  These warrants
become exercisable in May 1999 and expire in May 2003.  The warrant exercise
price is $10.20 per share.

16.   Income Taxes

  The components of income tax expense (benefit) are approximately as follows:

<TABLE>
<CAPTION>

                                                                                    December 31,
                                                               ----------------------------------------------------
                                                                     1998              1997                1996
                                                                 ------------       -----------        ------------
<S>                                                              <C>                <C>                <C>
Current
     Federal...................................................        $2,439            $(383)            $  __
     State.....................................................           406              158                 2
Deferred:
     Federal...................................................           304              214                __
     State.....................................................             7              (34)               __
                                                               --------------     ------------       -----------
       Total...................................................        $3,156            $ (45)            $   2
                                                               ==============     ============       ===========
</TABLE>

                                       46
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------

  The Company's effective tax rate differs from the U.S. federal statutory tax
rate, as follows:

<TABLE>
<CAPTION>

                                                                                    December 31,
                                                               ----------------------------------------------------
                                                                  1998                  1997                1996
                                                                  ----                  ----                ----
<S>                                                           <C>                  <C>               <C>
Income tax provision at statutory rate.........................    34.0%                 34.0%             34.0%
State taxes, net of federal tax effect.........................     3.3                   1.6               0.1
Non-deductible items...........................................     0.4                   3.2               0.5
Net operating loss benefit.....................................      __                 (48.3)            (29.5)
Other..........................................................     0.3                   4.9              (4.8)
                                                                -------               -------           -------
Effective tax rate.............................................    38.0%                 (4.6)%             0.3%
                                                                =======               =======           =======
</TABLE>

   Components of the deferred income tax balance are as follows:

<TABLE>
<CAPTION>

                                                                                    December 31,
                                                               ----------------------------------------------------
                                                                  1998                  1997                1996
                                                                  ----                  ----                ----
<S>                                                           <C>                  <C>               <C>

Deferred tax assets
 Net operating loss carryforwards.............................. $    __               $   308            $   569
 Accrued expenses..............................................     183                   245                 34
 Tax credits...................................................      __                   120                100
 Other.........................................................      __                    24                 17
                                                                -------               -------            -------
    Deferred tax assets........................................ $   183               $   697            $   720
                                                                =======               =======            =======

Deferred tax liabilities
    Depreciation and amortization.............................. $   473               $   467            $   310
                                                                =======               =======            =======
Valuation allowance............................................      __                    __               (410)
                                                                -------               -------            -------
Net deferred tax asset (liability)............................. $  (290)              $   230            $    __
                                                                =======               =======            =======
</TABLE>

                                       47
<PAGE>

                                  ATG INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (all dollar amounts in thousands, except per share data)

                            --------------------


17.   Earnings per Share (EPS)

  In accordance with the disclosure requirements of SFAS 128, a reconciliation
of the numerator and denominator of basic and diluted EPS is provided as
follows:

<TABLE>
<CAPTION>
                                                                    For the Years Ended December 31,
                                                            ------------------------------------------------
                                                               1998               1997               1996
                                                            -----------       ------------       ------------
<S>                                                         <C>               <C>                <C>
Numerator - Basic and Diluted EPS
     Net income...........................................      $ 5,149           $ 1,018            $   508
     Accretion on mandatorily redeemable
     preferred stock......................................          __             (1,469)            (1,288)
                                                          -------------     -------------      -------------
     Net income (loss) available to
     common shareholders..................................      $ 5,149           $  (451)           $  (780)
                                                          =============     =============      =============
Denominator - Basic EPS
     Common shares outstanding............................       12,975             7,532              7,532
                                                          -------------     -------------      -------------

Basic earnings (loss) per share...........................      $  0.40           $ (0.06)           $ (0.10)
                                                          =============     =============      =============

Denominator - Diluted EPS
Denominator - Basic EPS...................................       12,975             7,532              7,532
     Effect of Dilutive Securities
     Common stock options.................................          723                __                 __
                                                          -------------     -------------      -------------
                                                                 13,698             7,532              7,532
                                                          -------------     -------------      -------------
Diluted earnings (loss) per share.........................      $  0.38           $ (0.06)           $ (0.10)
                                                          =============     =============      =============
</TABLE>
  Options and warrants to purchase 352,000 shares of Common Stock at exercise
prices in excess of the average market price of the Company's Common Stock were
excluded from the computation of diluted earnings per share as their effect
would be anti-dilutive.

18.   Employee Retirement Plan

  The Company maintains a Qualified Retirement Plan (401(k) Plan) which covers
substantially all employees.  Eligible employees may contribute up to 15% of
their annual compensation, as defined, to this plan.  The Company may also make
a discretionary contribution.  To date the Company has not made contributions to
the 401(k) Plan.

19.   Business Segments

  Effective December 31, 1998, the Company adopted SFAS No. 131, " Disclosures
about Segments of an Enterprise and Related Information." Statement 131 requires
enterprises to report information about operating segments in annual financial
statements and selected information about reportable segments in interim
financial reports issued to shareholders.

  ATG manages its operations within two business segments: waste processing,
conducted by its Fixed Facilities Group (FFG); and field services, conducted by
its Field Engineering Group (FEG). FFG processes customer waste utilizing the
Company's thermal and non-thermal technologies. FEG performs remediation,
construction or various engineering services for customers under long-term
contracts.

  Prior to 1998, the Company evaluated its operations as one business unit.
Thermal processing of large volumes of waste began in 1998 and the Company
commenced evaluating its business as two business segments in the fourth quarter
of the year. The Company segregates revenue and gross profit by business
segment. Selling, general and administrative expenses are not allocated to the
business segments. The accounting policies of the business segments are the same
as those described in the summary of significant accounting policies.

  Information about business segments in 1998:

                                FFG          FEG         OTHER        TOTAL
                               -------      ------       -----       -------
  Revenue                     $ 18,889    $ 17,011         -       $ 35,900
  Gross profit                  11,082       5,002         -         16,084
  Sales, General and
     Administrative expenses                                          7,832
  Stock-based compensation                                              120
  Interest income, net                                                  173
  Provision for income taxes                                          3,156
                                                                    -------
        Net income                                                 $  5,149
                                                                    =======
  Segment assets                42,030         650       3,380     $ 46,060
                                                                    =======
  Expenditures for long -
     lived assets               21,490          40         120     $ 21,650
                                                                    =======

  Substantially all of the segment revenues in 1998 were from customers in North
America, denominated in U.S.dollars.


                                       48
<PAGE>

                                    PART IV


  Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  The following documents are filed as part of this report:

     1. Financial Statements. The following Consolidated Financial Statements of
ATG Inc. and Report of Independent Accountants are filed as part of this report:


<TABLE>
<CAPTION>

                                                                                                Page
                                                                                                ----
<S>                                                                                          <C>
Report of Independent Accountants.......................................................         31
Consolidated Balance Sheets--As of December 31, 1997 and 1998...........................         32
Consolidated Statements of Operations--For the Three Years Ended
December 31, 1998........................................................................        33
Consolidated Statements of Shareholders' Equity--For the Three Years Ended
  December 31, 1998......................................................................        34
Consolidated Statements of Cash Flows--For the Three Years Ended
December 31, 1998........................................................................        35
Notes to Consolidated Financial Statements...............................................        36-48

2. Financial Statement Schedules. For years ended December 31, 1998,
   1997 and 1996:

Schedule II.  Valuation and Qualifying Accounts..........................................        50

</TABLE>

  All other schedules are omitted because they are not applicable or the
required information has been included in the consolidated financial statements
or notes thereto.

3.  Exhibits

         2.1    Final bankruptcy court bid dated November 13, 1998**
         2.2    Form of letter agreement dated December 1, 1998 among the
                purchasers and the Trustee**
         3.1    Articles of Incorporation of the Company*
         3.2    Bylaws of the Company*
         3.3    Certificate of Amendment of Articles of Incorporation*
         4.1    Specimen Common Stock Certificate*
         9.1    Voting Trust Agreement*
        10.1    Assumption Agreement, dated September 2, 1992, between the
                Company, as transferee, Tippett-Richardson, as transferor, and
                Confederation Life Insurance Company, as lender*
        10.2    Deed of Trust (Non-Construction) & Assignment of Rents, dated
                September 18, 1997, between the Company, as trustor, First
                Bancorp, as trustee, and Sanwa Bank California, as beneficiary*
        10.3    Deed of Trust, dated August 5, 1993, between the Company and ATG
                Richland, collectively as trustor, Chicago Title Insurance
                Company, as trustee, and West One Bank, as beneficiary*
        10.4    Term Loan Agreement, dated September 18, 1997, between the
                Company and Sanwa Bank California*
        10.5    Letter from the Company to Steve Guerrettaz, dated December 2,
                1997, regarding terms of employment*
        10.6    Letter from the Company to Fred Feizollahi, dated February 20,
                1995, regarding terms of employment*
        10.7    Consultant Agreement, dated as of July 1, 1992, between the
                Company and Edward Vinecour*
        10.8    Non-Competition Agreement, dated as of July 1, 1992, between the
                Company and Edward Vinecour*
        10.9    Collective Bargaining Agreement between the Company and the
                International Union of Operating Engineers No. 280*
        10.10   Form of Stock Purchase Agreement*
        10.11   Continuing Guaranty, dated as of April 19, 1996, provided by
                Doreen Chiu in favor of Sanwa Bank*
        10.12   Continuing Guaranty, dated as of April 19, 1996, provided by
                Frank Chiu in favor of Sanwa Bank*
        10.13   Continuing Guaranty, dated as of May 20, 1997, provided by
                Doreen Chiu in favor of Safeco Credit Company, Inc.*
        10.14   Continuing Guaranty, dated as of May 20, 1997, provided by Frank
                Chiu in favor of Safeco Credit Company, Inc.*
        10.15   Small Business Administration (SBA) Guaranty, dated August 6,
                1993, provided by Doreen Chiu and Frank Chiu in favor of West
                One Bank*
        10.16   Guaranty Agreement, dated September 1, 1994, provided by Doreen
                Chiu and Frank Chiu in favor of Great Western Leasing*
        10.17   Guaranty, dated January 13, 1994, provided by Doreen Chiu and
                Frank Chiu in favor of The CIT Group/Equipment Financing Inc.*
        10.18   Guaranty of Commercial Lease Agreement, dated December 20, 1994,
                provided by Doreen Chiu and Frank Chiu in favor of California
                Thrift & Loan*
        10.19   Contract No. MGK-SBB-A26602, dated September 5, 1997, awarded to
                the Company by Waste Management Federal Services of Hanford,
                Inc.*
        10.20   Purchase Order No. MW6-SBV-357079, dated November 3, 1995,
                issued to the Company by Westinghouse Hanford Company*
        10.21   Contract No. DE-AC06-95RL13129, dated January 4, 1995, among the
                U.S. Department of Energy, as the procuring agency, the U.S.
                Small Business Administration, as contractor, and the Company,
                as subcontractor*
        10.22   Gasification Vitrification Chamber Purchase and License
                Agreement, dated August 1997, between the Company and Integrated
                Environmental Technologies, LLC*
        10.23   Purchase Agreement between the Company and Integrated
                Environmental Technologies, LLC*
        10.24   Technology Transfer Purchase and Royalty Fee Agreement, dated
                September 30, 1997, between the Company and Regent Star Ltd.*
        10.25   Technology Transfer and Purchase Agreement, dated June 28, 1997,
                between the Company and Pacific Trading Company*
        10.26   Contract No. DACW05-98-C-0001, dated September 24, 1997, awarded
                to the Company by the U.S. Army Corps of Engineers, Sacremento
                District*
        10.27   Contract No. DAKF04-92-D-0007, dated February 8, 1991, among the
                Fort Irwin Directorate of Contracting, as the procuring agency,
                the U.S. Small Business Administration, as contractor, and the
                Company, as subcontractor*
        10.28   Promissory Note, dated December 31, 1997, provided by the
                Company to Doreen M. Chiu*
        10.29   1998 Stock Ownership Incentive Plan*
        10.30   Employee Stock Purchase Plan*
        10.31   1998 Non-Employee Directors Stock Option Plan*
        10.32   Letter of Credit Agreement, dated March 6, 1998, between the
                Company and Sanwa Bank California*
        10.33   Continuing Guaranty, dated as of March 6, 1998, provided by
                Doreen M. Chiu in favor of Sanwa Bank California*
        10.34   Continuing Guaranty, dated as of March 6, 1998, provided by
                Frank Y. Chiu in favor of Sanwa Bank California*
        10.35   Indemnity Agreement, dated August 12, 1992, made and entered
                into by Doreen M. Chiu, Frank Y. Chiu, the Company and National
                Safety Consultants, Inc. in favor of ACTSTAR Insurance Company*
        10.36   Continuing Agreement of Idemnity--Contractors' Form, dated March
                19, 1998, made and entered into by Doreen M. Chiu, Frank Y. Chiu
                and the Company for the benefit of Reliance Insurance Company,
                United Pacific Insurance Company, Reliance National Indemnity
                Company and Reliance Surety Company*
        10.37   Purchase Order, dated February 10, 1996, issued by the Company
                to ToxGon Corporation*
        10.38   Amendments to Letter of Credit Agreement***
        10.39   Line of Credit Agreement***
        10.40   Amendment to Line of Credit Agreement****
        10.41   Term Loan Agreement  Sanwa Bank California****
        10.42   ATG Catalytics L.L.C. Operating Agreement****
        21.1    List of Subsidiaries of Registrant****
        23.1    Consent of PricewaterhouseCoopers LLP
        27.1    Financial Data Schedule****
-----------------------
(*) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1 (No. 333-46107) which became effective May 6,
1998.

(**) Incorporated by reference to exhibits filed with the Registrant's Form 8-K
dated December 1, 1998

(***) Incorporated by reference to exhibits filed with the Registrant's Form
10-Q for the quarter ended June 30, 1998.

(****) Incorporated by reference to exhibits filed with the Registrant's Form
10-K for the year ended December 31, 1998.

                                       49
<PAGE>

(b)  Reports on Form 8-K

  A report on Form 8-K, dated December 1, 1998, was filed during the last
quarter of 1998, covering the acquisition of certain assets and business lines
from the trustee for debtors in bankruptcy. The assets and business lines were
formerly owned by Molten Metal Technologies, Inc.

  A report on Form 8-K/A, Amendment No. 1, was subsequently filed on August 4,
1999, providing pro forma financial information and certain audited financial
statements of the business acquired.

       REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Shareholders of
ATG Inc., and its Subsidiaries:

        In connection with our audits of the consolidated financial statements
of ATG Inc. and its subsidiaries as of December 31, 1998 and 1997, and for each
of the three years in the period ended December 31, 1998, which financial
statements are included in this Form 10-K, we have also audited the financial
statement schedule listed in Item 14(a) herein.

        In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.

                                                      PRICEWATERHOUSECOOPERS LLP

San Jose, California
February 26, 1999


                                                                     Schedule II


                                   ATG INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                       ---------------------------------
                                 (in thousands)

<TABLE>
<CAPTION>
                                                            Additions
                                            Balance at     Charged to                          Balance
                                           Beginning of     Costs and                         at End of
          Description                         Period        Expenses       Deductions(1)        Period
          -----------                      ------------    -----------     -------------      ----------
<S>                                       <C>             <C>            <C>                 <C>
Year ended December 31,1996.............
  Allowance for doubtful accounts              $ 40           $  6            $    --             $ 46
Year ended December 31, 1997............
  Allowance for doubtful accounts              $ 46           $ 73            $    --             $119
Year ended December 31, 1998............
  Allowance for doubtful accounts              $119           $210             $  (24)            $305
</TABLE>



----------------------
(1) Deductions represent accounts receivable amounts that were considered
doubtful and previously reserved for that became uncollectible and were written
off in the year.

                                      50
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    ATG INC.

                                    By: /s/ Doreen M. Chiu
                                        ------------------
                                        Doreen M. Chiu
                                        Chairman of the Board
                                        President and CEO


Date:  September 15, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

                                          Chairman, President and Chief         September 15, 1999
     /s/ Doreen M. Chiu                   Executive Officer
----------------------------------------
Doreen M. Chiu
<S>                                       <C>                                    <C>

                                          Executive Vice-President               September 15, 1999
     /s/ Frank Y. Chiu                    Director
----------------------------------------
     Frank Y. Chiu

                                          President-Waste Mgmt. Services         September 15, 1999
     /s/ William M. Hewitt                Director
----------------------------------------
     William M. Hewitt

                                          Chief Financial Officer                September 15, 1999
     /s/ Steven J. Guerrettaz             Director (Principal Financial and
----------------------------------------  Chief Accounting Officer)
     Steven J. Guerrettaz

                                          Director                               September 15, 1999
      /s/ Earl E. Gjelde
----------------------------------------
       Earl E. Gjelde

                                          Director                               September 15, 1999
     /s/ Andrew C. Kadak
----------------------------------------
     Andrew C. Kadak

                                          Director                               September 15, 1999
     /s/ George Doubleday II
----------------------------------------
     George Doubleday II

</TABLE>



                                       51(1)