-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QIpLmG6YG3KK/PSY3UlYtwA+kIiRZSoS55blLlSoqP0n2jblT7SoT3JuwMk5JP0c j5la8rnzRjvlohr4+f7U6g== 0001047469-98-001936.txt : 19980126 0001047469-98-001936.hdr.sgml : 19980126 ACCESSION NUMBER: 0001047469-98-001936 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19980123 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN TECHNOLOGIES GROUP INC CENTRAL INDEX KEY: 0000878547 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLES & MOTOR VEHICLE PARTS & SUPPLIES [5010] IRS NUMBER: 954307525 STATE OF INCORPORATION: NV FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: SEC FILE NUMBER: 000-23268 FILM NUMBER: 98512225 BUSINESS ADDRESS: STREET 1: 1017 S MOUNTAIN AVE CITY: MONROVIA STATE: CA ZIP: 91016 BUSINESS PHONE: 8183575000 MAIL ADDRESS: STREET 1: 425 EAST HUNTINGTON DR CITY: MONROVIA STATE: CA ZIP: 91016 10KSB/A 1 10-KSB/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO FORM 10-KSB/A [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ____________ Commission file number 0-23268 ------- AMERICAN TECHNOLOGIES GROUP, INC. --------------------------------- (Name of small business issuer in its charter) NEVADA 95-4307525 ------ ---------- (State or other jurisdiction of (IRS. Employer incorporation or organization) Identification No.) 1017 SOUTH MOUNTAIN AVENUE, MONROVIA, CA. 91016 ------------------------------------------------- (Address of principal executive offices) (zip code) Issuer's telephone number: (818) 357-5000 Securities registered under Section 12(b) of the Exchange Act: Title of each class Name of exchange on which registered None Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK ------------ (Title of Class) 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 --- --- Check if there is no disclosure of delinquent filers in response to Item 405 of Regulations S-B not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] The registrant's revenues for its most recent fiscal year were $3,083,216. As of October 31, 1997, the registrant had 21,253,442 shares of Common Stock outstanding. The aggregate market value of the voting stock held by non- affiliates was $53,297,880 computed by reference to the average closing bid and asked prices on such date. DOCUMENTS INCORPORATED BY REFERENCE None. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. The Directors and Executive Officers of the Company as of July 31, 1997 are listed below, together with brief accounts of their business experience and certain other information. Subsequent to July 31, 1997, Messrs. Kingon, Odom and Wachsner were appointed to fill vacancies on the Board of Directors. Year First Present Elected Name Age Office or Position Director - ---- --- ------------------ -------- John Collins 46 Chairman of the Board of 1991 Directors, Chief Executive Officer and Treasurer Hugo Pomrehn 59 Director, Vice Chairman 1995 of the Board of Directors Lawrence J. Brady 58 Director and 1997 President Shui-Yin Lo 56 Director of Research 1993 and Development and a Director David Gann 48 Director of Marketing 1993 and a Director Harold Rapp 51 Chief Operating Officer --- JOHN COLLINS: has been Chief Executive Officer, Treasurer, and Director of the Company since July, 1991, and also served as President from that date until June, 1993. From 1983 until July, 1991, Mr. Collins operated New Image Public Relations, which he co-founded. New Image provided financial public relations and consulting services to emerging public companies, as well as other services. Mr. Collins has resigned from all positions with the Company effective December 1, 1997, however he will continue to provide certain services to the Company as a consultant. HUGO POMREHN: after serving as President from April, 1995 to March, 1997 and Chief Operating Officer from November, 1995 to March, 1997, Mr. Pomrehn served as Vice Chairman since March, 1997. Since November, 1995, he has served as a Director. 2 Effective December 1, 1997, Mr. Pomrehn has resigned from his position on the Board and will serve as Executive Vice President - Special Projects on a part- time basis where his sole focus will be on the Baser project. From June, 1993, until March, 1995, he was a Senior Vice President at PLG Inc., a risk management consulting firm. In 1992, Mr. Pomrehn served as Under Secretary of Energy. He was the third ranking official at the U.S. Department of Energy, which employs approximately 170,000 federal and contractor personnel and has an annual budget of $20 billion. At the Department of Energy, he was responsible for defense programs, environmental restoration and waste management, as well as nuclear energy development and operation. Prior to his nomination, he was Vice President and Manager of the Los Angeles Office for Bechtel Corporation where he was principally employed since 1967 in positions of increasing responsibility. Mr. Pomrehn's assignments included Assistant Chief Nuclear and Environmental Systems Engineer; Project Engineer on the Arizona Nuclear Power Plant at Palo Verde, Arizona; and Project Manager of the Korean Nuclear Projects. From 1986 to 1988, Mr. Pomrehn was Site Director for the Browns Ferry Nuclear Power Plant operated by the Tennessee Valley Authority. Subsequent to this assignment, he was named Vice President and General Manager of the Bechtel/Kraftwerk Union Alliance providing maintenance, modification and inspection services to U.S. operating nuclear power plants. LAWRENCE J. BRADY: became President and a Director in March, 1997. In December, 1997, he became Chief Executive Officer and Chairman of the Board. From 1994 until he joined the Company, Mr. Brady was an independent consultant except for a five month period during which he served as president of Chantal Pharmaceutical Corp. From 1991 to 1994 Mr. Brady served as a director and founder of Capitoline International Group, Ltd., a consulting firm. He was a Senior Vice President of Hill & Knowlton Public Affairs Worldwide from 1987 to 1991 and Director of International Marketing for Sanders Associates, a Lockheed subsidiary from 1985 to 1987. Mr. Brady served as Assistant Secretary of Commerce for Trade Administration in the Reagan Administration, responsible for administering federal government export and import trade regulation functions, which included high technology export control and enforcement programs, the anti-dumping and countervailing duty laws and the anti-boycott and foreign trade zone programs. He has completed all requirements for a Ph.D. in International Economics and International Affairs except for his dissertation. SHUI-YIN LO: became Director of Research and Development and a Director in June, 1993. From January, 1987 until June, 1993, he was Chief Executive Officer of the Institute of Boson Studies Inc., a privately funded research company. Dr. Lo received his Ph.D. in physics in 1966 from the University of Chicago. He has been a visiting scholar at numerous universities and institutes including Stanford University, California, Oxford University, England, Institute for Theoretical Physics, Berlin University, Germany and the Institute of High Energy Physics, Beijing, China. DAVID GANN: was appointed Vice President of the Company in January, 1993, and became President and Director in June, 1993. Upon the hiring of Mr. Pomrehn in April, 1995, Mr. Gann relinquished his position as President and was appointed Director of Marketing. In November, 1995 he became President of ATG Media. He was President of Catalytic Solutions Inc. from July, 1990 to October, 1992, at which time it was acquired by the Company. From 1987 to 1990, Mr. Gann worked as a technical consultant to Los Angeles area banks for the disposal of high tech equipment. Mr. Gann received a Bachelor of Science degree in 1972 from Central Missouri State University. 3 Mr. Gann has resigned from all positions with the Company, however he will continue to provide certain services to the Company as a consultant. HAROLD RAPP: has been Chief Operating Officer since March, 1997, and Chief Financial Officer/Treasurer since December, 1997. Mr. Rapp was formerly a principal and Executive Vice President of Baltres-Valentio Associates, a larger Arizona based consulting engineering firm, whose clients included Intel, Signetics, AT&T, Heitman Properties, Motorola, Carborundum and Arizona State University. He is a successful inventor of vacuum distillation and desalination technology who served on ATG's Advisory Board prior to formerly joining the Company in March, 1997. ALFRED KINGON: has been a principal of Kingon International, an international investment firm since 1989. From 1987 to 1989, he was the United States Ambassador to the European Union. Mr. Kingon previously has served as Assistant to the President and Secretary to the Cabinet, Assistant Secretary of the Treasury for Policy Planning and Communications and Assistant Secretary of Commerce for International Economic Policy. WILLIAM ODOM: is Director of National Security Studies for the Hudson Institute and an adjunct professor at Yale University. As Director of the National Security Agency from 1985 to 1988 he was responsible for signal intelligence and communications security for the United States. He has many other senior national security positions in the military and the executive branch of the United States government, including in the Carter White House. Mr. Odom also serves as a director of American Science and Engineering, Inc., V-ONE Corporation and Nichols Research Corporation. TERRY WACHSNER: is President of Heitman Management, one of the largest commercial property management firms in the United States. He has held the position since 1994 and had other positions with the firm since 1982. He is a member of The National Advisory Council of Building Owners and Managers Association International. Directors are elected annually at the Company's annual meeting of shareholders. The term of each person currently serving as a director will continue until the Company's next annual meeting or until a successor is duly elected and qualified. Executive officers are appointed annually by the Board of Directors and serve at the discretion of the Board, except to the extent that provisions of employment agreements may govern. SECTION 16(b) BENEFICIAL OWNERSHIP COMPLIANCE Based upon the Company's review of the reports on Form 3, From 4 or Form 5 furnished to the Company pursuant to Section 16 of the Securities Exchange Act of 1934, John Collins, David Gann, Jim Nicastro and Hugo Pomrehn failed to timely file one Form 5 as to 1, 2, 1, and 1 transactions, respectively. Additionally, John Collins failed to timely file 2 Form 4s, each as to 1 transaction; Hugo Pomrehn and David Gann each failed to timely file 4 Form 4s, each as to 1 transaction; Shui-Yin Lo failed to timely file 3 Form 4s, each as to 1 transaction; Lawrence J. Brady failed to timely file 1 Form 3; Jim Nicastro failed to timely file 2 Form 4s each as to 1 transaction; and Bill Foster failed to timely file 4 Form 4s, as to an aggregate of 11 transactions. 4 ADVISORY BOARD: The Company's Advisory Board consists of renowned scientists or businessmen in technological fields who have agreed to be available for scientific or other consultations when needed. Board members will be compensated at individually determined hourly rates and will be granted options to acquire 2,500 shares of Common Stock at fair market value on the date of grant. Presently, twelve individuals have agreed to serve as Advisors and the Company is discussing appointment to the Advisory Board with additional people. The following is summary background information on the twelve people who have agreed to serve on the Advisory Board. There can be no assurance that these people will actually serve on the Advisory Board for any particular length of time. JAMES S.I. LO: holds a Ph.D. in clinical biochemistry from the University of Toronto (1975). He is currently a Clinical Assistant Professor, Department of Pathology, Health Sciences Center at Brooklyn, New York State University and is a Clinical Biochemist at Brookdale Hospital and Medical Center, Brooklyn, New York. Dr. S.I. Lo is the brother of Dr. S.Y. Lo, a director of the Company. CHARLES YOUNG: holds a Ph.D. in physics from the Massachusetts Institute of Technology (1977). He is currently a staff physicist at the Stanford Linear Accelerator Center where he has been employed since 1978. ANMIN LIU: holds a B.S. in civil engineering from Chuan Yuan University in Taiwan and an M.S. in Sanitary Engineering from Colorado State University, (1970). Since 1989 he has been the Engineer Manager at the Hyperion Wastewater Treatment Plant of the City of Los Angeles where he responsible for engineering and operations, including the multi-billion dollar expansion program ongoing at the plant. He has supervised the start up of two of the four wastewater plants operated by the City of Los Angeles. BENJAMIN BONAVIDA: holds a Ph.D. in Immunochemistry from the University of California, Los Angeles (1968). Since 1983 he has been a Professor, Department of Microbiology and Immunology at the UCLA School of Medicine. Since 1974 he has been a member of the American Association of Cancer Research and since 1973 he has been a member of the American Association of Immunologists, Federation of the American Societies for Experimental Biology. Doctor Bonavida periodically serves on various National Institutes of Health study sections. S.Y. CHENG: holds a Ph.D. in Mathematics from the University of California, Berkeley (1974). Since 1981 he has been a Professor of Mathematics at the University of California, Los Angeles where he was Vice-Chairman of the department from 1988 to 1990. In 1976 he was the Alfred P. Sloan Foundation Fellow and in 1989 he was the J.C. Wong Fellow. 5 GARY A. WILLIAMS: holds a Ph.D in Physics from the University of Califonria, Berkeley (1974). Since 1984 he has been a Professor of Physics at the University of California, Los Angeles. From 1978 to 1982 he was a Alfred P. Sloan Foundation Fellow. ED ROSE: holds a B.S. in Civil Engineering/Engineering Geology from the University of Southern California (1956). He is currently an independent consultant providing project and construction management services. For over 25 years he was employed by Bechtel Corporation retiring as a project manager. His professional affiliations include the American Society of Civil Engineers and the National Society of Professional Engineers. DANIEL C. TSUI: holds a Ph.D. in Electrical Engineering from the University of Chicago (1967). Since 1982 he has been a Professor of electrical engineering at Princeton University. He is a member of the National Academy of Sciences, Academia Sinica, Fellow of The American Physical Society, American Association for the Advancement of Science. In 1984, he received the Oliver E. Buckley Condensed Matter Physics Prize of The American Physical Society. VIJAY K. DHIR: holds a Ph.D. in Mechanical Engineering from the University of Kentucky, Lexington (1972). Since 1991 he has been a Professor, Mechanical, Aerospace and Nuclear Engineering Department, University of California, Los Angeles. Dr. Dhir has served as a referee of numerous journals and has acted as a consultant to many entities including the Nuclear Regulatory Commission, Rockwell International, General Electric Corporation, Los Alamos National Laboratory and Brookhaven National Laboratory. WILLIAM (KEN) CURRIE: holds a Ph.D. in Experimental Nuclear Physics from Glasgow University, Scotland (1961). He is well recognized for his contributions in renewable energy programs for Great Britain and the United States. He has been pivotal in developing corporate business and scientific relationships among United States governmental agencies, national laboratories and the World Bank. MARY LIDSTROM: holds a Ph.D. in Bacteriology from the University of Wisconsin, Madison (1977). Since 1995 she has been a Professor of Microbiology, University of Washington, Seattle, Washington. Previously she was a Professor of Environmental Engineering Science, California Institute of Technology, Pasadena, California. Her awards include the CalTech Award for Excellence, CalTech Teaching Award and the National Science Foundation Award for Women. Dr. Lidstrom has served on numerous editorial boards, most recently for the Journal of Bacteriology and the Annual Reviews of Microbiology. REINHARD BRUCH: holds a Ph.D. in Physics from the Free University of Berlin, Germany. Since 1991 he has been a Professor of Physics at the University of Nevada, Reno. Dr. Bruch has authored over 160 publications and his recent collaborations include Lawrence Livermore National Laboratory, University of Uppsala, Max-Plank Institute for Quantenoptik, University of Pierre and Marie Currie and Texas A&M University. 6 ITEM 10. EXECUTIVE COMPENSATION. The tables and discussion below set forth information about the compensation awarded to, earned by or paid to the Company's executive officers during the fiscal years ended July 31, 1995, 1996, and 1997 SUMMARY COMPENSATION TABLE
Long Term Annual Compensation Compensation ------------------- ------------- Other Annual Name & Principal Position Year Salary Compensation Stock Options ------------------------- ---- ------ ------------ ------------- John Collins 1997 $252,493 0 250,000 (1) Chairman of the Board, 70,000 (2) Chief Executive Officer and Treasurer 1996 189,459 0 97,500 (3) 1995 208,225 0 65,000 (4) Hugo Pomrehn 1997 $120,662 0 250,000 (1) Vice Chairman of the Board 50,000 (5) 40,000 (6) 1996 121,666 - 50,000 (7) 40,000 (8) 500,000 (9) 1995 - - 40,000 (10) Shui-Yin Lo 1997 $151,576 0 250,000 (1) Director of Research & 45,000 (5) Development and a Director 1996 136,625 0 40,000 (7) 1995 120,120 0 60,000 (11) David Gann 1997 $163,714 0 250,000 (1) Director of Marketing and a 40,000 (5) Director 1996 151,272 0 20,000 (7) 1995 139,756 0 40,000 (11) Jim Nicastro 1997 $161,632 0 250,000 (1) Vice President 40,000 (5) 1996 164,497 0 600,000 (12) 24,500 (7) 1995 155,081 0 20,000 (11) John M. Dab 1997 $145,333 0 20,000 (5) General Counsel and Secretary 1996 67,308 (13) 0 90,000 (14) 25,000 (7) 1995 - (15) 0 55,000 (11) - ---------------
(Footnotes are on the following page.) 7 (Footnotes from prior page.) (1) The exercise price of these options is $3.00 per share, the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing March, 1997. (2) The exercise price of these options is $1.87 per share, 10% above the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing January, 1998. (3) The exercise price of these options is $1.65 per share, 10% above the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing August, 1996. (4) The exercise price of these options is $3.30 per share, 10% above the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing August, 1995. (5) The exercise price of these options is $1.70 per share, the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing January, 1998. (6) The exercise price of these options is $3.00 per share, One Dollar less than the average of the closing bid and asked prices of the Common Stock over the thirty trading days prior to the date of grant. (7) The exercise price of these options is $1.50 per share, the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing August, 1996. (8) The exercise price of these options is $10.067 per share, One Dollar less than the average of the closing bid and asked prices of the Common Stock over the thirty trading days prior to the date of grant. (9) The exercise price of these options is $3.00 per share, the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing November, 1995; 250,000 options were voluntarily surrendered in March, 1996. (10) The exercise price of these options is $2.18 per share, One Dollar less than the average of the closing bid and asked prices of the Common Stock over the thirty trading days prior to the date of grant. (11) The exercise price of these options is $3.00 per share, the estimated fair market value on the date of grant. The options vest at the rate of 25% per year commencing August, 1995. (12) The exercise price of these options is $3.00 per share, the estimated fair market value on the date of grant, 500,000 options were voluntarily surrendered in March, 1996. (13) Does not include $64,250 paid to Mr. Dab during the fiscal year as legal fees prior to his employment by the Company. (14) The exercise price of these options is $3.00 per share, the estimated fair market value on the date of grant. Options for 30,000 shares of Common Stock have vested and 30,000 options vest upon the occurrence of certain events related to sales of The Force and 30,000 options vest upon listing of the Company's Common Stock on a stock exchange. (15) Does not include $118,700 in legal fees paid to Mr. Dab during the fiscal year. 8 OPTIONS GRANTED IN FISCAL 1997 Percent of Total Number of Options Securities Granted to Name Underlying Employees Expiration Date ---- Options in Fiscal Exercise --------------- Granted 1997 Price ------- ---- ----- John Collins 250,000 13.1 3.00 March, 2006 70,000 3.7 1.87 January, 2006 Hugo Pomrehn 40,000 2.1 3.00 April, 2002 50,000 2.6 1.70 January, 2006 250,000 13.1 3.00 March, 2006 Shui-Yin Lo 250,000 13.1 3.00 March, 2006 45,000 2.4 1.70 January, 2006 David Gann 250,000 13.1 3.00 March, 2006 70,000 3.7 1.87 January, 2006 Jim Nicastro 250,000 13.1 3.00 March, 2006 70,000 3.7 1.87 January, 2006 John M. Dab 20,000 1.1 1.70 January, 2006 OPTION VALUES AT JULY 31, 1997 Number of Securities Underlying Value of in-the-money Options Options at July 31, 1997 at July 31, 1997 ------------------------ ---------------- Name Exercisable Unexercisable Exercisable Unexercisable ---- ----------- ------------- ----------- ------------- John Collins 425,625 381,875 $ 436,163 $ 546,137 Shui-Yin Lo 858,750(1) 311,250 $ 882,338 $ 417,863 Hugo Pomrehn 445,000 275,000 $ 501,000 $ 399,000 David Gann 493,750(2) 581,250 $ 656,168 $1,111,583 Jim Nicastro 230,000 273,000 $ 241,488 $ 355,293 John M. Dab 63,750 126,250 $ 73,763 $ 181,638 - ----------------------- (1) Includes 450,000 options grant to Dr. Lo in connection with the sale to the Company of certain technology rights. (2) Includes 400,000 options grant to Mr. Gann in connection with the sale to the Company of certain technology rights. Effective January 1, 1997, the Company entered into one year employment agreements with Messrs. Collins, Gann, Nicastro and Dab and Dr. Lo at annual salaries of $266,466, $172,700, $170,000, $154,000 and $159,880, respectively. Each of Messrs. Collins, Gann, Pomrehn and Nicastro and Dr. Lo were granted an option to purchase to purchase 250,000 shares of Common Stock at a price of $3.00 per share. The option expires in March, 2006 and vests at the rate of 25% per year commencing as of March 1, 1997. 9 Effective as of April 1, 1995, the Company entered into a three year employment agreement with Mr. Pomrehn at a base salary of $120,000 per year. In addition, the agreement requires the granting of an option to purchase 40,000 shares of Common Stock as of that date at $2.18 per share and each anniversary thereof during the term of the agreement at $1.00 less than the average of the closing bid and asked prices for the Common Stock over the preceding 30 trading days. Each option will terminate upon the earlier of five years after granting or thirty days after termination of the agreement prior to the expiration its term. In December, 1997, Mr. Pomrehn's employment agreement was amended to provide three day a week service to the Company as Executive Vice President - Special Projects at an annual salary of $72,000. Each employment agreement provides for early termination by the Company for "cause," which includes final conviction of the employee of a felony involving willful conduct materially detrimental to the Company or the final adjudication of the employee in a civil proceeding for acts or omissions to act involving willful conduct detrimental to the Company, and for "good reason" by the employee, which includes the diminution of employee's title, responsibilities or status, or reduction in pay or benefits. In addition, except for Mr. Pomrehn's employment agreement, each agreement provides for the payment of three months salary if the employee terminates his employment in connection with a Change of Control as defined in the agreement or one year's salary in the event the Company terminates the employee during the period commecing 90 dyas before and ending 180 days after the Change of Control. Change of Control is defined as an event or series of events that would be required to be described as a change in control of the Company in a proxy or information statement distributed by the Company pursuant to Section 14 of the Securities Exchange Act of 1934 in response to Item 6(e) of Schedule 14A promulgated hereunder, or any substitute provision which may hereafter be promulgated thereunder or otherwise adopted. Directors of the Company who are employees do not receive compensation for serving as such; non-employee Directors receive $7,500 and an option to purchase 10,000 shares of Common Stock at the fair market value on the day of appointment per year. All Directors hold office until the next annual meeting of the shareholders or until their successors have been duly elected and qualified. All officers serve at the discretion of the Board of Directors. The Company has no retirement, pension or similar programs at the present time. The creation of any such plan, however, will be at the discretion of the Board of Directors of the Company. The Board of Directors may, in the future, adopt such employee benefit and executive compensation programs as it deems advisable and consistent with the best interests of the shareholders and the financial condition and potential of the Company. 10 STOCK OPTION PLANS The Company's 1993 Incentive Stock Option Plan and 1993 Non-Statutory Stock Option Plan (the "Option Plans") provide for the granting of Incentive Stock Options, within the meaning of Section 422b of the Internal Revenue Code of 1986, as amended, to employees and Non-Statutory Stock Options to employees, non-employee directors, or consultants or independent contractors who provide valuable services to the Company. At October 31, 1997, 1,658,000 shares of Common Stock were reserved for issuance under the Option Plans. The Option Plans were approved by the shareholders in November, 1993. The Option Plans are administered by the Board of Directors or, if the Board so designates, a Stock Option Committee consisting of at least two members of the Board of Directors. The Board or the Stock Option Committee, as the case may be, has the discretion to determine when and to whom options will be issued, the number of shares subject to option and the price at which the options will be exercisable. The Board or the Stock Option Committee will also determine whether such options will be Incentive Stock Option or Non-Statutory Stock Options and has full authority to interpret the Option Plans and to establish and amend the rules and regulations relating thereto. Under the Incentive Stock Option Plan, the exercise price of an Incentive Stock Option shall not be less than the fair market value of the Common Stock on the date the option is granted. However, the exercise price of an Incentive Stock Option granted to a ten percent (10%) stockholder (as defined in the Incentive Stock Option Plan), shall be at least 110% of the fair market value of Common Stock on the date the option is granted; exercise prices of options granted under the Non-Statutory Stock Option Plan may be less than fair market value. The maximum aggregate number of shares which may be covered by options under the Option Plans is 10% of the total outstanding share of Common Stock. Incentive Stock Options covering 75,000 shares exercisable at $6.25 per share, 11,000 shares exercisable at $5.00 per share, 140,000 shares exercisable at $3.30 per share, 624,000 shares exercisable at $3.00 per share, 97,500 shares exercisable at $1.65 per share and 233,000 shares exercisable at $1.50 per share and Non-Statutory Stock Options covering 45,000 exercisable at $5.00 per share, 55,000 shares exercisable at $3.00 per share, 20,000 shares exercisable at $1.70 per share and 30,000 shares exercisable at $1.50 per share have been granted and not cancelled or exercised. As of October 31, 1997, Options covering an additional 331,469 shares may be issued under the Option Plans. 11 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth certain information as of December 1, 1997 concerning the ownership of the Company's Common Stock by (i) each person known by the Company to be the beneficial owner of more than five percent of the outstanding Common Stock, (ii) each of the directors of the Company, and (iii) all directors and executive officers of the Company as a group: Amount and Nature Percent Name and Address of Beneficial Ownership (1) of Class - ---------------- --------------------------- -------- John Collins (2) 4,787,545 (3) 22.1 T/S Financial Services Inc. 1,102,564 (4) 5.2 P.O. Box 335 Moorpark, CA 93020 Lawrence J. Brady (2) 143,000 (5) -- Shui-Yin Lo (2) 913,750 (6) 4.1 Alfred H. Kingon (2) -- -- William Odom (2) -- -- Terry Wachsner (2) -- -- Harold Rapp (2) 26,500 (7) -- Jim Nicastro 305,275 (8) 1.4 John M. Dab (2) 103,250 (9) -- All officers and 1,491,775 6.5 directors as a group (8 persons) (5)(6)(7)(8)(9) - -------------------- * Less than 1 percent. (1) Except as reflected below, each of the persons included in the table has sole voting and investment power over the shares respectively owned, subject to the rights of spouses under applicable community property laws. (2) The address of each of these persons is c/o American Technologies Group, Inc., 1017 South Mountain Avenue., Monrovia, CA 91016. (3) Includes 190,000 shares issuable upon exercise of Non-Statutory Stock Options and 312,500 shares issuable under other options. Also included are 1,102,564 shares of Common Stock held of record by T/S Financial Services Inc. for which Mr. Collins holds a proxy but not financial interest. (4) These shares are subject to a proxy in favor of Mr. Collins. (5) Includes 125,000 shares issuable upon exercise of an option. (6) Includes 151,250 shares issuable upon exercise of Incentive Stock Options and 782,500 shares issuable upon exercise of other options. (7) Includes 25,000 shares issuable upon exercise of an option. (8) Includes 3,900 shares held by Mr. Nicastro's wife and 126,875 shares issuable upon exercise of Incentive Stock Options and 162,500 shares issuable upon exercise of other options. (9) Includes 4,500 shares of Common Stock held of record by Mr. Dab's children under the Uniform Gift to Minors Act and 88,750 shares issuable upon exercise of options granted under the Company's Stock Option Plans. 12 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The licensor of the BASER technology which the Company has sublicensed from NWEC is Apricot which is 50% owned by Dr. Shui-Yin Lo, a director of the Company. On July 22, 1994, the Company entered into a Technology Acquisition Agreement with Shui-Yin Lo, the Company's Director of Research and Development and a member of the Board of Directors. For $150,000 payable at the rate of a minimum of $1,000 per month, of which $92,000 was paid as of October 30, 1996, the Company acquired an option to acquire a 50% interest in Apricot or 100% of the technology underlying BASERs as invented by Dr. Lo, if he reacquires such rights. The exercise price for the option is 10,000 shares of Common Stock and a royalty of 5% of ATG's net profit, if any, from the exploitation of BASERs through July 21, 1999. Additionally, if Dr. Lo has not received 1,700,000 shares of Series A Stock in connection with the Company's purchase of the Invention, the exercise price will include such shares. Under the Technology Acquisition Agreement the Company acquired from Shui-Yin Lo exclusive right, title and interest to the Invention for an Option to acquire 450,000 shares of Common Stock at $3.00 per share, and, at such time as ATG receives an offer to purchase the Invention as developed by ATG for commercial utilization or ATG commences commercial utilization of any application of the Invention developed by ATG, ATG agreed to (i) issue to Lo 1,700,000 shares of Series A Stock and (ii) pay to Lo a royalty at the rate of 7.5% of ATG's net profit from the exploitation of the Invention. If Dr. Lo receives the 1,700,000 shares of Series A Stock as part of the exercise price for the BASER rights, then Dr. Lo will not receive such shares if the Invention is commercialized in accordance with the foregoing criteria. Certain officers of the Company are employed pursuant to written employment agreements the principal terms of which are described under "Item 10 Executive Compensation." In connection with the resignation of John Collins from his positions with the Company, the Company and Mr. Collins entered into a Consulting Agreement with a term expiring July 31, 1998 at a rate of $22,200. 13 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: January 22, 1998 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. NAME POSITION(S) DATE ---- ----------- ---- /s/ Lawrence J. Brady Chairman of the Board and January 22, 1998 - --------------------- Chief Executive Officer Lawrence J. Brady /s/ Harold Rapp Chief Financial Officer January 22, 1998 - --------------- Harold Rapp /s/ Shui-Yin Lo Director and January 22, 1998 - --------------- Director of Research Shui-Yin Lo /s/ Alfred H. Kingon Director January 22, 1998 - -------------------- Alfred H. Kingon /s/ William Odom Director January 22, 1998 - ---------------- William Odom /s/ Terry Wachsner Director January 22, 1998 - ------------------ Terry Wachsner 14 -----END PRIVACY-ENHANCED MESSAGE-----