SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


FORM 10-Q








x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period June 30, 2009





or





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





For the transition period from _____________ to ___________





Commission File Number 33-19048-NY





AMERICAN METAL & TECHNOLOGY, INC.


(Exact Name of Small Business Issuer as specified in its charter)





Delaware
22-2856171(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)





633 W. 5th Street, 28th Floor
Los Angeles, CA 90071(Address of principal executive offices) (Zip Code)Registrant's telephone number, including area code: (213) 223-2321








Indicate by check mark whether the Issuer:





(1) Has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports):





Yes  xNo o







Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files).





Yes oNo o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large Accelerated Filer
o
Accelerated Filer
oNon-Accelerated Filer
o
Smaller Reporting Company
x








(2) Has been subject to such filing requirements for the past 90 days.





Yes xNo o








10,720,268 shares of the registrant's Common Stock, $.0001 per share, were outstanding as of August 14, 2009.








1





AMERICAN METAL & TECHNOLOGY, INC.


TABLE OF CONTENTS


FORM 10-Q





PART I FINANCIAL INFORMATIONItem Number

PageItem 1.
Financial Statements
3Consolidated Balance Sheet as of June 30, 2009 (Unaudited) and December 31, 2008 (Audited)
3Consolidated Statements of Income and Other Comprehensive Income for the Three Months Ended June 30 2009 and for the Six Months Ended June 30, 2008 (Unaudited)
4Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (Unaudited)
5Notes to Financial Statements
6 - 16Item 2.
Management’s Discussion and Analysis of Financial Condition or Plan of Operation
17Item 3.
Qualitative and Quantitative Disclosures About Market Risk
21Item 4T.
Controls and Procedures
21PART II OTHER INFORMATION
21Item 1.
Legal Proceedings
21Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
21Item 3.
Defaults upon Senior Securities
21Item 4.
Submission of Matters to a Vote of Security Holders
21Item 5.
Other Information
21Item 6.
Exhibits and Reports on Form 8-K
22Signatures
22
































2





PART I. FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS








AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJune 30,
2009


December 31,
2008(Unaudited)


(Audited)ASSETSCurrent AssetsCash and cash equivalents

$
8,274,701


$
7,569,046Accounts receivable - net


1,333,787



2,424,157Investment in marketable securities


174,285



93,906Other receivables


554,170



352,250Other receivables - related parties


150,398



-Advances to suppliers


238,085



390,368Inventories


1,635,029



1,079,741Prepaid expense


60,338



-Current assets of the entity held for disposal


-



69,476Total Current Assets


12,420,793



11,978,944Property, Plant And Equipment, net


4,468,822



4,160,737Construction in Progress


2,512,144



2,884,437Intangible Assets, net


602,039



684,639Total Assets

$
20,003,799


$
19,708,757LIABILITIES AND SHAREHOLDERS' EQUITYCurrent LiabilitiesAccounts payable

$
974,941


$
1,544,995Accrued liabilities and other payables


434,459



95,039Accrued bonuses


351,913



351,913Amount due to related parties


1,217,256



813,082Unearned revenue


458,855



8,645Liability of the entity held for disposal


-



645Total Current Liabilities


3,437,424



2,814,319Commitments


-



-Shareholders' EquityCommon stocks; $0.0001 par value, 30,000,000 shares authorized, 10,720,268 shares issued and outstanding


1,072



1,072Additional paid in capital


7,786,114



7,786,114Deferred expense-warrants


-



(20,435
)Statutory reserve


1,425,863



1,412,586Accumulated other comprehensive income


1,953,431



1,865,844Retained earnings


5,399,895



5,849,257Total Stockholders' Equity


16,566,375



16,894,438Total Liabilities and Shareholders' Equity

$
20,003,799


$
19,708,757The accompanying notes are an integral part of the consolidated financial statements.


3





AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)For The Three Months


For The Six MonthsEnded June 30,


Ended June 30,2009


2008


2009


2008Net sales

$
1,437,804


$
5,086,839


$
2,722,027


$
9,983,353Cost of goods sold


(1,139,482
)


(3,307,693
)


(2,028,330
)


(6,744,813
)Gross profit


298,322



1,779,145



693,697



3,238,540Operating expensesSelling expenses


(4,232
)


(14,459
)


(8,038
)


(30,717
)Operating and administrative expenses


(194,824
)


(360,312
)


(826,139
)


(841,258
)Total operating expenses


(199,055
)


(374,771
)


(834,177
)


(871,975
)Income (Loss) from operations


99,267



1,404,374



(140,480
)


2,366,565Other income (expense)Interest income


2,227



1,621



112,926



7,349Unrealized gain on marketable securities


3,972



-



3,972



-Gain (Loss) on sale of marketable securities


6,959



9,196



(22,618
)


44,847Other expense


(319,928
)


(12,351
)


(321,054
)


(11,310
)Total other income (expense)


(306,770
)


(1,534
)


(226,775
)


40,886Income (Loss) before minority interest


(207,504
)


1,402,840



(367,254
)


2,407,451Minority interests


-



(700
)


-



(13,285
)Net income (loss) from continuing operations


(207,504
)


1,403,540



(367,254
)


2,420,736Loss from entity held for disposal


(68,831
)


-



(68,831
)


-Net Income (Loss)

$
(276,335
)

$
1,403,540


$
(436,085
)

$
2,420,736Basic and diluted weighted average shares outstanding


10,720,268



10,402,687



10,720,268



10,402,687Net earnings per share from continuing operations

$
(0.02
)

$
0.13


$
(0.03
)

$
0.23Net loss per share from entity held for disposal


(0.01
)


-



(0.01
)


-Basic and diluted net earnings (loss) per share

$
(0.03
)

$
0.13


$
(0.04
)

$
0.23The accompanying notes are an integral part of the consolidated financial statements.












































4







AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)For The Six MonthsEnded June 30,2009


2008Cash flows from operating activities:Net (Loss) Income

$
(436,085
)

$
2,420,736Adjustments to reconcile net (loss) income tonet cash provided by operating activities:Minority interest


-



(13,285
)Issuance of warrants for services


-



29,548Amortization of deferred expense-warrants


20,435



-Loss (gain) on disposal of marketable securities


22,618



(44,847
)Unrealized gain on marketable securities


(3,972
)


-Bad debt expenses


94,148



(62,139
)Depreciation and amortization


254,527



175,781(Increase)/decrease in assets:Accounts receivable


1,000,618



(1,092,336
)Note receivable


105,377



-Other receivables


131,247



169,392Other receivable-related party


(149,802
)Inventory


(556,307
)


(6,023
)Advance to suppliers


151,789



(1,006,569
)Prepaid expenses


(5,257
)


-Increase/(decrease) in liabilities:Accounts payable


(568,110
)


398,592Other payable and accrued expenses


339,471



(13,857
)Unearned revenue


450,059



107Net cash provided by operating activities from continuing operations


850,756



955,101Net cash provided by operating activities of entity held for disposal


68,831



-Net cash provided by operating activities


919,587



955,101Cash flows from investing activities:Net purchase of marketable securities


(40,807
)


(42,728
)Additions to construction in progress


-



(73,811
)Purchase of equipment and leasehold improvements


(171,542
)


(1,017,774
)Net Cash Used in Investing Activities


(212,349
)


(1,134,313
)Cash flows from financing activities:Proceeds from loans


7,124



25,000Net Cash Provided By Financing Activities


7,124



25,000Net Increase (decrease) in Cash and Cash Equivalents


714,362



(154,212
)Effects of Exchange Rate Change in Cash


(8,707
)


377,648Cash and Cash Equivalents-Beginning Balance


7,569,046



6,037,193Cash and Cash Equivalents-Ending Balance

$
8,274,701


$
6,260,629Supplement disclosure of cash flow information:Income taxes paid

$
-


$
-Interest expenses paid

$
-


$
-Non Cash Transaction:Shares Due To Reorganization

$
-


$
-The accompanying notes are an integral part of the consolidated financial statements.











5
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





1. Organization and description of business





On June 1, 2007, American Metal & Technology, Inc. (AMTI, "We, "Us, "Our"or the "Company") formally changed its name from Murray United Development Corporation to American Metal & Technology, Inc.





The Company entered into a Stock Purchase Agreement on November 6, 2006 (the "Agreement") with American Metal Technology Group, a Nevada corporation (“AMTG"), pursuant to which the Company acquired one hundred (100%) percent of AMTG's outstanding common stock from the AMTG Stockholders and AMTG became a wholly-owned subsidiary
of the company in a two step reverse takeover transaction on May 22, 2007.  In connection with this transaction, and in addition to the 173,253,434 shares of common stock outstanding immediately prior to closing, the Company issued 1,213,295,563 shares to the stockholders and consultants of AMTG (1,142,388,273 shares to AMTG's former shareholders, including 20,000,000 shares of common stock issues to AMTG as investment upon completion of the due diligence period to the Agreement, and
redistributed proportionally to AMTG's shareholders as of May 22, 2007, and 70,907,300 shares to AMTG's consultants).  These shares represent more than eighty five (85%) of the Company's issued and outstanding shares of voting capital stock on a fully diluted basis, and therefore the former shareholders of AMTG and its consultants effectively have control of the Company.  In addition, as a condition of the closing of the Agreement, the Company issued an additional 10,000,000 shares of common stock
to a former officer and director of the Company in connection with the cancellation of all indebtedness to him, and his assumption of all liabilities and the assignment all assets of the Company immediately prior to closing.   AMTG is now a wholly owned subsidiary of the Company.





The exchange of shares with AMTG has been accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of AMTG obtained control of the consolidated entity. Accordingly, the merger of the two companies has been recorded as a recapitalization of AMTG, with AMTG being treated as the continuing entity. 
The historical financial statements presented herein are those of AMTG. The continuing company has retained December 31 as its fiscal year end.





Reflecting the change of ownership, the Company filed a Certificate of Amendment to its Certificate of Incorporation to change its name to American Metal & Technology, Inc., which became effective June 1, 2007.





The Company now through AMTG via its subsidiaries, Beijing Tong Yuan Heng Feng Technology Co., Ltd. and American Metal Technology (Lang Fang) Co., Ltd., is mainly in the business of manufacturing and sales of high-precision investment casting and metal fabrication products in the People's Republic of China (“China”).
The Company's production involves high-precision investment casting and machined products, including valves, pipe fittings, etc.





AMTG was incorporated on January 13, 2004 under the laws of the state of Nevada. On June 1, 2004, AMTG entered into an equity purchase agreement with Beijing Sande Technology (Holding) Co., Ltd. (“BST”) to acquire 80% ownership of Beijing Tong Yuan Heng Feng Technology
Co., Ltd. (“BJTY”). As a result, AMTG issued 7,200 shares of his pre-split common stock to BST in exchange for 80% ownership of BJTY. On August 2, 2004, AMTG incorporated American Metal Technology (Lang Fang) Co., Ltd. (“AMLF”) in Hebei, China, for the purpose of expanding the production facility of BJTY. On August   8, 2004, AMTG and AMLF together entered into an equity
purchase agreement with Beijing Sande Shang Mao Co., Ltd. (BSS)for the remaining 20% of BJTY. As a result, AMTG which issued 1,800 shares of pre-split common stock to BSS and AMLF becomes the owner of 20% shareholder of BJTY. AMTG later acquired the 20% ownership of BJTY from AMLF and owns 100% of BJTY. On November 12, 2004, AMTG effectuated a forward split of all the outstanding shares of common stock on a 1,000 for 1 basis. On November 2005, AMTG sold
5% of BJTY to an unrelated party for $240,000. As set forth below, the Company repurchased such shares pursuant to an Equity Purchase Agreement Executed on September 22, 2008.




On September 22, 2008, the Company entered in an Equity Purchase Agreement ("the Agreement") with Wen Ge Ren (the "Seller"), a shareholder owning a 5% stock interest in Beijing Tong Yuan Heng Feng Technology Co., Ltd ("BJTY"), which is 95% owned through the Company's wholly owned subsidiary American Metal Technology Group. Pursuant to the
Agreement, the Company paid to the Seller US $390,299. The Seller has agreed to accept from the Company the equivalent of US $92,566.46 or RMB 629,451.91 and balance of US $297,732.57 pursuant to the issuance of such number of shares of restricted Common Stock based upon the amount equal to 75% of the average of the closing bid price of the Company's Common Stock for the five-day trading period commencing on September 18, 2008. The Company delivered to the Seller the cash consideration and duly executed share
certificates representing the underlying shares registered in the name of the Seller within 60 days from the date of signature. The Company delivered the cash consideration and issued 317,581 shares to the Seller prior to September 30, 2008.




On October 31, 2008, the Board of Directors adopted resolutions, authorizing incentive compensation to key members of its management if the Company has four million ($4,000,000) dollars or more in net income for the fiscal year of 2008 excluding expenses
relating to the incentive compensation, as reflected in the audited Financial Statements of the Company as filed with the Securities and Exchange Commission. The incentive compensation shall be paid by the issuance of shares of common stock by the Company as follows: (A) 533,333 shares of common stock determined by multiplying the initial four million ($4,000,000) dollars of net income by ten (10%) percent and dividing the product by an agreed value of $0.75 per share and (B) such number of additional shares
of common stock determined by multiplying the amount of net profit in excess of four million ($4,000,000) dollars by twenty (20%) percent and dividing such product by an agreed value of $0.75 per share.  As of June 30, 2009, such shares have not been issued.





On April 29, 2009, the Board of Directors of AMTG adopted a resolution authorizing the creation of a new Hong Kong corporation.  A Certificate of Incorporation was filed in Hong Kong on April 30, 2009 organizing American Metal Technology Group Limited (“AMTL”). In June 2009, the Board of Directors of AMTG adopted a
resolution which authorized AMTG’s utilization of AMTL as the operating entity with respect to overseeing AMTG’s operations in Asia and authorized AMTG’s wholly owned subsidiaries in the People’s Republic of China to become wholly owned subsidiaries of AMTL effective immediately.




6
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







2. Summary of significant accounting policies





The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information required by generally accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results for any future period. These statements should be read in conjunction with the Company's audited financial statements and notes thereto for the fiscal year ended December 31, 2008. The results of the six month period ended June 30, 2009 are not necessarily indicative of the results
to be expected for the full fiscal year ending December 31, 2009.





Principal of consolidation





The consolidated financial statements of American Metal Technology, Inc. reflect the activities of the following subsidiaries:





Subsidiaries
Percentage
Of OwnershipAmerican Metal Technology Group, (“AMTG")  Co., Ltd.
U.S.
100
%American Metal Technology (Lang Fang) Co., Ltd.
P.R.C.
100
%Beijing Tong Yuan Heng Feng (Technology) Co., Ltd.
P.R.C.
100
%American Metal Technology Group Limited
H.K.
100
%





The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All significant inter-company transactions and accounts have been eliminated in the consolidation.





Use of estimates





The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.





Cash and cash equivalents





For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of June 30, 2009 and December 31, 2008, cash
and cash equivalent amounted to $8,274,701 and $7,569,046, respectively. The cash is deposited with four banks in China and is not insured.





Accounts receivable





The Company's policy is to maintain reserves for potential credit losses for accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these
reserves. As of June 30, 2009 and December 31, 2008, the Company had accounts receivable of $1,333,787 and $2,424,157, net of allowance of $149,306 and $62,716 respectively.





Advances to suppliers





The Company advances to certain vendors for the purchase of material. As of June 30, 2009 and December 31, 2008, the advances to suppliers amounted to $238,085 and $390,368 respectively.




7
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






2. Summary of significant accounting policies - continued


Revenue recognition





The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability
is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Unearned revenue as of June 30, 2009 and December 31, 2008 amounted to $458,855 and $8,645 respectively.





The Company's revenue consists of invoiced value of goods, net of a value-added tax (VAT). No product return or sales discount allowance is made as products delivered and accepted by customers are normally not returnable and sales discount is normally not granted after products are delivered.





Foreign currency translation





The reporting currency of the Company is the US dollar. The Company uses their local currency, Renminbi (RMB), as their functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation
adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders' equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.





Accumulated other comprehensive income amounted to $1,953,431 and $1,865,844 as of June 30, 2009 and December 31, 2008, respectively. Accumulated other comprehensive income was mainly foreign currency translation gain as of June 30, 2009.





Income taxes





The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. At June 30, 2009 and December 31, 2008, there was no significant book to tax differences.





Local PRC Income Tax





The Company is governed by the Income Tax Law of the PRC concerning subsidiaries located in PRC. Under the Income Tax Laws of the PRC, Chinese enterprises are generally subject to an income tax at an effective rate of 33% (30% state income taxes plus 3% local income taxes) on income reported in the statutory financial statements after appropriate
tax adjustments.





The Company does not have any significant deferred tax asset or liabilities in the PRC tax jurisdiction.




Beginning January 1, 2008, the new Enterprise Income Tax (EIT) law replaced the existing laws for Domestic Enterprises (DES) and Foreign Invested Enterprises (FIEs). The new standard EIT rate of 25% replaced the 33% rate previously applicable to both DES and FIEs. The Company evaluated the effect of the new EIT law on its financial position,
and the two years tax exemption, three years 50% tax reduction tax holiday for production-oriented FIEs will be continued.  The Company is exempted from income tax in Peoples Republic of China, for the six months ended June 30, 2009 and 2008.





Segment reporting





Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating
decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.





SFAS No. 131 has no effect on the Company's consolidated financial statements as the Company operates in one reportable business segment - manufacture and marketing high-precision investment casting and metal fabrication products in China.




8
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






2. Summary of significant accounting policies - continued


Recent accounting pronouncements





In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s
financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its
financial position, financial performance, and cash flows. Management does not believe the effect of this pronouncement on financial statements will have a material effect.





In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, “Determination of the Useful Life of Intangible Assets”, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill
and Other Intangible Assets”.  This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  Early adoption is prohibited.  Application of this FSP is not expected to have a significant impact on the financial statements.





In May 2008, the FASB issued FASB Staff Position (FSP) APB 14-1, “Accounting for Convertible Debt That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” ("FSP 14-1").  FSP 14-1 will be effective for financial statements issued for fiscal years beginning after December 15, 2008.  The
FSP includes guidance that convertible debt instruments that may be settled in cash upon conversion should be separated between the liability and equity components, with each component being accounted for in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods.  FSP 14-1 is not currently applicable to the Company since the Company does not have convertible debt.





In May of 2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting Principles”. The pronouncement mandates the GAAP hierarchy reside in the accounting literature as opposed to the audit literature. This has the practical impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP hierarchy.
This pronouncement will become effective 60 days following SEC approval. The Company does not believe this pronouncement will impact its financial statements.





In May 2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.  The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts.  The pronouncement is effective for fiscal years beginning after December 31,
2008.  The company does not believe this pronouncement will impact its financial statements.





In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities”.  This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.  The Company does not currently have any share-based awards that would qualify as participating securities.  Therefore, application of this FSP is not expected to have an effect on the Company's financial reporting.




In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations
and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements
to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company’s fiscal year beginning January 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after January 1, 2009.




On December 30, 2008 FASB issued FIN 48-3, “Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises”. This FSP defers the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for certain non-public enterprises as defined in paragraph 289, as amended, of FASB Statement
No. 109, Accounting for Income Taxes, including non-public not-for-profit organizations. However, non-public consolidated entities of public enterprises that apply U. S. GAAP are not eligible for the deferral. Nonpublic enterprises that have applied the recognition, measurement, and disclosure provisions of Interpretation 48 in a full set of annual financial statements issued prior to the issuance of this FSP also are not eligible for the deferral. This FSP shall be effective upon issuance. The Company does not
believe this pronouncement will impact its financial statements.




On January 12, 2009 FASB issued FSP EITF 99-20-01, “Amendment to the Impairment Guidance of EITF Issue No. 99-20”. This FSP amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to be Held by a Transferor
in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The FSP also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and other related guidance. The FSP is shall be effective for interim and annual reporting periods ending after December 15, 2008, and shall
be applied prospectively. Retrospective application to a prior interim or annual reporting period is not permitted. The Company does not believe this pronouncement will impact its financial statements.




9
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






3. Marketable Securities




The Company’s securities are classified as trading and available-for-sale and, as such, are carried at fair value. The securities comprised of shares of common stock of third party customers and securities purchased. Securities classified as trading and available-for-sale may be sold in response to changes in interest rates, liquidity
needs, and for other purposes. The Company does not currently have any held-to-maturity or trading securities.





Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Unrealized holding gains and losses for trading securities and realized gains and losses for securities classified as available-for-sale are reported in earnings based upon
the adjusted cost of the specific security sold.





Marketable securities classified as available for sale consisted of the following as of June 30, 2009 and December 31, 2008:





June 30, 2009


December 31, 2008Marketable Securities

Various


VariousCost

$
170,311


$
164,689Market Value


174,285



93,906Unrealized Gain (Loss) for the period ended


3,974


$
(70,783
)Accumulated Unrealized Gain (Loss)


-



(58,382
)





The Company adopted SFAS No. 157, effective January 1, 2008. SFAS No. 157 applies to marketable securities.





SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value of certificates of deposit, the Company
uses the market approach.  SFAS No. 157 establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value.  This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available.  Observable inputs are inputs that reflect the assumptions market participants
would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company.  Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:





·
Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.  Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available.  The Company does not currently have any financial instruments
utilizing Level 1 inputs.





·
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.  The certificates
of deposit, which were the only component of long-term investments, utilized Level 2 inputs.  These financial instruments are valued by quoted prices that are less frequent than those in active markets or by models that use various assumptions that are derived from or supported by data that is generally observable in the marketplace.  Valuations in this category are inherently less reliable than quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies
and the applicable underlying assumptions.





·
Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data.  The Company does not currently have any financial instruments utilizing Level 3 inputs.  These financial instruments have significant inputs that cannot be validated by readily determinable data and generally involve considerable judgment by management.





The following table summarizes by level within the fair value hierarchy of marketable securities as of June 30, 2009 and December 31, 2008:




June 30, 2009Level 1


TotalMarketable SecuritiesTrading securities

$
174,285


$
174,285$
174,285


$
174,285





December 31, 2008Level 1


TotalMarketable SecuritiesAvailable-for-sale securities

$
93,906


$
93,906$
93,906


$
93,906




10
AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
 4. Other receivables





Other receivables consisted of the followings at June 30, 2009 and December 31, 2008.  The receivables are due from unrelated parties, interest free, unsecured, and due on demand.





June 30, 2009


December 31, 2008Note receivable

$
11,713


$
117,259Tax receivable


-



194,638Others


549,978



40,353Less:  allowance for doubtful accounts


(7,521
)


-Totals

$
554,170


$
352,250





5. Inventories





Inventories consisted of the followings at June 30, 2009 and December 31, 2008:





June 30, 2009


December 31, 2008Supplies and raw materials

$
1,038,423


$
522,008Work in process


431,739



539,386Finished goods


164,867



18,347Totals

$
1,635,029


$
1,079,741





6. Property, Plant and Equipment





Property, Plant and Equipment consist of the following at June 30, 2009 and December 31, 2008:





June 30, 2009


December 31, 2008Building and improvements

$
980,204


$
981,311Vehicle


112,803



112,930Machinery and equipments


4,710,852



4,174,913Totals


5,803,859



5,269,154Less: accumulated depreciation


(1,335,037
)


(1,108,417
)$
4,468,822


$
4,160,737





Depreciation expenses for the six months ended June 30, 2009 and 2008 were $227,787 and $74,328, respectively.





7. Construction in Progress:





As of June 30, 2009 and December 31, 2008, construction in progress, representing construction for additional facilities at its Langfang manufacturing center, amounted to $2,512,144 and $2,884,437, respectively.





8. Intangible assets

The intangible assets comprised of following at June 30, 2009 and December 31, 2008:

June 30, 2009


December 31, 2008Land use right, net

$
602,039


$
609,378Permits, net


60,338



75,261Total

$
662,377


$
684,639






11
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




8. Intangible assets - continued
 
 Land use right:
 
 Per the People's Republic of China's governmental regulations, the Government owns all land. However, the government grants the user a “land use right” (the Right) to use the land. The Company has recognized the amounts paid for the acquisition of rights to use land as intangible asset and amortizing over a period of fifty
years.
 
 American Metal Technology (Lang Fang) Co., Ltd. acquired land use rights during the year ended 2004 for a total amount of $663,740. The land use right is for fifty years. The intangible assets consist of the followings as of June 30, 2009 and December 31, 2008:


June 30, 2009


December 31, 2008Intangible assets

$
665,237


$
665,987Less: accumulated amortization


(63,198
)


(56,609
)$
602,039


$
609,378





Permits:





Permits amounted to $60,338 and $75,261 as of June 30, 2009 and December 31, 2008 respectively and are amortized over 5 years:





2009


2008Prepaid expenses

$
202,504


$
196,333Less: accumulated amortization


(142,166
)


(121,072
)$
60,338


$
75,261





Intangible assets of the Company are reviewed annually as to whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events
and circumstances warrant revised estimates of useful lives. As of June 30, 2008 the Company expects these assets to be fully recoverable.





Total amortization expenses for the six month period ended June 30, 2009 and 2008 amounted to $26,740 and $28,163 respectively. Amortization expenses for next five years after June 30, 2009 are as follows:




1 year after June 30, 2009

$
52,0002 year after June 30, 2009


29,0003 year after June 30, 2009


13,0004 year after June 30, 2009


13,0005 year after June 30, 2009


13,000Total

$
120,000





9. Other payable and accrued expenses





Other payable and accrued expenses consisted of the followings at June 30, 2009 and December 31, 2008:





2009


2008Payable to other companies

$
54,272


$
12,731Taxes payable


20,122



-Accrued expenses


360,065



82,953Totals

$
434,459


$
95,684




10. Due to related parties





Due to related parties amounted to $1,217,256 and $813,082 as of June 30, 2009 and December 31, 2008. Due to related parties includes $1,213,536 due to an entity, 33% of which is owned by the President and CEO of the Company and $3,720 due to the President and CEO of the Company as of June 30, 2009.  The $1,213,536 due to the
related party had been fully repaid on July 13, 2009 (see Note 17 – Subsequent Event).





Due to related parties include $762,482 due to an affiliate owned by the CEO of BJTY and AMLF and $50,600 due to shareholder as of December 31, 2008. Due to related parties payable are due on demand, interest free, and unsecured.




12
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






11. Stockholders’ equity





Additional paid in capital




The local government in Lang Fang required the Company’s subsidiary American Metal Technology (Lang Fang) Co., Ltd, to increase its investments in Lang Fang with respect to its 2nd phase construction. On May 8, 2008, the Board of Directors authorized
the transfer of $2,245,981 from the Company’s Retained Earnings to Paid in Capital.





Statutory reserve





As stipulated by the Company Law of the People's Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:





i)
Making up cumulative prior years' losses, if any;





ii)
Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;





iii)
Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and Statutory common welfare fund is no longer required per
the new cooperation law executed in 2006.





iv)
Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.





In accordance with the Chinese Company Law, the Company has allocated 10% of its net income to surplus. The amount allocated to the statutory reserve amounted to $13,277 and $275,697 for the six month ended June 30, 2009 and 2008, respectively.





The total statutory reserve, as of June 30, 2009 and December 31, 2008, amounted to $1,425,863 and $1,412,586 respectively.





Deemed dividend





On July 11, 2008, the Company acquired from the Chairman and the President of Company, fifty thousand (50,000) shares of common stock, representing 100% of the issued and outstanding shares, of Lighting Power Global Limited, a British Virgin Island company, incorporated on May 29, 2008, pursuant to the BVI Business Company Act, 2004, resulting
in the Company becoming the sole shareholder of Lighting Power Global Limited.  The Company agreed to reimburse the Chairman and the President for any loans made and/or expenses incurred with respect to the acquisition and ownership of the shares of common stock of Lighting Power Global Limited, which amounted to $50,000.  The company recorded deemed dividend and related party payable in the amount of $50,000 at December 31, 2008.





On March 18, 2009, the Board of Directors authorized the Company to transfer and resell the Company’s ownership of fifty thousand (50,000) shares of common stock, representing 100% of the issued and outstanding shares of Lighting Power Global Limited, a British Virgin Island company, to the Chairman and the President of Company, resulting
in the President becoming the sole shareholder of Lighting Power Global Limited.  The Board of Directors also authorized the Company to cancel any funds due to the President for any loans made and /or expenses incurred with respect to the original acquisition and ownership of the shares of common stock of Lighting Power Global Limited.





12. Options and warrants




Stock Options


In April 2002 the Company issued options to purchase 40,000 shares of common stock at $3.00 per share. The options were issued to an employee under a non qualified option plan. As of April, 2007, all options have expired. No options were issued during the six month ended June 30, 2009.





Warrants





As a result of the exercises and expiration of warrants, the Company has no Class A and Class B warrants as of December 31, 2007.  99,320 Class B warrants, and 3,333 underwriter's B warrants expired on March 12, 2007.





On March 15, 2008, the Company issued to CCG Investor Relations Partners LLC warrants to purchase 50,000 shares to assist the Company in the execution of its investor relations strategy.




13
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






12. Options and warrants - continued




The assumptions used in calculating the fair value of warrants granted using the Black-Scholes option pricing model are as follows:





Risk-free interest rate


4.12
%Expected life of the warrants

4 yearExpected volatility


70
%Expected dividend yield


0
%





These warrants were recorded at the fair value of $100,796.  The Company has been expensing the fair value of these warrants over the term of the agreement.





During the six month ended June 30, 2009, the Company expensed $20,435 and deferred $0 in the consolidated financial statements.





The following table summarizes the warrants outstanding as of June 30, 2009:




Warrants
outstanding


Weighted Average Exercise Price


Aggregate
Intrinsic ValueOutstanding, December 31, 2008


50,000


$
5


$
-Granted


-


$
-


$
-Forfeited/Canceled


-


$
-



-Exercised


-



-



-Outstanding, June 30, 2009


50,000


$
5


$
-





The weighted average remaining contractual life of warrants outstanding is 3 years as of June 30, 2009.





13. Current vulnerability due to certain concentrations





BJTY and AMLF’s operations are all carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.





The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company's results may
be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.





Major customers





Two major customers accounted for 65% of the net revenue for the six month ended June 30, 2009. The Company had $151,460 receivables from one customer and $444,972 unearned revenue with the other as of June 30, 2009.  Two major customers accounted 81% of the net revenue for the six month ended June 30, 2008. The company had $2,358,636
accounts receivable from those customers as of June 30, 2008.





A majority of our customers ultimately sell our products to users in Europe which subjects us to a substantial risk of an economic downturn to Europe.





Our President and Chief Executive Officer and a Director, and the Secretary of the Company and a Director own 35% and 21.6%, respectively of a company now known as Beijing Sande Technology (Holding) Co., Ltd. (“Beijing Sande”) which is a Chinese Corporation which, in turn, owns approximately 20% of Beijing Micro Matic Machinery,
Ltd, which is the 76% customer referred to above.  The controlling interest of approximately 80% of Beijing Micro Matic Machinery, Ltd. is owned by Denmark Micro Matic International SA, (“Denmark Micro”) an entity registered in Denmark.





The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral. Credit losses have not been significant.




14
 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






14. Commitments




Consulting agreements:





On March 15, 2008, the Company signed a letter of engagement with CCG Investor Relations Partners LLC.  According to the terms of the agreement, CCG agreed to assist the company in the execution of its investor relations strategy. The agreement was for a twelve-month period and the Company agreed to pay $7,000 per month to CCG
and issue warrants to purchase 50,000 shares of the Company's common stock at an exercise price of $5 per share. These warrants were recorded at the fair value of $100,796 based on 70% volatility, 4.12% discount rate and 0% annual rate of quarterly dividends.  The Company has been expensing the fair value of these warrants over the term of the agreement.  As of September 1, 2008, we terminated our agreement with CCG Investor Relations Partners LLC.





During the six months ended June 30, 2009, the Company expensed $20,435 and deferred $0 in the consolidated financial statements.





15. Minority interest




On September 22, 2008, the Company entered in an Equity Purchase Agreement ("the Agreement") with Wen Ge Ren (the "Seller"), a shareholder owning a 5% stock interest in Beijing Tong Yuan Heng Feng Technology Co., Ltd ("BJTY"), which is 95% owned through the Company's wholly owned subsidiary American Metal Technology Group. Pursuant to the
Agreement, the Company paid to the Seller US $390,299. The Seller has agreed to accept from the Company the equivalent of US $92,566.46 or RMB 629,451.91 and balance of US $297,732.57 pursuant to the issuance of such number of shares of restricted Common Stock based upon the amount equal to 75% of the average of the closing bid price of the Company's Common Stock for the five-day trading period commencing on September 18, 2008. The Company delivered the cash consideration and issued 317,581 shares to the Seller
prior to September 30, 2008.





16. Entity held for disposal





On March 18, 2009, the Board of Directors authorized the Company to transfer and resell the Company’s ownership of fifty thousand (50,000) shares of common stock, representing 100% of the issued and outstanding shares of Lighting Power Global Limited, a British Virgin Island company, to the Chairman and the President of Company, resulting
in the President becoming the sole shareholder of Lighting Power Global Limited.  The Board of Directors also authorized the Company to cancel any funds due to the President for any loans made and /or expenses incurred with respect to the original acquisition and ownership of the shares of common stock of Lighting Power Global Limited.





As a result, Lighting Power Global Limited is reported as an entity held for disposal in the accompanying financials.





The components of loss from operations related to the entity held for disposal for the six months ended June 30, 2009 is shown below:





2009Net sales

$
-Cost of sales


-Gross profit


-Operating expensesOperating and administrative expenses


68,682Total operating expenses


68,682Loss from operations


(68,682
)Non-operating expensesOther expense


149Net Loss before income tax


(68,831
)Provision for Income tax


-Net loss from entity held for disposal

$
(68,831
)








15
AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS








16. Entity held for disposal - continued




Assets and liabilities for the entity held for disposal as of June 30, 2009 and December 31, 2008 are as follows:





June 30, 2009


December 31, 2008AssetsCash and cash equivalents

$
-


$
22,901Account receivable, net


-



46,575Total Current assets


-



69,476LiabilitiesOther payable


-



645Total Liabilities


-



645Net Asset Held for Disposal

$
-


$
68,831





17. Subsequent event





On July 1, 2009, AMTG entered into an amended loan agreement with an entity, 33% of which is owned by the President and CEO of the Company regarding the $1,213,536 due to the related party (see Note 10 – Due to related party).  In view of the depreciation in the U.S. dollar, AMTG agreed to pay to the related party the agreed
upon sum of $317,565, to compensate the related party for the loss in the value of the loan based upon the difference between the exchange rate at the time of the loan and the current exchange rate.  Such agreement was authorized and approved by our Board of Directors.  The additional charge of $317,565 had been accrued as of June 30, 2009.  The total principal balance of $1,213,536 had been fully repaid on July 13, 2009, whereas the additional charge of $317,565 had been fully paid
on August 5, 2009.




































16


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION.





The following discussion and analysis provides information which we believe is relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.





Statements in this Form 10-Q which are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause our actual
results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "intends," "anticipates" or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described
from time to time in our reports filed with the Securities and Exchange Commission.





Critical Accounting Policies and Estimates





The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company's discussion and analysis of its financial condition and operating results require the Company's management to make judgments, assumptions, and estimates that affect the amounts reported in
its consolidated financial statements and accompanying notes. Note 2 "Summary of Significant Accounting Policies" of Notes to Consolidated Financial Statements in this Form 10-Q describes the significant accounting policies and methods used in the preparation of the Company's consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.





Management believes the Company's critical accounting policies and estimates are those related to revenue recognition, allowance for doubtful accounts, inventory valuation, impairment of long-lived assets, foreign currency translation and income taxes. Management considers these critical policies because they are both important to
the portrayal of the Company's financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. The Company's senior management has reviewed these critical accounting policies and related disclosures with the Company's Board of Directors.





Revenue recognition





The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability
is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Unearned revenue as of June 30, 2009 amounted to $458,855.





The Company's revenue consists of invoiced value of goods, net of a value-added tax (VAT). No product return or sales discount allowance is made as products delivered and accepted by customers are normally not returnable and sales discount is normally not granted after products are delivered.





Allowance for doubtful accounts





The Company's policy is to maintain reserves for potential credit losses for accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy
of these reserves. As of June 30, 2009, the Company had net accounts receivable of $1,333,787, net of allowance of $149,306.





Inventory valuation





Inventories are valued at the lower of cost or market value using weighted average method. Management compares the cost of inventory with the market value and an allowance is made for writing down the inventory to its market value, if lower.





Impairment of long-lived assets





The Company applies the provisions of Statement of Financial Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"), issued by the Financial Accounting Standards Board
("FASB"). FAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will
be recognized for the amount by which the carrying value exceeds the fair value.







17




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION. - continued




Impairment of long-lived assets - continued




The Company tests long-lived assets, including property, plant and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and
evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of
impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets for the three months and six months ended June 30, 2009 and June 30, 2008.





Foreign currency translation





The reporting currency of the Company is the US dollar. The Company uses their local currency, Renminbi (RMB), as their functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period.
Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders' equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.





Accumulated other comprehensive income amounted to $1,953,431 and $1,865,844 as of June 30, 2009 and December 31, 2008, respectively. Accumulated other comprehensive income was mainly from foreign currency translation gain as of June 30, 2009.





Income taxes





The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. At June 30, 2009 and 2008, there was no significant book to tax
differences.








RESULTS OF OPERATIONS





We design and manufacture high-precision casting and machined parts based on blueprints supplied by our customers. To set us apart from competition, we streamlined production cycle by providing a one stop solution to include all three integral processes in making high precision parts, which are molding design and fabrication, high
precision investment casting and CNC machining process. Our products are almost exclusively component parts for use in final products, which are either assembled or manufactured outside China or are manufactured and assembled in China and exported to foreign markets.   Our primary focus during 2008 and 2009 has been to increase demand for our castings and machined parts outside China, and we experienced significant growth in existing and new markets with existing and new customers.  During
the six months ended June 30, 2009, as further set forth below, due to the worldwide economic slowdown, we recognized that we would experience a reduction in revenue and have been working towards reducing our operating expenses.





To capitalize on the increased demand for our products, we commenced significant capital expansion and capital improvement efforts, utilizing most of the net proceeds received from our equity financing in 2007 to expand and enhance our manufacturing capabilities. By the end of first quarter ended March 31, 2008, we completed the first
phase of the expansion plan. Phase one entails a 53,819 square foot manufacturing space, 5 turning centers and 60 CNC Mazak Lathe, 19 of which were delivered and became operational in the three months ended December 31, 2007 and the three months ended March 31, 2008 and the last of which became operational on or about April 7, 2008.  All of the new high-precision lathe machines are equal in size and capacity to the Company's existing machines.





In February 2008, we announced that we were planning to invest $3 million to build additional facilities at our Langfang manufacturing center. The new facilities marked the second phase of a multiphase plan to transform the Company’s capacity and capabilities for the foreseeable future. This second phase of our multiphase expansion
plan will add two buildings totaling approximately 10,916 square meters, increasing annual capacity for casting products by 50% to 3,600 tons from 2,400 tons.





18





ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION. - continued

RESULTS OF OPERATIONS - continued During the first quarter of fiscal year 2009, we completed construction of the first building, which is a factory with a workspace of 6,654.84 square meters.  The factory entails  a 4,500 square meter metal casting shop, a 1,000 square meter electronic shop, a 500 square meter mould shop, and a 600 square
meter inventory and assorted sets shop. The second building will be a 4,260.84 square meter four level staff dormitory which will accommodate 600 staff members. We have substantially completed the construction of the second building during the second quarter of fiscal year 2009, and expect to transfer from construction-in-progress to fixed assets in the third quarter once the total cost is confirmed and the title documents are completed.





As of December 31, 2008, we had 323 employees working at our factories compared to 256 at the same time in the prior year. Prior to December 2008, the Company operated with three shifts per day for seven days each week.  Due to the global economic downturn, in December 2008, the Company reduced shifts to one shift
per day.  From January 2009 through the date of this Quarterly Report, the Company has been operating one shift per day.  As of June 30, 2009, we had 260 full time employees.





For the three months and six months ended June 30, 2009, the Company’s net sales dropped approximately 72% and 73% as compared to the three months and six months ended June 30, 2008, respectively.  We experienced an approximate 70% decline in our orders from our European customers.  We anticipate that
during 2009 we will achieve 40% of the sales which we received during the fiscal year ended December 31, 2008.  Depending upon the condition of the economy, we may experience a net loss for 2009.





On September 22, 2008, the Company entered in an Equity Purchase Agreement ("the Agreement") with Wen Ge Ren (the "Seller"), a shareholder owning a 5% stock interest in Beijing Tong Yuan Heng Feng Technology Co., Ltd ("BJTY"), which is 95% owned through the Company's wholly owned subsidiary American Metal Technology Group. Pursuant
to the Agreement, the Company paid to the Seller US $390,299. The Seller has agreed to accept from the Company the equivalent of US $92,566.46 or RMB 629,451.91 and balance of US $297,732.57 pursuant to the issuance of such number of shares of restricted Common Stock based upon the amount equal to 75% of the average of the closing bid price of the Company's Common Stock for the five-day trading period commencing on September 18, 2008. The Company delivered the cash consideration and issued 317,581 shares to the
Seller prior to September 30, 2008.





On October 31, 2008, the Board of Directors adopted resolutions, authorizing incentive compensation to key members of its management if the Company has four million ($4,000,000) dollars or more in net income for the fiscal year of 2008 excluding expenses relating to the incentive compensation, as reflected in the audited Financial
Statements of the Company as filed with the Securities and Exchange Commission. The incentive compensation shall be paid by the issuance of shares of common stock by the Company as follows: (A) 533,333 shares of common stock determined by multiplying the initial four million ($4,000,000) dollars of net income by ten (10%) percent and dividing the product by an agreed value of $0.75 per share and (B) such number of additional shares of common stock determined by multiplying the amount of net profit in excess of
four million ($4,000,000) dollars by twenty (20%) percent and dividing such product by an agreed value of $0.75 per share.  As of June 30, 2009, such shares have not been issued.





On March 18, 2009, the Board of Directors authorized the Company to transfer and resell the Company’s ownership of fifty thousand (50,000) shares of common stock, representing 100% of the issued and outstanding shares of Lighting Power Global Limited, a British Virgin Island company, to the Chairman and the President of Company,
resulting in the President becoming the sole shareholder of Lighting Power Global Limited.  The Board of Directors also authorized the Company to cancel any funds due to the President for any loans made and /or expenses incurred with respect to the original acquisition and ownership of the shares of common stock of Lighting Power Global Limited.





On July 1, 2009, AMTG entered into an amended loan agreement with an entity, 33% of which is owned by the President and CEO of the Company regarding the $1,213,536 due to the related party (see Note 10 – Due to related party).  In view of the depreciation in the U.S. dollar, AMTG agreed to pay to the related party the
agreed upon sum of $317,565, to compensate the related party for the loss in the value of the loan based upon the difference between the exchange rate at the time of the loan and the current exchange rate.  Such agreement was authorized and approved by our Board of Directors.  The additional charge of $317,565 had been accrued as of June 30, 2009.  The total principal balance of $1,213,536 had been fully repaid on July 13, 2009, whereas the additional charge of $317,565 had been
fully paid on August 5, 2009.





Revenue





Net sales for the three months ended June 30, 2009 was $1,437,804, a decrease of 71.7% as compared to $5,086,839 for the three months ended June 30, 2008. Gross profit for the three months ended June 30 2009, was $298,322, or approximately 20.7% of revenues, compared to $1,779,145, or 34.97% of revenues, for the same
period in 2008.





Net sales for the six months ended June 30, 2009 was $2,722,027, a decrease of 73% as compared to $9,983,353 for the six months ended June 30, 2008.  Gross profit for the six months ended June 30, 2009, was $693,697, or approximately 25% of revenues, compared to $3,238,540, or 32% of revenues, for the same period in
2008.





The decrease is primarily due to the approximate 70% decline in orders from our European customers.  The decline in gross margin was resulted from higher fixed costs allocated to cost of goods sold due to decline in sale orders during the
current period as compared to the same period prior year.






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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION. - continued





Expenses from Operations





Total expenses, comprised mostly of general and administrative expenses were $199,055 for the three-month period ended June 30, 2009, a decrease of $175,716, compared to $374,771 for the three month period ended June 30, 2008.





Total expenses, comprised mostly of general and administrative expenses were $834,177 for the six-month period ended June 30, 2009, a decrease of $37,798, compared to $871,975 for the six-month period ended June 30, 2008.





Interest Income and Expense





Net interest income for the three months ended June 30, 2009 was $2,227 as compared to net interest income of $1,621 for the three months ended June 30, 2008.  This increase is primarily due to the increase in our cash and cash equivalents.





Net interest income for the six months ended June 30, 2009 was $112,926 as compared to net interest income of $7,349 for the six months ended June 30, 2008.  This increase is primarily due to interest income recognized during the first quarter of fiscal year 2009 from the maturity of a CD.





Other Expense





Other expense for the three months ended June 30, 2009 was $319,928 as compared to $12,351 for the three months ended June 30, 2008.  Other expense for the six months ended June 30, 2009 was $321,054 as compared to $11,310 for the six months ended June 30, 2008.  The increase during the current periods was mainly
due to accruing the additional charge of $317,565 for the balance due to a related party as discussed in Note 17 – Subsequent event.





Net (Loss) Income





We had net loss of $276,335 for the three months ended June 30, 2009 as compared to net income of $1,403,540 for the three months ended June 30, 2008.  We also incurred net loss of $436,085 for the six months ended June 30, 2009 as compared to net income of $2,420,736 for the six months ended June 30, 2008.  The
losses observed during the current periods were mainly derived from the decreases in net sales and the increase in other expense.








LIQUIDITY AND CAPITAL RESOURCES





Our cash and cash equivalents were $8,274,701 on June 30, 2009.  Through the fiscal year ended December 31, 2008, we met our liquidity needs through the revenue derived pursuant to the sale of our precision metal castings and electronic circuit boards manufactured at facilities controlled by our subsidiary corporations
in the People’s Republic of China.





Ultimately, our success is dependent upon our ability to generate revenues from the sale of precision metal casting and electronic circuit boards manufactured in facilities located in the People’s Republic of China.





During the six month period ended June 30, 2009, net cash provided by operating activities was $919,587 as compared to $955,101 for the six-month period ended June 30, 2008.  Net cash provided from financing activities was $7,124 for the six-month period ended June 30, 2009 as compared to $25,000 for the six-month period
ended June 30, 2008.





Off-Balance Sheet Arrangements





We have no off-balance sheet arrangements.





Material Commitments





None.





Purchase of Significant Equipment





None.




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





As of June 30, 2009 we have investments of $174,285 in marketable securities.  During the three months and six months ended June 30, 2009, we recorded a net gain of $6,959 and a net loss of $22,618 on the disposal of such securities, respectively.  Although
these investments represent less than one (1%) percent of our total assets, and, accordingly, do not represent a significant component of our assets, there can be no assurance that there will not be significant fluctuations in the equity markets that reduce the value of these investments including, but not limited to, a total loss of the value of these investments.





We require substantial amounts of raw materials in our operations, including metals and energy. We purchase all of our raw materials from outside sources, and our metals purchases are from a select group of suppliers.  As a result, our purchases of metals are concentrated with a few suppliers and any interruptions in their
ability to supply these materials could have a material adverse effect on our financial position, results of operations and/or cash flows. The availability and price of raw materials may also be subject to shortages in supply, suppliers’ allocations to other purchasers, and interruptions in production by suppliers (including by reason of labor strikes or work stoppages at our suppliers’ plants).  In addition, although we are subject to changes in exchange rates and worldwide price levels
of raw materials, our contracts with our suppliers provide that we are not responsible for any 3-5% increase in commodity prices, including price increases resulting from currency fluctuations.  Our management has in the past and intends in the future to pass any additional increases in price to our customers.





Our subsidiary corporations in the People’s Republic of China conduct business in the local currency and therefore, we are exposed to foreign currency exchange risk resulting from fluctuations in foreign currencies. This risk could adversely impact our results and financial condition. We believe our current exposure to fluctuations
in foreign currency exchange rates is immaterial, based upon the aforementioned provisions with respect to price increases found in our contracts with our suppliers. We have not entered into any foreign currency exchange and option contracts to reduce our exposure to foreign currency exchange risk and the corresponding variability in operating results as a result of fluctuations in foreign currency exchange rates.








ITEM 4T. CONTROLS AND PROCEDURES





Our principal executive and financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)), has concluded that as of the fiscal quarter ended June 30, 2009 our disclosure controls and procedures were ineffective
to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is accumulated and communicated to our management, including, our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure, and (ii) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.





There have been no changes in our internal control over financial reporting identified during the period covered by this report which have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.








PART II - OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS.





We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest
adverse to our interest.








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





None.








ITEM 3. DEFAULTS UPON SENIOR SECURITIES





None.








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





None.








ITEM 5. OTHER INFORMATION





None.


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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.





(A) Exhibits





Exhibit Number
Description





31
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





32
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002








(B) Reports on Form 8-K





1
Filed 8-K/A on July 6, 2009, the Company announced a change in its certifying accountant.








SIGNATURES





In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





AMERICAN METAL & TECHNOLOGY, INC.(Registrant)Date: August 14, 2009
By:
/s/ Chen GaoChen GaoTitle: President and Chief Executive Officer




















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