UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(~~mark~~Mark one)

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

For the quarterly period ended ~~December~~March 31, ~~2008~~2009

~~[ ]~~ 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 000-52572

ADVANCED GROWING SYSTEMS, INC.

(Name of Registrant as specified in its charter)

Nevada		20-4281128
(State or other jurisdiction of		(I.R.S. Employer
incorporation or jurisdiction)		Identification Number)

3050 Royal Boulevard South, Ste 135

Alpharetta, GA 30022

(Address of principal executive offices)

Registrant’s telephone number, including area code: (678) 387-5061

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the ~~preceeding~~ preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Large Accelerated Filer o	Accelerated Filer o

Non-Accelerated Filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of ~~February~~ 1May 15, 2009, there were 26,~~633~~910,~~093~~793 shares of the Registrant's common stock, ~~par~~ par value $0.001, issued and outstanding.

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION		3
Item 1.	Financial Statements		3
	Consolidated Balance Sheets at December 31, 2008 (Unaudited) and September 30, 2008 (Audited)		1
	Consolidated Balance Sheets		3
	Consolidated Statements of Operations (Unaudited) for the three months ended December 31, 2008 and 2007		2
	Consolidated Statements of Operations		4
	Consolidated Statements of Cash Flows (Unaudited) for the three months ended December 31, 2008 and 2007		3
	Consolidated Statements of Cash Flows		5
	Notes to Consolidated Financial Statements		46
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		79
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		810
Item 4.	Controls and Procedures		810
PART II	OTHER INFORMATION		11
Item 1.	Legal Proceedings		911
Item 1A.	Risk Factors		911
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		911
Item 3.	Defaults upon Senior Securities		911
Item 4.	Submission of Matters to a Vote of Security Holders		911
Item 5.	Other Information		911
Item 6.	Exhibits		911

ITEM1. Financial Statements

Advanced Growing Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
	December 31, 2008			September 30, 2008
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	-		$	-
Accounts receivable, net of allowance for doubtful accounts of $25,286 and $25,143		101,083			100,145
Inventories		4,892			32,420
Other current assets		36,960			-
Assets of discontinued operations		364,917			890,699
Total current assets		507,852			1,023,264
Property and equipment, net		1,945,279			2,064,990
Other assets		9,248			5,068
Total assets	$	2,462,379		$	3,093,322
Liabilities and stockholders' equity (deficit)
Current liabilities:
Bank overdraft	$	30,615		$	22,952
Accounts payable and accrued expenses		1,086,711			787,056
Convertible notes payable, net of discount		280,000			280,000
Current portion of notes payable, net of discount		1,192,397			903,422
Current portion of capital lease obligations		1,741			15,759
Liabilities of discontinued operations		2,706,572			2,915,451
Total current liabilities		5,298,036			4,924,640
Long-term notes payable		306,787			328,167
Long-term portion of capital lease obligations		-			37,931
Total liabilities		5,604,823			5,290,738
Minority interest		190			380
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, 50,000,000 authorized, 25,000,000 designated as follows:
Preferred stock, Series A; par value $.001; 10,000,000 designated; 4,750,000
issued and outstanding in 2009 and 2008		4,750			4,750
Preferred stock, Series B; par value $.001; 10,000,000 designated; 3,933,333
and 3,933,333 issued and outstanding in 2009 and 2008		3,933			3,933
Preferred stock, Series C; par value $.001; 15,000,000 designated; 9,235,272
issued and outstanding in 2009 and 2008		9,235			9,235
Common stock; par value $.001; 500,000,000 authorized; 26,636,493 and
25,756,793 issued and outstanding in 2009 and 2008		26,637			25,756
Treasury stock, 357,143 shares at cost		(125,000	)		(125,000	)
Common stock warrants		-			-
Additional paid-in capital		13,315,796			13,115,429
Accumulated deficit		(16,377,985	)		(15,231,899	)
Total stockholders' equity (deficit)		(3,142,634	)		(2,197,796	)
Total liabilities and stockholders' equity	$	2,462,379		$	3,093,322

See accompanying notes to consolidated financial statements

-1-

Advanced Growing Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
	For the three months ended
	December 31, 2008 (Unaudited)			December 31, 2007 (Unaudited)
Net sales	$	483,313		$	196,905
Cost of goods sold		243,526			36,712
Gross profit		239,787			160,193
Administrative expenses:
Operating expenses		712,721			594,019
Occupancy expenses		177,994			21,531
Advertising expenses		6,511			4,437
Depreciation and amortization		80,781			52,347
Total administrative expenses		978,007			672,334
Other expenses:
Interest expense, net		141,596			24,179
Penalty incurred on preferred stock		-			-
Other expenses		(50,637	)		12,426
Total other expenses		90,959			36,605
Total expenses		1,068,966			708,939
Loss before income tax benefit		(829,179	)		(548,746	)
Income tax benefit		-			-
Net loss from continuing operations		(829,179	)		(548,746	)
Preferred stock dividend		-			-
Discontinued operations (Note 3)
Loss from discontinued operations of
Advanced Nurseries, net of tax		(316,901	)		(296,881	)
Net loss available to common shareholders	$	(1,146,080	)	$	(845,627	)
Net loss per common share:
Continuing operations	$	(0.03	)	$	(0.02	)
Discontinued operations	$	(0.01	)	$	(0.02	)
Net loss	$	(0.04	)	$	(0.04	)
Weighted average shares outstanding		26,068,023			23,773,668

See accompanying notes to consolidated financial statements

-2-

Advanced Growing Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
	For the three months ended
	December 31, 2008 (Unaudited)			December 31, 2007 (Unaudited)
Operating Activities
Net loss from continuing operations	$	(829,179	)	$	(548,746	)
Net loss from discontinued operations		(316,901	)		(296,881	)
Net loss		(1,146,080	)		(845,627	)
Adjustments to reconcile net loss from continuing
operations to net cash provided by (used in) operating activities:
Depreciation and amortization		80,781			52,348
Common shares issued for services		158,435			-
Non-cash interest expense		42,812			-
Loss on sale of equipment		(447	)		-
Changes in operating assets and liabilities
Accounts receivable		(938	)		(56,328	)
Inventories		27,528			27,147
Other assets		(41,140	)		207
Accounts payable and accrued expenses		302,050			15,138
Net cash provided by (used in) operating activities of discontinued operations		286,909			557,131
Net cash used in operating activities		(290,090	)		(249,984	)
Investing Activities
Purchases of property and equipment		(8,941	)		(104,389	)
Net cash provided by (used in) investing activities of
discontinued operations		29,804			(76,658	)
Net cash provided by (used in) investing activities		20,863			(181,047	)
Financing Activities
Bank overdraft		7,663			-
Proceeds on notes payable		311,728			-
Payments on capital lease obligations		(3,631	)		31,588
Payments on note payable		(46,533	)		58,526
Net cash provided by (used in) financing activities of
discontinued operations		-			(34,596	)
Net cash provided by financing activities		269,227			55,518
Net increase (decrease) in cash and cash equivalents		-			(375,513	)
Cash and cash equivalents at beginning of year		-			375,513
Cash and cash equivalents at end of year	$	-		$	-
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	59,396		$	75,170
Supplemental Disclosure of Non-Cash Information
Conversion of convertible notes payable	$	-		$	430,000
Assets returned under a capital lease	$	48,318		$	-
Stock issued for interest on convertible notes	$	-		$	50,559
Warrants issued with convertible notes	$	-		$	195,605

ITEM 1. Financial Statements

Advanced Growing Systems, Inc. and Subsidiaries
Consolidated Balance Sheets


	March 31, 2009			September 30, 2008
	(Unaudited)			(Audited)

Assets
Current assets:
Cash and cash equivilents	$	33,754		$	-
Accounts receivable, net of allowance for doubtful accounts of $18,753 and $25,143		160,554			100,145
Inventories		31,260			32,420
Other current assets		18,480			-
Assets of discontinued operations		335,641			890,699

Total current assets		579,689			1,023,264

Property and equipment, net		1,851,352			2,064,990
Other assets		9,248			5,068

Total assets	$	2,440,289		$	3,093,322

Liabilities and stockholders' equity (deficit)
Current liabilities:
Bank overdraft	$	-		$	22,952
Accounts payable and accrued expenses		1,511,360			787,056
Convertible notes payable, net of discount		280,000			280,000
Current portion of notes payable, net of discount		1,261,912			903,422
Current portion of capital lease obligations		-			15,759
Liabilities of discontinued operations		2,860,898			2,915,451

Total current liabilities		5,914,170			4,924,640

Long-term notes payable		259,603			328,167
Long-term portion of capital lease obligations		-			37,931

Total liabilities		6,173,773			5,290,738

Minority interest		190			380

Commitments and contingencies

Stockholders' equity (deficit):
Preferred stock, 50,000,000 authorized, 25,000,000 designated as follows:
Preferred stock, Series A; par value $.001; 10,000,000 designated; 4,750,000
issued and outstanding in 2009 and 2008		4,750			4,750
Preferred stock, Series B; par value $.001; 10,000,000 designated; 3,933,333
issued and outstanding in 2009 and 2008		3,933			3,933
Preferred stock, Series C; par value $.001; 15,000,000 designated; 9,235,272
issued and outstanding in 2009 and 2008		9,235			9,235
Common stock; par value $.001; 500,000,000 authorized; 26,910,793 and
25,756,793 issued and outstanding in 2009 and 2008		26,911			25,756
Treasury stock, 357,143 shares at cost		(125,000	)		(125,000	)
Additional paid-in capital		13,383,299			13,115,429
Accumulated deficit		(17,036,802	)		(15,231,899	)

Total stockholders' equity (deficit)		(3,733,674	)		(2,197,796	)

Total liabilities and stockholders' equity	$	2,440,289		$	3,093,322

See accompanying notes to consolidated financial statements

-3-

Advanced Growing Systems, Inc. and Subsidiaries
Consolidated Statements of Operations




	Three months ended						Six months ended
	March 31, 2009			March 31, 2008			March 31, 2009			March 31, 2008


Net sales	$	938,811		$	338,919		$	1,422,124		$	535,824

Cost of goods sold		700,534			176,990			944,060			213,702

Gross profit		238,277			161,929			478,064			322,122

Administrative expenses:
Operating expenses		336,738			621,953			1,049,459			1,215,972
Occupancy expenses		89,281			90,247			267,275			111,778
Advertising expenses		6,411			1,038			12,922			5,475
Depreciation and amortization		81,110			55,719			161,891			108,066

Total administrative expenses		513,540			768,957			1,491,547			1,441,291

Other (income) expenses:
Interest expense, net		158,729			104,199			300,325			128,378
Penalty incurred on preferred stock		-			63,333			-			63,333
Other (income) expenses		41,223			6,360			(9,414	)		18,786

Total other (income) expenses		199,952			173,892			290,911			210,497

Total (income) expenses		713,492			942,849			1,782,458			1,651,788

Loss before income tax benefit		(475,215	)		(780,920	)		(1,304,394	)		(1,329,666	)

Income tax benefit		-			-			-			-

Net loss from continuing operations		(475,215	)		(780,920	)		(1,304,394	)		(1,329,666	)

Preferred stock dividend		-			-			-			-

Discontinued operations (Note 4)
Loss from discontinued operations of
Advanced Nurseries, net of tax		(183,601	)		(400,449	)		(500,502	)		(697,330	)

Net loss available to common shareholders	$	(658,816	)	$	(1,181,369	)	$	(1,804,896	)	$	(2,026,996	)

Net loss per common share:

Continuing operations	$	(0.02	)	$	(0.03	)	$	(0.05	)	$	(0.06	)
Discontinued operations	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.03	)
Net loss	$	(0.03	)	$	(0.05	)	$	(0.07	)	$	(0.09	)

Weighted average shares outstanding		26,722,789			24,301,584			26,244,721			23,778,771

See accompanying notes to consolidated financial statements

-4-

Advanced Growing Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

	For the six months ended
	March 31, 2009			March 31, 2008

Operating Activities

Net loss from continuing operations	$	(1,304,394	)	$	(1,329,666	)
Net loss from discontinued operations		(500,502	)		(697,330	)
Net loss		(1,804,896	)		(2,026,996	)
Adjustments to reconcile net loss from continuing
operations to net cash provided by (used in) operating activities:

Depreciation and amortization		161,891			108,066
Common shares issued for services		226,211			58,170
Non-cash interest expense		42,812			-
Penalty incurred on preferred stock					63,333
Loss on sale of equipment		546			-
Changes in operating assets and liabilities
Accounts receivable		(60,409	)		(185,173	)
Inventories		1,160			94,244
Other assets		(4,180	)		207
Accounts payable and accrued expenses		724,302			237,828
Net cash provided by (used in) operating activities of
discontinued operations		469,594			644,333

Net cash used in operating activities		(261,449	)		(1,005,988	)

Investing Activities

Purchases of property and equipment		(8,941	)		(108,926	)
Net cash provided by (used in) investing activities of
discontinued operations		29,804			(62,924	)

Net cash used in investing activities		20,863			(171,850	)

Financing Activities

Bank overdraft		(22,952	)		-
Proceeds on notes payable		373,456			50,000
Payments on capital lease obligations		(5,372	)		43,499
Payments on note payable		(70,785	)		22,067
Net cash provided by (used in) financing activities of
discontinued operations		-			74,371

Net cash provided by financing activities		274,347			802,325

Net increase (decrease) in cash and cash equivalents		33,761			(375,513	)

Cash and cash equivalents at beginning of year		-			375,513

Cash and cash equivalents at end of year	$	33,761		$	-

Supplemental Disclosure of Cash Flow Information

Cash paid for interest	$	130,917		$	87,660

Supplemental Disclosure of Non-Cash Information

Conversion of convertible notes payable	$	-		$	430,000
Assets returned under a capital lease	$	60,142		$	-
Stock issued for interest on convertible notes	$	-		$	50,559
Warrants issued with convertible notes	$	-		$	195,605

See accompanying notes to consolidated financial statements

-5-

ADVANCED GROWING SYSTEMS, INC AND SUBSIDIARIES

Notes to the Interim Consolidated Financial Statements

~~December~~March 31, ~~2008~~2009

(Unaudited)

Note 1, Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q of regulation S-X. They do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, except as disclosed herein there has been no material change in the information disclosed in the notes to consolidated financial statements for the period ended September 30, 2008 included in Advanced Growing Systems, Inc.’s (the “Company”) Form 10-K, as filed with the Securities and Exchange Commission (“SEC”). The interim unaudited consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the ~~three~~six months ended ~~December~~March 31, ~~2008~~2009 are not ~~necessarily~~ necessarily indicative of the results that may be expected for the year ending September 30, 2009.

Note 2, Going Concern

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principals generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has sustained substantial losses and has a significant working capital deficit. The Company intends to generate positive cash flows from operations through increased production and sales of organic fertilizer and financing activities through debt issuances and from warrant exercises by equity holders. There can be no assurance the Company will be able to obtain this additional capital in the future. The Company has no other committed sources or arrangements for additional financing as of the time of this report.

Note 3, Discontinued Operations

In September 2008, the Board of Directors approved a plan to close Advanced Nurseries, Inc. (“ANI”) and begin a voluntary liquidation of the remaining assets. ANI has incurred over $4,~~300~~500,000 in losses since its inception and the outlook for the nursery industry warranted this decision. The Level Four drought imposed by the director of the Georgia Environmental Protection Division, which reduced and eliminated outdoor watering, deepening credit crisis and contraction of the housing industry made the outlook for ANI unfavorable. The future outlook for ~~the next two years of~~ operations would result in ~~further~~additional losses for a division that has not produced profits to date. There have been some attempts to sell the nursery to other competitors, but the economic environment did not warrant any offers.

The majority of the assets of the business have been disposed. The remaining assets consist mainly of cash and trade receivables. Trade receivables have been reduced to estimated net realizable value. ~~Plant,~~All ~~property~~leased and ~~equipment~~financed vehicles ~~were~~have ~~also reduced~~been ~~because~~returned ofto the ~~return~~original ~~and~~parties. ANI ~~sale~~has received notices from the Northern Georgia District of ~~remaining~~Bankruptcy ~~vehicles~~Court ~~and~~forcing it into ~~equipment. This~~an ~~activity~~involuntary ~~yielded~~bankruptcy aunder ~~charge~~the laws of ~~$112,803~~bankruptcy court. Management ~~for~~is ~~the~~completing ~~return and~~its ~~liquidation~~submission of ~~these~~all ~~assets~~necessary responses to the court.

The plan of liquidation is to liquidate all of the assets that are owned by ANI, to return all leased or financed vehicles and to collect all accounts receivable for sales prior to the closure date. Management anticipates that this will take approximately six months to complete, or by March 31, 2009, at which time, ANI will file dissolution papers with the Georgia Secretary of State and cease its existence.-6-

-4-

ADVANCED GROWING SYSTEMS, INC AND SUBSIDIARIES

Notes to the Interim Consolidated Financial Statements

December 31, 2008

(Unaudited)

The following table summarizes the components of the assets and liabilities from discontinued operations reported in the Consolidated Balance Sheets as of ~~December~~ March 31:

	2008		2007
	2009		2008
Cash	$	1,063	$	-
Accounts receivable, net		334,579		1,661,251
Inventories		-		1,977,470
Property and Equipment, net		-		1,027,167
Other assets		-		18,894
Total assets	$	335,642	$	4,684,782
Accounts payable		2,~~351~~505,~~272~~598		2,618,510
Accrued liabilities		147,176		355,464
Line of credit		~~178~~208,~~848~~124		714,483
Lease/debt obligations		-		274,342
Total liabilities	$	2,~~677~~860,~~296~~898	$	3,962,799

The following table summarizes certain operating data for discontinued operations for the 3six months ended ~~December~~March 31:

	2008			2007
	2009			2008
Net sales	$	204,187		$	24,~~288~~039,~~845~~364
Cost of goods sold		~~202~~236,~~072~~521			12,~~562~~789,~~537~~289
Gross profit		2,116			726,308
Gross profit (loss)		(32,334	)		1,250,075
Administrative expenses:
Operating expenses		~~167~~260,~~797~~294			~~814~~1,~~788~~549,178
Occupancy expenses		( 1211,~~700~~138	)		88166,~~882~~766
Advertising expenses		-35			17,~~609~~785
Depreciation and amortization		-			65131,~~412~~440
Total administrative expenses		~~155~~249,~~097~~191			~~970~~1,~~691~~855,169
Interest expense		1,117			37,858
Loss from operations		(281,525	)		(605,094	)
Other expense		162,803			14,641
Interest expense		7,101			61,146
Net loss for discontinued operations	$	(316,902	)	$	(296,881	)
Other expense		211,876			31,090
Net loss for discontinued operations	$	(500,502	)	$	(697,330	)

Note 4, Critical Accounting Policies

Our critical accounting policies, including the assumptions and judgements underlying them, are disclosed in our fiscal 2008 Form 10-K in Note 3- Summary of Significant Accounting Policies included in our Consolidated Financial Statements. There were no significant changes to our critical accounting policies during the three months ended December 31, 2008. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions.

-57-

ADVANCED GROWING SYSTEMS, INC AND SUBSIDIARIES

Notes to the Interim Consolidated Financial Statements

~~December~~March 31, ~~2008~~2009

(Unaudited)

Note 5, Income Taxes

The Company and its subsidiaries file a consolidated federal tax return with the Company being the common parent corporation of the affiliated group and have executed a tax sharing agreement across corporate lines. Deferred tax assets and liabilities are recognized for the effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Substantially all of the tax benefit is attributable to the net operating losses generated during the current fiscal periods.

Management has determined that the deferred tax asset may not be realized in the short term. Therefore, due to the short operating history of the Company, management has recorded a valuation allowance to reduce the deferred tax asset to zero. The net operating loss carryovers from the fiscal years ended September 30, 2006, 2007 and 2008 of $825,416, $2,759,322 and $7,571,725 respectively, will expire in 2026, 2027 and 2028, respectively, if not utilized.

Note 6, Notes Payable

In December 2008, the Company issued a junior secured short term note to Conative Capital Management, LLC (“Conative”) for $250,000. The note is a six month note due on June 10, 2009 and accrues interest at 18%, payable in cash at the end of each month. The Company issued 44,000 shares of the Company’s common stock valued at $.20 per share, the spot price of the stock at the time of the transaction, at closing of this transaction. The value of these shares was $8,800. The Company will also issue 44,000 shares of the Company’s common stock to Conative at the end of each ~~moth~~month that the note is outstanding. The Company has issued 264,000 shares to be held by an escrow agent to be issued at the end of each month. The value of these shares was $52,800. As of March 31, 2009 there has been 132,000 shares issued by the escrow agent to Conative.

Note 7, Related Party

In ~~December~~ ~~2008, the Company issued 10,000 shares of common stock to each Board of~~March ~~Directors~~2009 ~~at $.25 per share,~~ the ~~spot price at the date of the meeting for attendance at the December 14, 2008 Board of Directors meeting. The 60,000 shares were valued at $15,000. The~~ Company ~~also~~ issued ~~50,000 shares of common stock at $.22 per share, the spot price at the date of issuance, to employees of the Company. These shares had a value of $11,000. The Company also issued~~ 100,000 warrants, at $.50 per warrant, each to the President of Organic Growing Systems, Inc. (“OGSI”) and to the CFO of the Company, per their employment ~~agreements~~agreement. The value of these warrants was calculated at $3211,~~656~~418.

In December 2008, the Company issued 10,000 shares of common stock to each Board of Directors at $.25 per share, the spot price at the date of the meeting for attendance at the December 14, 2008 Board of Directors meeting. The 60,000 shares were valued at $15,000. The Company also issued 50,000 shares of common stock at $.22 per share, the spot price at the date of issuance, to employees of the Company. These shares had a value of $11,000. The Company also issued 100,000 warrants at $.50 per warrant, each to the President of OGSI and to the CFO of the Company, per their employment agreements. The value of these warrants was calculated at $32,656.

Note 8, Stock for Services

~~The~~During the second quarter the Company issued 5617,~~000~~900 shares at $.2319 per share, tothe ~~one~~spot price at time of ~~the~~issuance, ~~Company’s~~to ~~SEC attorneys~~a ~~for~~company ~~services~~providing ~~rendered~~marketing inmaterials ~~2008~~for the Company. The value of these shares ~~were~~ was calculated at $123,~~880~~401. The Company also issued 9024,000 shares ~~and 207,332 shares~~ at $.1925 ~~and $.23~~ per share, ~~respectively~~the spot price at time of issuance, to ~~the~~a client ~~other~~based ~~SEC attorney~~upon ~~for~~the ~~services~~number ~~rendered~~of intons ~~2008. The~~shipped ~~value~~to ofthe ~~these~~client. These shares ~~was~~were ~~calculated~~valued at $176,~~100 and $47,686, respectively~~000. The Company also ~~issue~~ 19issued 4,~~368~~000 shares at $.2326 per share, the spot price ~~when~~at the ~~offer~~end ~~for~~of ~~stock~~February ~~was~~when ~~made, to~~services awere ~~service~~rendered, ~~provider~~for ofinformation technology ~~OGSI~~services ~~in lieu of cash~~rendered. These shares were valued at $41,~~455~~040. The Company also issued 3070,000 shares at $.19 per share, the spot price at the ~~time~~end of ~~the transaction~~ February, to ~~the~~one ~~group~~of ~~that brought~~ the ~~Marquette~~Company’s ~~financing~~SEC toattorneys ~~OGSI~~for services rendered. ~~The~~ ~~value~~These shares ofwere ~~these~~valued ~~shares~~at ~~was $5~~13,~~700~~300. The Company also issued 44153,~~000~~400 shares at ~~$.20~~a price per share, ~~the spot~~ranging ~~price~~from at$.14 ~~the~~to ~~time~~$.25 offor ~~the~~invoices ~~agreement,~~due to a ~~client~~raw ~~based~~material ~~upon~~supplier dated ~~the~~from ~~number~~December ~~of tons~~31, ~~shipped~~2008 toand ~~the~~January ~~client~~31, 2009. These shares were valued at $831,~~800~~368.

~~-6-~~During the first quarter the Company issued 56,000 shares at $.23 per share to one of the Company’s SEC attorneys for services rendered in 2008. These shares were calculated at $12,880. The Company also issued 90,000 shares and 207,332 shares at $.19 and $.23 per share, respectively, to the other SEC attorney for services rendered in 2008. The value of these shares was calculated at $17,100 and $47,686, respectively. The Company also issue 19,368 shares at $.23, the spot price when the offer for stock was made, to a service provider of OGSI in lieu of cash. These shares were valued at $4,455. The Company also issued 30,000 shares at $.19 per share, the spot price at the time of the transaction, to the group that brought the Marquette financing to OGSI. The value of these shares was $5,700. The Company also issued 44,000 shares at $.20 per share, the spot price at the time of the agreement, to a client based upon the number of tons shipped to the client. These shares were valued at $8,800.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and plan of operations together with our financial statements and related notes appearing elsewhere in this Quarterly Report. Various statements have been made in this Quarterly Report on Form 10-Q that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may also be made in Advanced Growing’s other reports filed with or furnished to the SEC and in other documents. In addition, from time to time, Advanced Growing through its management may make oral forward-looking statements. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely” and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Advanced Growing undertakes no obligation to update or revise any forward-looking statements.

Results of Operations

The Company had a net loss from continuing operations of $~~829~~475,~~179~~215 ($.0302 per share) for the three months ended ~~December~~March 31, ~~2008~~2009 compared to a net loss from ~~continuing~~ continuing operations of $~~548~~780,~~746~~920 ($.0203 per share) for the three months ended March 31, ~~December~~2008. For the six months ended March 31, ~~2007~~2009 the Company had a net operating loss of $1,304,394 compared to $1,329,666 for the six months ended March 31, 2008. Net sales from continuing operations increased $~~286~~599,~~408~~892, or 177%, for the three months ended ~~December~~March 31, ~~2008~~2009, as did all categories of expenses as the Company. Net sales for the six months ended March 31, 2009 increased $886,300 over the six month period ended March 31, 2008. Cost of goods sold increased $523,544 for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. For the six months ended March 31, 2009 the cost of goods sold increased $730,358 compared to the six months ended March 31, 2008. This increase is attributable to an increase in sales, as well as the Company using a contract manufacturer to help fulfill several customer’s orders resulting in a lower gross margin on those sales. For the three months ended ~~December~~March 31, 2009, interest expense increased $54,530 over the same period ended March 31, 2008. For the six months ended March 31, 2009 interest expense increased $~~117~~171,~~417~~947 over the same six month period ended ~~December~~ March 31, ~~2007~~2008. This increase is due to the amortization and interest ~~paid~~ paid on the Lamassu note. Depreciation and amortization expense ~~increased~~ increased $2825,~~434~~391 for the three months ended ~~December~~March 31, ~~2008~~2009 over the same three ~~month~~ month period ended ~~December~~March 31, ~~2007~~2008. For the six months ended March 31, 2009 depreciation and amortization increased $53,825 compared to the six months ended March 31, 2008. This increase is attributable to the addition ~~adding~~of the second and third manufacturing lines at the Mississippi plant. Operating expenses for the three month period ended ~~December~~ March 31, 2009 ~~2008~~decreased ~~increased~~ $~~118~~285,~~702~~215 over the three month period ended ~~December~~March 31, ~~2007~~2008. ~~This~~ For ~~increase~~the ~~was~~six ~~generated~~months byended ~~the~~March ~~maintenance~~31, ~~required~~2009 atoperating expenses decreased $166,513 compared to the six months ended March 31, 2008. These ~~production~~decreases ~~facility~~are asattributable ~~well~~to asclosing the ~~increased~~Houston, ~~utility~~TX ~~expenses~~warehouse ~~for~~and ~~the~~well ~~facility~~as ~~for~~cutting ~~the~~back ~~increase~~on insales, ~~manufacturing~~general and administration expenses. Overall, management feels that all of the infrastructure, sales and general and administrative expenses are in place to handle the upcoming in-season for the Company. These levels ~~should~~ are not expected to increase over the next three fiscal quarters in order to achieve the projections for the year.

Plan of Operations

~~OGSI~~For ~~has~~the ~~continued~~three ~~building~~months ~~upon~~ended ~~the~~March ~~growth~~31, ~~that~~2009 itOGSI ~~experienced~~increased intheir ~~2007. For~~revenue $475,215 as compared to the three months ended ~~December~~March 31, 2008. For ~~OGSI~~the ~~increased~~six ~~their revenue~~months ~~approximately~~ended ~~$280~~March 31,~~000~~ as2009 ~~compared~~revenues toincreased $780,920 over the ~~three~~six months ended ~~December~~ March 31, ~~2007~~ 2008. The increase is due to a more mature sales approach as ~~compared~~well toas the ~~re-organization~~customers ~~that~~learning ~~was~~the ~~taking~~benefits ~~place~~of ~~last~~using ~~year~~our product as compared to synthetic fertilizers. ~~The limitation~~Management ~~has~~feels that revenues could have been even higher if the ~~lack~~manufacturing facility had a more dependable manufacturing process. Sales for the first six months of ~~production~~2009 ~~capacity~~have ~~due~~exceeded the sales for all of fiscal 2008 of 1,286,860. Management is working with an engineering firm to ~~downtime~~improve the up front problems of the manufacturing process. In the past, the emphasis was placed on the back end of the manufacturing ~~lines~~process to ensure that the end product was consistent and to specifications. The ~~Company~~engineering isfirm ~~working~~changed onthis emphasis to the front end to eliminate damaging materials from entering the production process. By changing this ~~issue~~emphasis bythe ~~finding~~raw materials entering the production process is consistent and ~~maintaining~~will anlead ~~inventory~~to fewer downtimes as a result of the ~~needed~~machinery ~~parts~~now ~~and~~processing ~~supplies~~a souniform ~~when~~raw material from the ~~machinery~~beginning of the isprocess. The ~~down~~sales itteam is ~~down~~continuing ~~for~~to ~~hours~~discuss ~~instead~~the positives of ~~days~~the organic fertilizer products. Sales have been primarily focused upon sod farmers and municipal entities, but once a consistent production capacity can be obtained the sales force will begin working with larger farmers in an effort to obtain larger volume customers. The sales team has been pursuing many larger farms and believes that the ~~second~~ third quarter will produce year long commitments from some of the larger clients that have been pursued over the last six months. This is typically considered the planning time for the industry and the Company feels that some of the bigger groups will begin purchasing more of the product to be ready for the ~~fertilization~~ fertilization period. For the last twelve months, the sales team has been able to sell all of the fertilizer product produced or available to be sold. They feel that they can continue to sell all of the finished goods produced and maintain a backlog of potential sales.

Management feels that by the ~~end~~engineering offirm will have the ~~second~~necessary ~~fiscal~~changes ~~quarter~~made ~~that~~to the facility ~~manufacturing~~by ~~plant~~ the middle part of May and will be ~~consistently~~well ~~producing~~on ~~between~~their ~~150~~way ~~and~~to getting the production capacity to the 150-200 tons per day, ~~once~~before ~~all~~the ofend ~~the~~of ~~extra~~May. The ~~parts~~engineering ~~and~~firm ~~supplies~~will ~~are~~be onpaid ~~hand. The~~in Company ~~has~~stock, aup ~~large~~to ~~feedstock~~$500,000, ~~contract~~for ~~with~~services arendered ~~litter producer~~ in ~~the~~increasing ~~immediate~~manufacturing capacity. The ~~area~~engineering ~~who~~firm will bealso ~~able~~share in a percentage of togross ~~deliver~~margin ~~the~~dollars ~~feedstock~~once toit ~~support~~gets ~~the~~per ~~budgeted~~day ~~sales~~production ~~for~~capacity ~~the~~above 100 tons per ~~year~~day. This capacity along with the anticipated sales should be able to to generate enough gross profit to bring the Company to break even or positive ~~net~~ net income.

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Liquidity and Capital Resources

At ~~December~~ March 31, ~~2008~~2009, we had total current assets of $~~507~~579,~~852~~689, consisting primarily of of accounts receivable and inventories. Current liabilities of $5,~~298~~914,~~036~~170 consisting primarily of accounts payable, accrued expenses and term and convertible notes payable. The Company has accumulated a net loss from inception through ~~December~~March 31, ~~2008~~2009 of $1617,~~377~~036,~~985~~082. Stockholders’ deficit as of ~~December~~ March 31, 2008 ~~2007~~ was $3,~~142~~733,~~624~~674. The Company has recorded gross revenues of $~~483~~1,~~313~~422,124 for the ~~three~~six months ended ~~December~~March 31, ~~2008~~2009.

Off Balance Sheet Arrangements

We ~~have~~do not nohave any off-balance sheet arrangements.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

We do not hold any derivative instruments and do not engage in any hedging activities

ITEM 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures in accordance with the Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the period ended ~~December~~ March 31, ~~2008~~2009 our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and properly reported.

Specifically, the Company has had several complex equity type transactions that have historically required audit adjustments to ensure that the transactions are properly valued, accounted for and disclosed. Management has worked towards evaluating and implementing improvements based upon the Sarbanes-Oxley Act of 2002 and is fully reporting under this act.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s internal control over financial reporting as of ~~December~~March 31, ~~2008~~ 2009. In In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in in Internal Control — Integrated Framework. Based on this evaluation, our ~~Chief~~ Chief Executive Officer and Chief Financial Officer concluded that, as of ~~December~~ March 31, ~~2008~~ 2009, our internal control over financial reporting was effective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II- ~~Other Information~~OTHER INFORMATION

ITEM 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a materially adverse effect on our consolidated financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending, or to the knowledge of the executive officers of our Company (except as described below) or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 1A. Risk Factors

There are no material changes to our risk factors previously disclosed on Form 10-K, dated September 30, 2008.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None~~There were no unregistered sales of Equity Securities and Use of Proceeds during the period ended March 31, 2009.

ITEM 3. Defaults Upon Senior Securities

~~None~~There were no defaults upon senior securities during the period ended March 31, 2009.

ITEM 4. Submission of Matters to a Vote of Security Holders

~~None~~There were no Matters submitted to a Vote of Security Holders during the period ended March 31, 2009.

ITEM 5. Other Information

~~None~~There is no information required to be disclosed under this item which was not previously disclosed.

ITEM 6. Exhibits

231.1* Plan Certification of ~~Liquidation~~Christopher ofJ. ~~Advanced~~Nichols, ~~Nurseries~~Principal Executive Officer pursuant to 18 U.S.C. Sec.1350, ~~Inc~~as adopted pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002

1031.1*2 ~~Employment~~Certification ~~Agreement~~ of Dan K. Dunn, Principal Financial and Accounting Officer pursuant to 18 U.S.C. Sec. 150, as adopted pursuant to Sec. 203 of the Sarbanes-Oxley Act of 2002

1032.2*1 ~~Conative~~Certification ~~Note~~of ~~Purchase~~Christopher ~~Agreement~~J. Nichols, Principal Executive Officer pursuant to 18 U.S.C. Sec1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002

3132.~~1** Certification~~2 Certification of Dan K. Dunn, Principal ~~Executive~~Financial ~~Officer~~and Accounting Officer pursuant to 18 U.S.C. Sec. 1350., as adopted pursuant to Sec. ~~302~~906 of the Sarbanes-Oxley Act of 2002

~~31.2** Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Sec. 150, as adopted pursuant to Sec. 203 of the Sarbanes~~-~~Oxley Act of 2002~~11-

32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Sec 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002

32.2** Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002

* Previously Filed

** Filed Herein

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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.

ADVANCED GROWING SYSTEMS, INC.

/s/ Chris J. Nichols

Chris J. Nichols

Principal Executive Officer

Dated: ~~February~~May 1815, 2009

ADVANCED GROWING SYSTEMS, INC.

/s/ Dan K. Dunn

Dan K. Dunn

Principal Financial Officer

Dated: ~~February~~May 1815, 2009

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