<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ------------
Commission file number 0-23268
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AMERICAN TECHNOLOGIES GROUP, INC.
---------------------------------
(Name of small business issuer in its charter)
NEVADA 95-4307525
------ ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1017 SOUTH MOUNTAIN AVENUE, MONROVIA, CA. 91016
-------------------------------------------------
(Address of principal executive offices) (zip code)
Issuer's telephone number: (626) 357-5000
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
--- ---
As of June 18, 1998, the registrant had 22,704,368 shares of Common Stock
outstanding.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <S>
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Consolidated Balance Sheets as of April 30, 1998 and July 31, 1997 3
Consolidated Statements of Operations for the Nine and Three Month Periods
ended April 30, 1998 and 1997 5
Consolidated Statements of Cash Flows for the Nine Month Periods
ended April 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
ITEM 2 Management's Discussion and Analysis 10
PART II OTHER INFORMATION
ITEM 2 Changes in Securities 12
ITEM 6 Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, THIS QUARTERLY REPORT CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, AND THE COMPANY DESIRES TO TAKE ADVANTAGE OF
THE "SAFE HARBOR" PROVISIONS THEREOF. THEREFORE THE COMPANY IS INCLUDING
THIS STATEMENT FOR THE EXPRESS PURPOSE OF SUCH SAFE HARBOR WITH RESPECT TO
ALL SUCH FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS IN THIS
REPORT REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED HEREIN AND IN
OTHER REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE
ANTICIPATED. IN THIS REPORT, THE WORDS "ANTICIPATES", "BELIEVES", "INTENDS",
"FUTURE", AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS
TO RELFECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.
Page 2
<PAGE>
American Technologies Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
April 30, July 31,
ASSETS 1998 1997
- ------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 134,634 $ 1,033,108
Accounts receivable, net of allowance for
doubtful accounts of $17,139 and
$134,772 at April 30,1998 and
July 31, 1997, respectively 25,930 445,230
Amounts due from officers/shareholders 220,648 148,375
Prepaid expenses 7,286 -
Inventory 191,267 239,738
----------- -----------
Total current assets 579,765 1,866,451
----------- -----------
PROPERTY, EQUIPMENT AND MINERAL PROPERTIES 7,276,977 7,687,852
Less accumulated depreciation (382,923) (290,388)
----------- -----------
Net property, equipment and mineral properties 6,894,054 7,397,464
----------- -----------
INVESTMENT-JOINT VENTURE 105,000 -
NET ASSETS HELD FOR DISPOSAL
New Concept Mining Tempiute mineral property 630,960 -
OTHER ASSETS
Technology rights, net of accumulated
amortization of $300,000 at April 30, 1998 900,000 -
Other assets 593,206 298,518
----------- -----------
Total other assets 1,493,206 298,518
----------- -----------
TOTAL ASSETS $ 9,702,985 $ 9,562,433
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
Page 3
<PAGE>
American Technologies Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
April 30, July 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- -----------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
LIABILITIES
Accounts payable $ 624,331 $ 739,982
Related party payables - 71,410
Deferred subscription revenue - 105,043
Current portion of notes payable and capital leases 151,993 605,569
Other accrued liabilities 115,754 254,638
Net liabilities of discontinued operations-ATG Media, Inc. 185,993 -
------------ ------------
Total current liabilities 1,078,071 1,776,642
------------ ------------
Deferred tax liability 489,224 489,224
Deferred subscription revenue - 101,260
Convertible debentures 75,000 -
Notes payable and capital leases 1,537,559 1,250,444
------------ ------------
2,101,783 1,840,928
------------ ------------
Total liabilities 3,179,854 3,617,570
------------ ------------
STOCKHOLDERS' EQUITY
Series A Preferred - $ .001 par value, 10,000,000 authorized, 378 378
Issued and outstanding 378,061 shares
Series B Preferred - $.001 par value, 500,000 authorized, - -
None issued and outstanding
Series C Preferred - $.001 par value, 2,000 authorized - -
None issued and outstanding
Common Stock: ATG - $.001 par value, 100,000,000 authorized, 22,707 20,722
20,721,789 issued and outstanding at July 31, 1997
22,707,368 issued and outstanding at April 30, 1998
Additional paid in capital 38,547,062 32,904,555
Stock subscriptions 123,569 135,518
Deficit (32,170,585) (27,116,310)
------------ ------------
Total stockholders' equity 6,523,131 5,944,863
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,702,985 $ 9,562,433
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
Page 4
<PAGE>
American Technologies Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the nine months and three months ended April 30, 1998 and 1997 (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
April 30, April 30,
---------------------------- ---------------------------
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES
Product sales $ 623,881 $ 1,048,261 $ 84,981 $ 965,524
Other 199,651 102,784 76,325 52,776
------------ ------------ ------------ ------------
Total operating revenues 823,532 1,151,045 161,306 1,018,300
------------ ------------ ------------ ------------
COSTS AND EXPENSES
Product sales and marketing 600,461 1,048,299 88,407 343,416
Mining operations 115,863 1,096,464 20,551 449,153
Research and development 871,515 735,543 225,094 246,798
General and administrative 1,993,266 2,063,259 733,521 825,148
Amortization of intangible assets 300,000 - 100,000 -
------------ ------------ ------------ ------------
Total costs and expenses 3,881,105 4,943,565 1,167,573 1,864,515
INTEREST EXPENSE (INCOME), NET 1,562,065 1,888,256 34,684 726,139
------------ ------------ ------------ ------------
Loss from continuing operation
before income taxes (4,619,638) (5,680,776) (1,040,951) (1,572,354)
PROVISION FOR INCOME TAXES (1,600) - - -
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (4,621,238) (5,680,776) (1,040,951) (1,572,354)
DISCONTINUED OPERATIONS (NOTE 8)
Loss from discontinued operations
-ATG Media, Inc. (518,812) (658,165) (231,071) (188,519)
------------ ------------ ------------ ------------
NET LOSS BEFORE EXTRAORDINARY ITEM (5,140,050) (6,338,941) (1,272,022) (1,760,873)
EXTRAORDINARY ITEM
Gain on extinguishment of debt 85,775 - 85,775 -
------------ ------------ ------------ ------------
NET LOSS (5,054,275) (6,338,941) (1,186,247) (1,760,873)
ACCRETED DIVIDENDS - (857,143) - -
------------ ------------ ------------ ------------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $ (5,054,275) $ (7,196,084) $ (1,186,247) $ (1,760,873)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
BASIC AND FULLY DILUTED
NET LOSS PER SHARE
Continuing operations $ (0.21) $ (0.36) $ (0.05) $ (0.08)
Discontinued operations (0.02) (0.04) - (0.01)
Extraordinary item - - - -
------------ ------------ ------------ ------------
Net Loss $ (0.23) $ (0.40) $ (0.05) $ (0.09)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,662,736 18,109,418 22,441,203 19,424,466
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
Page 5
<PAGE>
American Technologies Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Nine Months Ended
April 30,
-----------------------------
1998 1997
- -------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss $(5,054,275) $(6,338,941)
Adjustments to reconcile net loss
to net cash used
in operating activities:
Depreciation and amortization 410,982 414,867
Loss due to impairment of equipment 10,161 -
Extraordinary gain on extinguishment of debt (85,775) -
Stock issued as consideration for services 119,465 286,210
Imputed interest expense for notes payable - 376,270
Imputed interest on convertible debt and financing cost 1,471,771 1,720,382
Changes in assets and liabilities:
Accounts receivable 419,300 (560,243)
Inventories 48,471 (146,609)
Other assets (301,974) 412
Accounts payable and accrued liabilities (325,945) 76,395
Deferred subscription revenue (206,303) (46,286)
Net liabilities of discontinued operations 185,993 -
----------- -----------
Net cash used in operating activities (3,308,129) (4,217,543)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment 582,267 (366,358)
Net assets held for sale (630,960) -
Investment in Joint Venture (105,000) -
----------- -----------
Net cash used in investing activities (153,693) (366,358)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Payments on notes payable and capital lease (280,686) (70,600)
Amounts due from stockholders/officers (72,273) (139,275)
Notes receivables - (80,000)
Net proceeds from issuance of convertible debenture 2,834,880 3,623,500
Net proceeds from issuance of stock and stock subscriptio 81,427 587,680
----------- -----------
Net cash provided by financing activities 2,563,348 3,921,305
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (898,474) (662,596)
CASH AND CASH EQUIVALENTS, Beginning of Period 1,033,108 2,486,313
----------- -----------
CASH AND CASH EQUIVALENTS, End of Period $ 134,634 $ 1,823,717
----------- -----------
----------- -----------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Stock issued for technology rights $ 1,200,000 $ -
----------- -----------
----------- -----------
Convertible debenture issued for commission $ 225,000 $ -
----------- -----------
----------- -----------
Notes issued for mining properties $ 200,000 $ -
----------- -----------
----------- -----------
Conversion of debentures $ 3,150,000 $ 2,733,333
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
Page 6
<PAGE>
AMERICAN TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a
fair presentation have been included. Operating results for the nine and
three month periods ended April 30, 1998 are not necessarily indicative of
the results that may be expected for the year ended July 31, 1998. For
further information, please refer to the consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-KSB/A
for the year ended July 31, 1997.
2. ORGANIZATION, LINE OF BUSINESS AND SIGNIFICANT BUSINESS RISKS
a. ORGANIZATION AND LINE OF BUSINESS
American Technologies Group, Inc. (the Company or ATG), a Nevada
corporation, is engaged in the research, development, commercialization and
sale of products and systems using its patented and proprietary
technologies. ATG is focused on energy and environmental systems and
services which offer cost-effective solutions to reduce, and in some cases
eliminate, hazardous chemical by-products or emissions resulting from
industrial production and combustion processes.
b. SIGNIFICANT BUSINESS RISKS
Since its inception, the Company has incurred significant operating losses.
The ability of the Company to successfully carry out its business plan is
dependent upon (1) its ability to obtain sufficient additional capital
and/or (2) generate significant revenues through its existing assets and
operating business.
The Company is seeking to retain an investment banking firm to assist in
the obtaining of additional working capital. The successful outcome of
future activities cannot be determined at this time and there are no
assurances that if achieved, the Company will have sufficient funds to
further develop its business plans or generate positive operating results.
c. LOSS PER SHARE
Effective December 15, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share."
Common share equivalents were not considered as they would be anti-dilutive
and had no impact on earnings per share for any periods presented.
However, the impact under the treasury method of dilutive stock options
would have been 972,781 and 381,336 shares for the nine months ended April
30, 1998 and 1997, respectively.
Page 7
<PAGE>
3. DEBENTURES
In October, 1997, the Company issued $3,225,000 of 7.5 percent Convertible
Debentures (Debentures), maturing October 15, 1999. Accrued interest on
these convertible debentures is due on the earlier of conversion or
maturity and both the accrued interest and the principal are payable in
cash or the Company's Common Stock at the Company's discretion. The
conversion price is equal to the lower of the average closing bid price of
the Common Stock for the five trading days prior to the closing or 75
percent of the average closing bid price of the Common Stock for the five
trading days prior to conversion. In December 1997 and January 1998, an
aggregate of $500,000 of Debentures plus accrued interest of $6,771 were
converted into 495,343 shares of Common Stock.
In February, 1998, the Company and the holder of $2,650,000 of Debentures
entered into an agreement pursuant to which the $2,650,000 of Debentures
was converted into 883,333 shares of Common Stock at a conversion price of
$3.00 per share. This negotiated conversion price was significantly higher
than the conversion price if the holder converted at the 25% discount to
market originally permitted in the Debenture. In connection with that
anticipated discount, in accordance with generally accepted accounting
principles (GAAP), the Company recorded in its income statement for the
three months ended October 31, 1997 the amortization of imputed interest
expense of $1,075,000. This imputed interest expense is a non-cash charge.
As a result of favorable negotiations regarding the conversion ratio,
$2,650,000 of Debentures were not converted at the 25% discount resulting
in the Company not incurring $883,333 in imputed interest expense.
However, pursuant to GAAP, this imputed interest expense will not be
reversed in the Company's financial statements.
4. TECHNOLOGY RIGHTS
On August 5, 1997, in exchange for 500,000 shares of Common Stock valued at
$1,200,000, the Company acquired all remaining interests and royalty rights
of Robert W. Carroll and BWN Oil Investments Corporation, a Nevada
corporation (together BWN), to the "clean air pac" which is used by the
Company in The Force-Registered Trademark- airborne fuel treatment. Under
the 1992 agreement pursuant to which the Company acquired the right to use
the clean air pac, the Company was required to pay a 1.25% cash royalty
plus up to one million shares of Series A Convertible Preferred Stock to
BWN based upon sales of The Force. The technology rights are amortized
based on the straight line basis over a period of three years.
5. CAPITAL STOCK
a. COMMON STOCK
During the three months ended October 31, 1997, the Company issued 120
shares of Common Stock for services rendered, valued at estimated market
value at the date of issuance of $360 and 30,000 shares of Common Stock
upon exercise of stock options and payment of $63,600.
During the three months ended January 31, 1998, the Company issued 1,250
shares of Common Stock for services rendered, valued at estimated market
value at the date of issuance of $3,875 and 20,000 shares of Common Stock
upon exercise of stock options and payment of $26,600.
During the three months ended April 30, 1998, the Company issued 54,000
shares of Common Stock for services rendered, valued at estimated market
value of $115,230.
In December 1997 and January 1998, an aggregate of $500,000 of Debentures
plus accrued interest of $6,771 were converted into 495,343 shares of
Common Stock.
Page 8
<PAGE>
In February 1998, an aggregate of $2,650,000 of Debentures were converted
into 883,333 shares of Common Stock.
b. STOCK SUBSCRIPTIONS
During the nine months ended April 30, 1998, the Company issued 1,533
shares of Common Stock valued at $4,600 which were included within stock
subscriptions as of July 31, 1997. As of April 30, 1998, the Company had
not issued (i) 31,533 shares of Common Stock owed for services rendered
prior to October 31, 1997, valued at $65,049 and (ii) 36,957 shares of
Common Stock sold under private placements during fiscal 1997 for an
aggregate of $65,870 in cash received prior to July 31, 1997. These
amounts have been included within stock subscriptions in the accompanying
consolidated balance sheets.
6. MINING LEASE
In November, 1997, New Concept Mining Inc., a wholly-owned subsidiary of
the Company, entered into a Mining Lease and Option to Purchase Agreement
with Royal Gold, Inc. (Royal Gold) pursuant to which Royal Gold was granted
an option to purchase three patented and 115 unpatented mining claims in
the Manhattan Mining District of Nevada for $3,475,000 prior to November
20, 2001. Subject to the exercise of the option, Royal Gold has an
exclusive mining lease for twenty years and so long thereafter as minerals
are produced in commercial quantities. In exchange, Royal Gold will assume
landowner payments totaling $875,000 over a four year period ($120,600 of
which has been paid to landowners by Royal Gold through April 30, 1998 and
accounted for as other income) and incur a minimum of $250,000 yearly for
exploration and development costs on the property. Furthermore, ATG will
receive a 4% net royalty on all smelted gold produced by Royal Gold from
the property.
7. JOINT VENTURE
In March, 1998, the Company formed a joint venture with a 33% ownership
interest, which will be accounted for in accordance with the equity method.
The joint venture markets various personal and home care products
containing the Company's proprietary IE-TM- crystals. The Company made an
initial investment of $105,000 in the joint venture for the start of
operations. Sales of these products commenced in June, 1998.
8. NOTES PAYABLE
Certain notes of New Concept Mining, Inc. have been reclassified from short
term to long term as a result of the extension of the maturity date.
9. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
The Board of Directors has directed management to focus on the Company's
three core technologies and dispose of the Company's publishing operations
and sell certain of its mineral properties. As a result, with the
assistance of a broker, bids for the purchase of New Concept's Tempiute
mineral property have been solicited. Further, management has negotiated
the sale of ATG Media, Inc. for $500,000, which transaction is anticipated
to close prior to August 15, 1998.
Accordingly, the operations of ATG Media are reported as discontinued
operations. Revenues for the three and nine month periods ended April 30,
1998 from the operations of ATG Media were $69,600 and $265,400,
respectively. Also, the Tempiute mineral property is classified
as assets held for disposal in the April 30, 1998 Consolidated Balance
Sheet.
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Total assets increased by $140,600 from $9,562,400 at July 31, 1997 to
$9,703,000 at April 30, 1998. This increase was the net result of an
increase in other assets of $1,194,700 primarily consisting of the newly
acquired technology rights ($900,000) net of amortization, partially offset
by a decrease in current assets of $1,286,700, primarily consisting of
decreases in cash ($898,500) and in accounts receivable ($419,300), increases
in investment in a joint venture ($105,000) and net assets of discontinued
operations ($631,000), partially offset by decreases in property and
equipment ($410,900).
Total liabilities decreased by $437,800 from $3,617,600 at July 31, 1997 to
$3,179,900 at April 30, 1998. This decrease was principally the result of
the reduction of accounts payable ($115,700), deferred subscription revenue
($105,000), current notes payable ($453,600) and other accrued liabilities
($138,900), partially offset by increases in long term notes payable
($287,000) and net liabilities of discontinued operations ($186,000).
The Company's consolidated revenue decreased by $857,000 from $1,018,300 to
$161,300 for the three month periods ended April 30, 1997 and 1998,
respectively. The Company's consolidated revenue decreased by $327,500 from
$1,151,000 to $823,500 for the nine month periods ended April 30, 1997 and
1998, respectively. These decreases in revenues were primarily attributable
to decreases in product sales (discontinuance of the sale of laundry products
to TradeNet Marketing, Inc.,) offset by an increase in rental income from the
recently consummated lease purchase of New Concept Mining properties of
$120,600. It is anticipated that revenue in subsequent periods will increase
as a result of products sales through the joint venture, although there can
be no assurance to this effect.
Operating expenses decreased by $697,000 from $1,864,500 to $1,167,600 for
the three month periods ended April 30, 1997 and 1998, respectively. This
decrease was primarily attributable to decreases of product sales and
marketing expenses ($255,000) and mining operation expenses ($428,600).
Operating expenses decreased by $1,062,500 from $4,943,600 to $3,881,100 for
the nine month periods ended April 30, 1997 and 1998, respectively. This
decrease was primarily attributable to decreases of expenses for product
sales and marketing ($447,800) and mining operations ($980,600).
The Company's consolidated loss from continuing operations decreased by
$531,400 from $1,572,400 to $1,041,000 for the three month periods ended
April 30, 1997 and 1998, respectively. For the nine month periods ended
April 30, 1997 and 1998, respectively, the Company's consolidated loss from
continuing operations decreased by $1,059,600 from $5,680,800 to $4,621,200.
These decreases in losses were principally the result of decreases in
operating expenses and interest expenses partially offset by a decrease in
revenues.
Net loss from New Concept decreased by $605,700 from a net loss of $508,900
to net income of $96,900 and by $1,370,500 from $1,395,800 to $25,300 for the
three and nine month periods ended April 30, 1997 and 1998, respectively.
This decrease is the result of suspension of mining and milling activities at
New Concept's gold properties in the Manhattan mining district. It is
anticipated that the future expenses related to operation of New Concept will
remain significantly less than prior comparable periods due to the suspension
of mining activities and the agreement with Royal Gold (see financial
statement note 6, Mining Lease). With the assistance of a mining property
broker, bids for the purchase of New Concept's Tempiute mining property have
been solicited. A sale of this property will result in a nominal decrease in
operating expenses for New Concept Mining.
Net loss from ATG Media, Inc. (ATG Media) increased by $42,600 from $188,500
to $231,100 and decreased by $139,400 from $658,200 to $518,800 for the three
and nine month periods ended April 30, 1997 and 1998, respectively. The
Board of directors has approved the pending sale of ATG Media for $500,000,
which sale is anticipated to close within sixty days, although there can be
no assurance to this effect.
Page 10
<PAGE>
The primary source of working capital during the nine month period ended
April 30, 1998 was the issuance of $3,225,000 of 7.5 percent Convertible
Debentures for net proceeds of $2,834,900. In the comparable period ended
April 30, 1997, the primary source of working capital was the sale of
$4,100,000 of Convertible Debentures for net proceeds of $3,623,500 and net
proceeds from the sale of stock and stock subscriptions of $587,700.
Subsequent to April 30, 1998, the Company refinanced the note secured by its
principal offices resulting in loan proceeds of $346,200 after payment of the
existing note and costs. Management believes that the June, 1998 commencement
of product sales by the joint venture will increase working capital over the
next six months, although there can be no assurance to this effect. The Company
anticipates that it will be able to continue its operations at the current level
for the remainder of the fiscal year without the sale of additional equity,
however, there can be no assurance to this effect.
Page 11
<PAGE>
PART II
OTHER INFORMATION
ITEM 2 CHANGES IN SECURITIES
(a) Not applicable.
(b) Not applicable.
(c) During the three months ended April 30, 1998, an aggregate of Fifty Four
Thousand (54,000) shares of Common Stock were issued in consideration of
services rendered, valued at One Hundred Fifteen Thousand, Two Hundred Thirty
Dollars ($115,230). These transactions are claimed to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof, as transactions not involving a public
offering, in that the purchasers had full access to all material information
concerning the Company and were acquiring the shares for investment and not
with a view to distribution. There were no underwriting discounts or
commissions paid in connection with the issuance of the Common Stock nor was
any advertising or other form of general solicitation used by the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
None
Page 12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN TECHNOLOGIES GROUP, INC.
By: /s/ Lawrence J. Brady
-------------------------
Lawrence J. Brady
Chairman of the Board and
Chief Executive Officer
Date: June 19, 1998
By: /s/ Harold Rapp
-------------------------
Harold Rapp
Chief Financial Officer
Date: June 19, 1998
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> APR-30-1998
<CASH> 134,634
<SECURITIES> 0
<RECEIVABLES> 25,930
<ALLOWANCES> 0
<INVENTORY> 191,267
<CURRENT-ASSETS> 579,765
<PP&E> 7,907,937
<DEPRECIATION> 382,923
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0
378
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