ADMG Adamant DRI Processing and Minerals Group (CE)

Advanced Materials Group, Inc. (Pink Sheets:ADMG), a leading developer and manufacturer of medical, consumer and industrial products, today announced revenues for the second quarter and six months ended May 31, 2007. Revenues were $2.6 million for the second quarter compared to $2.5 million or a 2.4% increase over the same period in 2006. On a six-month basis, revenues were $5.1 million compared to $4.9 million or a 5% increase for the same period last year. Basic and diluted earnings per share for the second quarter of 2007 were $0.01 compared to $0.02 for the same period in 2006. Net income was $160,000 compared to $205,000 for the same period in 2006. For the six-month period basic and diluted earnings were $433,046 or $0.04 per share, compared to a $357,728 or $0.03 per share for the six months ended May 31, 2006. Advanced Material Group, Inc.�s (AMI) growth was primarily due to the Company�s increased sales volumes within the medical OEM markets. Sales for the second fiscal quarter were spread across AMI�s three core product lines die cut foam products, heat/sonic sealed products and pressure sensitive adhesive products. AMI manufactures, markets and sells products that include foam pads for endoscopic fog reduction kits, soap impregnated sponges, non-slip pads, biopsy pads, medical and consumer packaging, cell phone and microwave antennae EMF absorbers, ink jet printer cartridge inserts and absorbers, customized space fillers for the aerospace industry, peel pouch packaging, specialty bags, tamper proof bags, cold packs, personal cooling devices, wound covers, medical tube holders and panty patches (Nundies). During AMI�s second fiscal quarter, the Company focused on two important items. First, in an effort to enhance AMI�s growth plan and bring new products to market, the Company obtained a $2,000,000 conventional line of credit from JP Morgan Chase Bank on March 1, 2007. Second, AMI received significant interest for its first proprietary, consumer-targeted product, Nundies, an adhesive disposable panty that fits the inseam inside of a woman�s pant. Sold online and at more than 100 retail locations throughout the United States, Nundies are the alternative to wearing underwear and the most comfortable option for women looking to go without panty lines. �Our strategic emphasis on moving to a manufacturing model that includes proprietary and patented products is starting to take hold,� said William Mortensen, president and chief financial officer. �We recently launched our first proprietary product, Nundies to very positive reviews and we plan deliver more AMI patented medical, consumer and industrial products that will serve to generate greater revenue and shareholder value in the long term.� About Advanced Materials, Inc. Dallas�based Advanced Materials, Inc. (AMI) is a leading developer and manufacturer of medical, consumer and industrial products for several of the top Medical OEM�s across the country. Since its reinvention in 2005 under President and CFO, William Mortensen, AMI has increased shareholder value by developing and selling proprietary and patented products, all while maintaining customer satisfaction. Statements in this release which are purely historical facts or which necessarily depend upon future events, including statements about forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements are based upon information available to Advanced Materials Group, Inc. on the date this report was submitted. Advanced Materials Group, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. Advanced Materials Group, Inc. may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be found in the risk factors section of Advanced Materials Group, Inc.'s most recent filing of Form 10-K with the Securities and Exchange Commission. ADVANCED MATERIALS GROUP, INC. CONSOLIDATED BALANCE SHEETS � May 31, 2007 (unaudited) November 30, 2006 � ASSETS Current assets: Cash and cash equivalents $ 185,573 $ 441,860 Accounts receivable, net 1,458,081 1,519,282 Inventories, net 1,242,935 815,422 Deferred tax asset 813,523 634,000 Prepaid expenses and other � 525,183 � � 253,477 � Total current assets 4,225,295 3,664,041 � Property and equipment, net 278,887 342,237 Other assets � 75,702 � � 75,702 � Total assets $ 4,579,884 � $ 4,081,980 � � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 353,501 $ 405,492 Accrued liabilities 62,840 185,155 Notes payable - related parties 16,384 43,952 Bank note payable 1,125,000 855,850 Current portion of capital lease obligations � 17,671 � � 19,728 � Total current liabilities 1,575,396 1,510,177 � Capital lease obligations, net of current portion � 10,825 � � 19,685 � Total liabilities 1,586,221 1,529,862 � Commitments and contingencies 0 0 � Stockholders' equity: Preferred stock-$.001 par value; 5,000,000 shares authorized; no shares issued and outstanding 0 0 Common stock-$.001 par value; 25,000,000 shares authorized; 12,146,026 and 12,116,026 shares issued and outstanding at May 31, 2007 and November 30, 2006, respectively 12,146 12,116 Additional paid-in capital 8,363,966 8,355,497 Accumulated deficit � (5,382,449 ) � (5,815,495 ) Total stockholders' equity � 2,993,663 � � 2,552,118 � Total liabilities and stockholders' equity $ 4,579,884 � $ 4,081,980 � ADVANCED MATERIALS GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) � � Three Months Ended � Six Months Ended � May 31, 2007 May 31, 2006 May 31, 2007 May 31, 2006 Net sales $ 2,587,204 $ 2,526,034 $ 5,151,059 $ 4,901,371 Cost of sales � 1,976,760 � 1,806,347 � 4,049,053 � 3,507,133 Gross profit � 610,444 � 719,687 � 1,102,006 � 1,394,238 � Operating expenses: Selling, general and administrative 420,821 456,950 779,996 921,676 Depreciation and amortization � � 9,625 � 20,296 � 24,820 � 47,065 Total operating expenses � 430,446 � 477,246 � 804,816 � 968,741 � Income from operations 179,998 242,441 297,190 425,497 Other income (expense): Interest expense (19,194 ) (37,068 ) (41,411 ) (78,952 ) Other, net � 10,605 � (339 ) � 19,393 � 11,183 Total other expenses, net � (8,589 ) � (37,407 ) � (22,018 ) � (67,769 ) Income tax benefit (expense) (11,348 ) 0 157,874 0 Net income $ 160,061 $ 205,034 $ 433,046 $ 357,728 � Basic and diluted earnings per common share $ 0.01 $ 0.02 $ 0.04 $ 0.03 � Weighted Average Common Shares Outstanding: Basic � 12,133,693 � 12,116,026 � 12,133,693 � 12,116,026 Diluted � 12,384,488 � 12,151,626 � 12,340,244 � 12,146,217