0001165527-13-000019.txt : 20130107 0001165527-13-000019.hdr.sgml : 20130107 20130107131347 ACCESSION NUMBER: 0001165527-13-000019 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20130107 DATE AS OF CHANGE: 20130107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN SOIL TECHNOLOGIES INC CENTRAL INDEX KEY: 0001031896 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 860671974 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22855 FILM NUMBER: 13514466 BUSINESS ADDRESS: STREET 1: 12224 MONTAGUE STREET CITY: PACOIMA STATE: CA ZIP: 91331 BUSINESS PHONE: 818-899-4686 MAIL ADDRESS: STREET 1: 12224 MONTAGUE STREET CITY: PACOIMA STATE: CA ZIP: 91331 FORMER COMPANY: FORMER CONFORMED NAME: NEW DIRECTIONS MANUFACTURING INC DATE OF NAME CHANGE: 19970625 10-K 1 g6511.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2012 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________ Commission file number: 000-22855 AMERICAN SOIL TECHNOLOGIES, INC. (Name of Small Business Issuer as specific in its Charter) Nevada 95-4780218 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 7745 Alabama Ave, # 9, Canoga Park, California 91304 (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number, including area code: (818) 899-4686 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods 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 [ ] 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 (ss.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 [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained herein, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] As of January 3, 2013, the number of shares of common stock outstanding was 68,090,590. As of January 3, 2013, the aggregate market value of our common stock held by non-affiliates was approximately $114,777 (based upon 24,951,469 shares at $0.0046 per share). DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated herein by reference: Form 10K for the fiscal year ended September 30, 2010 filed on January 13, 2011; Form 10Q for the quarterly period ended December 31, 2010 filed on February 22, 2011; Form 10Q for the quarterly period ended March 30, 2011 filed on May 16, 2011; Form 10Q for the quarterly period ended June 30, 2011 filed on August 15, 2011 and as amended and filed on August 28, 2011; Form 10K for the fiscal year ended September 30, 2011 filed on December 29, 2011; Form 10Q for the quarterly period ended December 31, 2011 filed on February 8, 2012; Form 10Q for the quarterly period ended March 30, 2012 filed on May 7, 2012; Form 10Q for the quarterly period ended June 30, 2012 filed on August 8, 2012. TABLE OF CONTENTS Page ITEM 1 DESCRIPTION OF BUSINESS.......................................... 3 ITEM 2 DESCRIPTION OF PROPERTY.......................................... 6 ITEM 3 LEGAL PROCEEDINGS................................................ 6 ITEM 4 MINE SAFETY DISCLOSURES.......................................... 7 ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......... 7 ITEM 6 SELECTED FINANCIAL DATA.......................................... 8 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................ 9 ITEM 8 FINANCIAL STATEMENTS............................................. 13 ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE......................................... 13 ITEM 9A CONTROLS AND PROCEDURES.......................................... 14 ITEM 9B OTHER INFORMATION................................................ 14 ITEM 10 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT................ 14 ITEM 11 EXECUTIVE COMPENSATION........................................... 16 ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.................................. 20 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................... 21 ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES........................... 22 ITEM 15 EXHIBITS ........................................................ 23 SIGNATURES................................................................. 24 2 PART I ITEM 1. BUSINESS DEVELOPMENT OF BUSINESS American Soil Technologies, Inc., formerly Soil Wash Technologies, Inc., was incorporated in California on September 22, 1993 as a soil remediation business. In May 2002, we discontinued the soil remediation business. BUSINESS OF ISSUER We develop, manufacture on an outsourced basis and market advanced products that decrease the need for water and improves the soil in the "Green Industry" consisting of agriculture, turf and horticulture. Our products enhance growing environments and reduce the environmental damage caused by common growing practices. We manufacture on an outsourced basis three primary products: Agriblend(R), a patented soil amendment developed for agriculture; Soil Medic, a patented slow release liquid fertilizer; developed for homes, parks, golf courses and other turf related applications; and The Agro Tower, developed for vertical farming. We market our products primarily in the United States. We are continually attempting to add sales representatives and distributors in both the agriculture and turf industries. On July 7, 2006, we acquired Smart World Organics, Inc. ("Smart World") as a wholly-owned subsidiary. Smart World is a "C" corporation formerly located in Hudson, Florida. Smart World developed organic and sustainable products through a unique research approach both in the field and with Universities and agricultural schools in Florida. The products were sold directly to the end user and through distributors in the United States Smart World provided next-generation organic and sustainable fertilizers to commercial and residential customers worldwide. Smart World also provided advanced, custom-formulated products built to suit unusual growing conditions and environments. The product line included homogenized fertilizers, non-toxic insect controls, plant protectants, seed, soil and silage inoculants. We issued 2,300,000 shares of common stock to the shareholders of Smart World in exchange for 100% of the shares of common stock of Smart World and assumed approximately $400,000 in notes and trade payables. On December 20, 2006, we entered into an Intellectual Property Purchase Agreement with Ray Nielsen whereby we purchased from Mr. Nielsen any and all intellectual property of Mr. Nielsen, including all formulas developed by Mr. Nielsen over the past 30 years, including but not limited to all formulas and intellectual property used in the business of Smart World, including all graphics and logos; all domain names and URL's; any proprietary software and its source code; all existing content and HTML files; all branding and trademarks; all trade names; all services marks; all copywritten material; all patents; and 3 all products and proceeds of the foregoing, in any form whatsoever and wheresoever located (collectively the "Intellectual Property"), in exchange for a convertible debenture in the amount of $1,500,000, bearing an interest rate of 8% per annum (the "Convertible Debenture"). The Convertible Debenture was convertible at the option of Mr. Nielsen at any time prior to the maturity date into shares of our common stock. The Debenture is deemed no longer convertible due to the expiration of the conversion rights. The Convertible Debenture is secured by the Intellectual Property. The principal of the Debenture and any unpaid accrued interest thereon was due and payable on January 19, 2008. We were to make quarterly interest payments until the maturity date. A dispute has arisen between Mr. Nielsen and us regarding the Convertible Debenture and the uniqueness and value of the Intellectual Property. See "Legal Proceedings." Due to losses incurred, in 2008, management terminated Smart World employees, consolidated Smart World operations with those of American Soil, and continues to seek sales of certain of its products. However, sales of Smart World related product have been minimal. COMPETITION To the best knowledge of our management, there is no direct competition for our Agriblend(R) product, however, earlier polymer based technology was very expensive and the remembrance of its cost has a negative effect on marketing Agriblend(R). Accordingly, educating the end user regarding the benefits of using Agriblend(R) and gaining general acceptance of the new "micro grain" technology are obstacles to marketing the product. The slow release fertilizer, "Soil Medic" does not seem to have competition at this time however, the patent which relates to the technology is expiring in Fiscal 2014. There is some competition for the organic products that we distribute that stem from Smart World. 4 SOURCES AND AVAILABILITY OF RAW MATERIAL AND PRINCIPAL SUPPLIERS Our products are proprietary blends that include cross-linked micro grain polymer in the blend. Cross-linked polymer is manufactured by several chemical companies that include Stockhausen; BASF; Ciba Specialties; and Floerger. All other components of our products are readily available commercially throughout the world. Agriblend(R) products are custom blended in accordance with our specifications at a blending facility located near Truth or Consequences, New Mexico. Our warehouse facilities are located in Phoenix, Arizona and Canoga Park, California. Nutrimoist(R) is blended by us through contract blenders and is a combination of different formulations, which include our polymer products. Two licensees under our patent manufacture our liquid slow release fertilizer. Custom blending of Soil Medic, as needed, is performed by us through independent blenders. The Agro Tower is manufactured for us by Make-It Manufacturing in Paso Robles, California. DEPENDENCE ON MAJOR CUSTOMERS We are dependent on three customers for a substantial portion of our sales. INTELLECTUAL PROPERTY We have six patents on the M-216 Polymer Injector machine designed to install our Nutrimoist(R) product into mature turf. On March 21, 2006, we acquired the U.S. patent on a slow release liquid fertilizer through our acquisition of Advanced Fertilizer Technologies, Inc. We have exclusive worldwide manufacturing/marketing rights to patented super absorbent cross-linked polymer application technology. The underlying patents include United States Patent number 5,649,495 and 5,868,087, commonly known and described as "Agricultural Retention Mixture and Application Technique." We have exclusive worldwide marketing rights to the patent pending linear polymer product known as the Sircle Saver Sack(TM). We own registered trademarks on the names, Agriblend(R), Nutrimoist(R), Hydroganic(R) and Prosper(R). We have worldwide marketing rights to a patented product known as the Agro Tower. We own the right to numerous formulas used to manufacture organic and sustainable soil amendments, fertilizers and insecticides. GOVERNMENT APPROVAL Agriblend(R) and our other polymers are subject to regulatory standards developed by the Environmental Protection Agency ("EPA") that are applicable to 5 maximum monomer concentrations in polymers. Polymer products cannot exceed monomer concentrations of 200 mg/kg. All of the polymers we use are well below the maximum monomer standard. Many of our products are organically approved through the National Organic Program ("NOP") and registered under EPA section 25B. RESEARCH AND DEVELOPMENT COSTS We have not spent material amounts for research and development during the years ended September 30, 2012 and 2011. COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS We provide Material Safety Data Sheets on all components of our product line and comply with labeling requirement for our products. In addition, we comply with EPA regulations applicable to monomer content in its polymer additives (no greater than five-hundredths percent (0.05%)). We believe that our operations currently comply in all material respects with applicable federal, state and local laws, rules, regulations and ordinances regarding the discharge of materials into the environment. We do not believe that such compliance will have a material impact on our capital expenditures, future earnings and competitive position. No material capital expenditures for environmental control equipment presently are planned. EMPLOYEES As of the date hereof, we have three full-time employees. We hire independent contractors on an "as needed" basis only. We have no collective bargaining agreements with our employees. We believe that our employee relationships are satisfactory. ITEM 1A NON APPLICABLE ITEM 1B NON APPLICABLE ITEM 2. DESCRIPTION OF PROPERTY On April 1, 2004, we entered into a Sublease Agreement to sublet 923.50 square feet located at a facility in Pacoima, California from a related party, which required monthly rental payments of approximately $554. The Sublease Agreement expired on December 31, 2008 and we continued to rent the facilities through December 2010. In January 2011, we moved offices to a location in Canoga Park and sublease the space from a related party. The new lease is month to month and does not require lease payments as our presence in the facility is nominal. We also rent storage space in Tucson and Phoenix, Arizona for approximately $200 per month. ITEM 3. LEGAL PROCEEDINGS On or about September 21, 2007, Stockhausen, Inc. ("Stockhausen") filed a Complaint in the United States District Court, for the Middle District of North 6 Carolina, against us seeking damages. The parties entered into a settlement agreement on June 2, 2010. Under the settlement agreement, we agreed to pay Stockhausen $250,000 on or before June 23, 2010 as a compromise to Stockhausen's claims that currently total $603,921. We further agreed that we would consent to the entry of a Judgment against us in favor of Stockhausen in the amount of $603,921 if we failed to make complete and timely payment as agreed. The company was unable to make the agreed upon payment, and on July 8, 2010, Stockhausen entered a judgment for the above stated amount against the company. On or about October 4, 2007, Raymond J. Nielsen and Cheryl K. Nielsen (collectively, "Plaintiffs"), filed a Complaint in the Circuit Court in the Sixth Judicial District of Pasco County, Florida, against us and Smart World (collectively "Defendants") seeking damages, declaratory, and injunctive relief. Plaintiffs allege that Defendants failed to pay interest when due on the Convertible Debenture from Defendants to Plaintiffs, and, thus, the entire amount of the Convertible Debenture is accelerated and Plaintiffs are seeking a judgment in the amount of $1,500,000 plus interest. On December 29, 2009, the matter was settled for $400,000 and the Company had 60 days in which to remit the amount or a judgment in the entire amount claimed will be entered against us. The Company was not able to meet the terms of the settlement and have been actively communicating with the Plaintiffs to extend the terms of the settlement. To the best knowledge of our management, there are no other legal proceedings pending against us. ITEM 4. MINE SAFETY DISCLOSURES None. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITES MARKET FOR COMMON EQUITY Our common stock is currently quoted on the Over-The-Counter Bulletin Board under the Symbol "SOYL." Set forth below is the trading history of our common stock without retail mark-up, mark-down or commissions: High Low ---- --- 2011 First Quarter ......................... 0.07 0.01 Second Quarter ........................ 0.02 0.01 Third Quarter ......................... 0.02 0.01 Fourth Quarter ........................ 0.02 0.01 7 2012 First Quarter ......................... 0.02 0.005 Second Quarter ........................ 0.01 0.005 Third Quarter ......................... 0.03 0.005 Fourth Quarter ........................ 0.02 0.005 On December 27, 2012, the closing stock price was $0.0045 The above quotations are inter-dealer quotations from market makers of our common stock. At certain times the actual closing or opening quotations may not represent actual trades that took place. HOLDERS As of December, 2012, there were 283 shareholders holding certificated securities and approximately 545 shareholders currently listed in the Depository Trust Company as holding shares in brokerage accounts. Our transfer agent is Standard Registrar & Transfer Company 1528 South 1840 East, Draper, Utah 84020. DIVIDENDS We have paid no dividends on our common stock since inception and do not anticipate or contemplate paying cash dividends in the foreseeable future. RECENT SALES OF UNREGISTERED SECURITIES None ITEM 6 SELECTED FINANCIAL DATA The following table sets forth, for the periods indicated, our selected financial information: Fiscal Year Ended Fiscal Year Ended September 30, 2012 September 30, 2011 ------------------ ------------------ STATEMENT OF OPERATIONS DATA: Revenue $ 70,842 $ 139,025 Loss From Operations (538,447) (609,266) Net Loss (643,819) (721,369) Net Loss Per Share $ (0.01) $ (0.01) 8 BALANCE SHEET DATA: Current Assets $ 10,612 $ 37,584 Property and Equipment, net 219 760 Intangible Assets, net 51,809 93,256 Total Assets 10,831 131,600 Total Current Liabilities (7,456,092) (6,881,234) Accumulated Deficit (28,675,193) (28,031,374) Stockholders' Deficit $ (7,445,263) $ (6,749,634) ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report. The following information contains certain forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may," "could," "expect," "estimate," "anticipate," "plan," "predict," "probable," "possible," "should," "continue," or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. OVERVIEW We develop, manufacture and market advanced technology that decreases the need for water and improves the soil in the "Green Industry" consisting of agriculture, turf and horticulture. RESULTS OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2012 COMPARED TO SEPTEMBER 30, 2011 REVENUES Revenues for the fiscal year-ended September 30, 2012 were $70,842 compared to $139,025 for the fiscal year ended September 30, 2011, a decrease of 49%. This decrease in revenue is directly related to our inability to properly market and sell our products due to a lack of operating capital. 9 COST OF SALES Cost of goods sold decreased to $25,797 for the fiscal year ended September 30, 2012 from $56,728 for the fiscal year ended September 30, 2011. The decrease in the cost of sales directly relates to the reduction in revenue producting activity not related to royalty revenue. Our gross margins were 64% and 59% for the years ended September 30, 2012 and September 30, 2011, respectively. The increase in our gross margins was caused by a higher percentage of royalty revenue compared to the traditional sale of goods. OPERATING EXPENSES Operating expenses decreased approximately 16% for the fiscal year ended September 30, 2012 compared to operating expenses for the fiscal year ended September 30, 2011. This decrease in operating expenses is a result of many factors, which include the below items. General and administrative expenses decreased approximately 13% for the fiscal year ended September 30, 2012 compared to the fiscal year ended September 30, 2011 due to a reduction in general operational expenses. Sales and marketing expenses decreased approximately 30% for the fiscal year ended September 30, 2012 compared the fiscal year ended September 30, 2011 as we eliminated substantially all marketing efforts. Research and development costs have been eliminated as there is no additional need for research and development on our existing products. In fiscal 2012, the amortization expense of intangible assets decreased by 17% compared to fiscal 2011. Impairment of intangible assets was zero during fiscal 2012 compared to $19,000 in fiscal 2011. INTEREST EXPENSE Interest expense decreased 9% for the fiscal year ended September 30, 2012 from the period ended September 30, 2011. This decrease resulted from reduced finance charges this audited period. NET LOSS For the reasons detailed above, we experienced reduced losses in the year ended September 30, 2012 compared to the year ended September 30, 2011. Given the gross margins of our turf products as well as a renewed interest in consumer organic products for the retail market, future operating results may improve. 10 SEASONALITY Our efforts in the United States have focused on the southern states and therefore generally experience year round growing cycles, with the sale of the agricultural products preceding the growing cycle of various crops. International sales have not been significant during recent years. If the Company is able to expand into the residential and commercial segments nationally, we will experience some seasonal declines in sales during the fall and winter quarters in less temperate climates. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $3,846 and $4,356 at September 30, 2012 and September 30, 2011, respectively. Net cash used by operations was $45,510 for the year ended September 30, 2012 as compared to $162 for the year ended September 30, 2011. We have historically relied upon one of our officers and significant shareholders to provide cash to meet short term operating cash requirements. During the year ended September 30, 2012 the Company borrowed an additional $45,000 from this officer and shareholder which makes up the total amounts received from financing activities. The officer's previous note was amended with a new principal balance of $834,842. Subsequent to September 30, 2012, the officer loaned an additional $38,000. As of September 30, 2012 we had a working capital deficit of $7,445,480 (current assets less current liabilities) compared to a working capital deficit of $6,843,650 as of September 30, 2011. The increase in the working capital deficit has been caused by an increase in our current liabilities, mostly related to accrued and unpaid wages. As shown in the accompanying financial statements, we have incurred an accumulated deficit of $28,675,193 and a working capital deficit of $7,445,480 as of September 30, 2012. Our ability to continue as a going concern is dependent on obtaining additional capital and financing and operating at a profitable level. We intend to seek additional capital either through debt or equity offerings and to increase sales volume and operating margins to achieve profitability. Our working capital and other capital requirements during the next fiscal year and thereafter will vary based on the sales revenue generated by our internal workforce and the ability of our distribution and sales network to grow. We will consider both the public and private sale of securities and debt instruments for expansion of our operations if such expansion would benefit our overall growth and income objectives. Should sales growth not materialize, we may look to these public and private sources of financing. There can be no assurance, however, that we can obtain sufficient capital on acceptable terms, if at all. Under such conditions, failure to obtain such capital likely would, at a minimum, negatively impact our ability to timely meet our business objectives. 11 CRITICAL ACCOUNTING POLICIES Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements require the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. The methods, estimates, and judgment we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. The SEC has defined "critical accounting policies" as those accounting policies that are most important to the portrayal of our financial condition and results, and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based upon this definition, our most critical estimates are: long-lived assets. Our most critical accounting policies applicable to the periods presented are noted below. For additional information see Note 2, "Summary of Significant Accounting Policies" in the notes to our consolidated financial statements appearing elsewhere in this report. Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available, and actual results may differ significantly from these estimates. REVENUE RECOGNITION We generate our revenues from the sale of products and services and recognize revenue when the following fundamental criteria are met: * persuasive evidence that an arrangement exists; * the products and services have been delivered; * selling prices are fixed and determinable and not subject to refund or adjustment; and * collection of amounts due is reasonably assured. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer, in accordance with the terms specified in the arrangement with the customer. Revenue recognition is deferred in all instances where the earnings process is incomplete. We provide for sales returns and allowances in the same period as the related revenues are recognized. We base these estimates on our historical experience or the specific identification of an event necessitating a reserve. To the extent actual sales returns differ from our estimates, our future results of operations may be affected. Should changes in conditions cause management to determine that these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected. 12 ACCOUNTS RECEIVABLE We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer's current credit worthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. While our credit losses have historically been within our expectations and the allowance established, we may not continue to experience the same credit loss rates as we have in the past. Our accounts receivable are concentrated in a relatively few number of customers. Therefore, a significant change in the liquidity or financial position of any one customer could make it more difficult for us to collect our accounts receivable and require us to increase our allowance for doubtful accounts, which could have a material adverse impact on our consolidated financial position, results of operations and cash flows. LONG-LIVED ASSETS The Company reviews its fixed assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT FINANCIAL RISKS Not Applicable ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required to be filed pursuant to this Item 8 begin on page F-1 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES As required by SEC Rule 13a-15 or Rule 15d-15, our Chief Executive and Principal Accounting Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures are effective as of September 30, 2012 and that they do allow for information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act to be recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive and Principal Accounting Officer as appropriate to allow timely decisions regarding required disclosure. 13 INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with, and as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits us to provide only management's report in this annual report. ITEM 9A(T). CONTROLS AND PROCEDURES Not Applicable ITEM 9B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS Our directors and executive officers are as follows: Name Age Position ---- --- -------- Carl P. Ranno 72 Director, Chief Executive Officer, President, Chief Financial Officer Neil C. Kitchen 64 Director, Vice President Diana Visco 54 Secretary Scott Baker 54 Director 14 MR. CARL P. RANNO, DIRECTOR, CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF FINANCIAL OFFICER, received a degree in Economics from Xavier University in Cincinnati, Ohio and his Juris Doctor from the University of Detroit School of Law. Mr. Ranno became a Director in September 2001 and Chief Executive Officer and President in May 2002. For the five years prior to becoming the President/CEO of the Company, he had acted as an advisor in strategic planning, mergers and acquisitions and as a securities attorney to numerous public companies. He has served as president and CEO of public and private companies. He is also a member of the board of directors of Central Utilities Production Company. MR. NEIL C. KITCHEN, DIRECTOR, VICE PRESIDENT, has over 20 years experience in business management in the environmental sector including management of companies involved in general engineering, toxicology, and environmental cleanup. Prior to joining us in 1994, he was Vice President of a publicly-held environmental cleanup company. He holds a B.S. in Business Management from San Diego State University and a class "A" General Engineering license with Hazardous Material Certification from the State of California. MS. DIANA VISCO, SECRETARY, Diana Visco, Secretary, has worked with us since January 1999. Prior to that, she worked for 21 years with the Americana Leadership College, Inc., traveling to all of its offices and conferences across the USA and Caribbean in addition to Australia, New Zealand, Canada and Europe. Ms Visco spent several years as a traveling administrator and as International Administrator handling all aspects of finance, administration as well as marketing and promotion in addition to being assistant to the President of that company. She is the daughter of Mr. Louie Visco, a former director who passed away on January 3, 2008 MR. SCOTT BAKER, DIRECTOR, has practiced law in Arizona for the past 19 years. He graduated from the University of Arizona with a B.S. in business in 1978 and obtained his J.D. from the University of Arizona in 1981. As a general practitioner, he has appeared before the U.S. District Tax Court and the U.S. District Court. Directors serve until the next annual meeting or until their successors are qualified and elected. Officers serve at the discretion of the Board of Directors. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and certain officers, as well as persons who own more than 10% of a registered class of our equity securities, ("Reporting Persons") to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. Based solely upon a review of the copies of such forms, we believe that all Reporting Persons have complied on a timely basis with all filing requirements applicable to them, except that Louie Visco filed one late report on Form 4 disclosing his conversion of debt to equity. 15 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE Set forth below is a summary of compensation for our principal executive officer and our two most highly compensated officers other than our principal executive officer (collectively, the "named executive officers") for our last two fiscal years. There have been no annuity, pension or retirement benefits ever paid to our officers, directors or employees. With the exception of reimbursement of expenses incurred by our named executive officers during the scope of their employment and unless expressly stated otherwise in a footnote below, none of the named executive officers received other compensation, perquisites and/or personal benefits in excess of $10,000.

---------- (1) All salaries for 2012 and 2011 were accrued in the Company's consolidated balance sheet, but not paid. No salaries and wages have been paid to the above named officers during the years ended September 30, 2012, 2011, or through the date of this report. GRANTS OF PLAN-BASED AWARDS We did not grant any plan-based awards during this fiscal year ended September 30, 2012. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END There are no outstanding equity awards as of September 30, 2012 16 EMPLOYMENT AGREEMENTS We have an employment agreement Carl P. Ranno as our Chief Executive Officer and President. The Agreement is for a term of five years, commencing on May 23, 2008 and expiring on May 22, 2013 with automatic one-year extensions unless either the Company or Mr. Ranno provides written notice of their intention not to renew the Agreement at least 30 days prior to the expiration of the then current term. The Agreement provides that, in addition to receiving paid vacation in accordance with the Company's policies as well as other customary benefits and provisions, Mr. Ranno shall receive an annual base salary of $200,000. If, at any time during the term of the Agreement, Mr. Ranno is terminated "without cause," he will be entitled to receive a cash payment equal to the aggregate compensation payable to Mr. Ranno during the remaining term of the Agreement. The compensation is being accrued. On May 23, 2008 the Company entered into an Employment Agreement with Neil C. Kitchen to act as the Company's Vice President and Chief Technical Officer (the "Agreement"). The Agreement is for a term of five years, commencing on May 23, 2008 and expiring on May 22, 2013 with automatic one-year extensions unless either the Company or Mr. Kitchen provides written notice of their intention not to renew the Agreement at least 30 days prior to the expiration of the then current term. The Agreement provides that, in addition to receiving paid vacation in accordance with the Company's policies as well as other customary benefits and provisions, Mr. Kitchen shall receive an annual base salary of $134,500. If, at any time during the term of the Agreement, Mr. Kitchen is terminated "without cause," he will be entitled to receive a cash payment equal to the aggregate compensation payable to Mr. Kitchen during the remaining term of the Agreement. The compensation is being accrued. On May 23, 2008, and effective the same date, the Company entered into an Employment Agreement with Diana Visco to act as the Company's Secretary and Administrative Assistant to the President (the "Agreement").The Agreement is for a term of five years, commencing on May 23, 2008 and expiring on May 22, 2013 with automatic one-year extensions unless either the Company or Ms. Visco provides written notice of their intention not to renew the Agreement at least 30 days prior to the expiration of the then current term. The Agreement provides that, in addition to receiving paid vacation in accordance with the Company's policies as well as other customary benefits and provisions, Ms. Visco shall receive an annual base salary of $85,000. If, at any time during the term of the Agreement, Ms. Visco is terminated "without cause," she will be entitled to receive a cash payment equal to the aggregate compensation payable to Ms. Visco during the remaining term of the Agreement. The compensation is being accrued. 2002 STOCK OPTION PLAN Our shareholders adopted a Stock Option Plan on November 8, 2002 (the "2002 Plan"). Under the 2002 Plan, 2,000,000 shares of common stock have been authorized for issuance as Incentive Stock Options or Nonstatutory Stock Options. Under the 2002 Plan, options may be granted to our key employees, officers, directors or consultants. The purchase price of the common stock subject to each Incentive Stock Option shall not be less than the fair market value (as determined in the 2002 Plan), or in the case of the grant of an 17 Incentive Stock Option to a principal stockholder, not less that 110% of fair market value of such common stock at the time such option is granted. The purchase price of the common stock subject to each Nonstatutory Stock Option shall be determined at the time such option is granted, but in no case less than 100% of the fair market value of such shares of common stock at the time such option is granted. The 2002 Plan shall terminate ten years from the date of its adoption by our shareholders, and no option shall be granted after termination of the 2002 Plan. Subject to certain restrictions, the 2002 Plan may at any time be terminated and from time to time be modified or amended by the affirmative vote of the holders of a majority of the outstanding shares of our capital stock present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the State of Nevada. As of September 30, 2012, 1,310,000 options were issued pursuant to the 2002 Plan. As of September 30, 2012 450,000 remained outstanding, all of which expired without exercise on November 1, 2012. 2005 STOCK OPTION/STOCK ISSUANCE PLAN GENERAL On January 31, 2005, our Board of Directors adopted our 2005 Stock Option/Stock Issuance Plan (the "2005 Plan") and directed that it be presented to the stockholders for their approval and adoption. The 2005 Plan provides for the issuance of up to 10,000,000 shares of common stock to our directors, officers, employees and consultants in the form of stock options and shares of common stock. Our Board of Directors will initially administer the 2005 Plan, except that the Board may, at its discretion, establish a committee comprised of two or more members of the Board or two or more other persons to administer the 2005 Plan (the "Plan Administrator"). The 2005 Plan has two separate components: the option grant program and the stock issuance program. To date, 498,240 shares of common stock have been issued pursuant to the stock issuance component of the 2005 Plan, As of September 30, 2011, 1,526,000 options were issued and outstanding. During the year ended September 30, 2012 all of these options expired. There are no options that remain outstanding from the 2005 Plan. OPTION GRANT PROGRAM Incentive stock options (those stock options that qualify under Section 422 of the Internal Revenue Code of 1986 ("the "Code")) may be granted to any individual who is, at the time of the grant, our employee. Non-qualified stock options (those options that do not qualify under Section 422 of the Code) may be granted to employees and other people, including our directors and officers. 18 Grants under the option grant program may be structured as installment options which become exercisable for vested shares over the optionee's period of service or as immediately exercisable options for unvested shares which will be subject to repurchase by us, at the option exercise price paid per share, upon the optionee's termination of service prior to vesting in those shares. All option grants must have an exercise price not less than 100% of the fair market value of the option shares on the grant date. Each option is to have a maximum term of ten years, subject to earlier termination in the event the optionee leaves our service. The optionee will have up to a three month period following termination of service (for reasons other than death or disability) in which to exercise the option. This period will be extended to 12 months if the optionee's service terminates by reason of disability, and in the event of the optionee's death, the personal representative of the optionee's estate (or the person inheriting the option) will have up to a 12 month period following the optionee's death in which to exercise the option. To exercise the option, the optionee must execute a stock purchase agreement and pay the exercise price for the purchased shares. Payment is to be made in cash; however, the Plan Administrator may also permit the optionee to deliver a full-recourse interest-bearing promissory note for the purchased shares payable in one or more installments. Provided that our shares remain publicly traded, the exercise price may be paid in shares of common stock or, alternatively, through the optionee's participation in a same-day sale program. Under such program, the option shares are sold immediately following the exercise of the option, and a portion of the sale proceeds is applied to the payment of the exercise price and all applicable withholding taxes. In the event we are acquired by merger or asset sale, the option shares will immediately vest, and the option may be exercised for any or all of those vested shares prior to the effective date of such acquisition. However, such accelerated vesting will not occur if our repurchase rights with respect to the unvested option shares are assigned to the acquiring entity. The Plan Administrator will have the discretion to structure one or more option grants under the Plan so that the shares subject to those options will immediately vest in the event the optionee's service is involuntarily terminated within 18 months following an acquisition in which our repurchase rights are so assigned, and the optionee would then have a one-year period to exercise the accelerated options for fully-vested shares. It is anticipated that this special vesting acceleration provision would be made available only on a limited case-by-case basis. The stock purchase agreement will provide us with the right to repurchase, at the original exercise price paid per share, any unvested shares held by the optionee at the time of his or her termination of service. The applicable vesting schedule will be set forth in the Notice of Grant. Full and immediate vesting of all the option shares will occur upon an acquisition by merger or asset sale, unless the repurchase right applicable to those shares is assigned to the successor company. One or more repurchase rights outstanding under the Plan may be structured so that those rights will subsequently lapse (and the option shares will immediately vest) upon an involuntary termination of the optionee's service within 18 months following the effective date of an acquisition in which the repurchase rights are assigned to the successor company. 19 STOCK ISSUANCE PROGRAM Shares of common stock may be issued to employees and other people, including our directors and officers. The stock issuance program allows eligible persons to purchase shares of common stock at fair market value or at a discount of up to 15% of fair market value. The shares may be fully vested when issued or may vest over time as the recipient provides services or as specified performance objectives are attained. In addition, shares of common stock may be issued as bonus awards in recognition of services rendered, without any cash outlay required of the recipient. The stock issuance component is structured as a stock purchase transaction, with the purchase price for the shares to be paid in cash or by promissory note at the time of issuance of the shares. The same repurchase rights summarized above for the "Stock Purchase Agreement" under the option grant program will apply to the purchased shares, namely, our right to repurchase, at the original purchase price, any unvested shares held by the participant at the time of his or her termination of service. It is anticipated that any issued shares will vest either immediately or in a series of installments over the participant's period of service. Full and immediate vesting of all the shares will occur upon an acquisition by merger or asset sale, unless the repurchase right applicable to those shares is assigned to the successor company. The assigned repurchase rights may be structured so that they will subsequently lapse (and the shares will immediately vest) upon an involuntary termination of the participant's service within 18 months following the effective date of the acquisition. COMPENSATION OF DIRECTORS Our Directors do not receive any cash compensation, but are entitled to reimbursement of their reasonable expenses incurred in attending directors' meetings. We do not have any audit, nominating, compensation or other committee of our Board of Directors. Scott Baker is our only independent director. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information regarding our shares of outstanding common stock beneficially owned as of the date hereof by (i) each of our directors and executive officers, (ii) all directors and executive officers as a group, and (iii) each other person who is known by us to own beneficially more than 5% of our common stock based upon 68,090,590 issued shares of common stock. 20

---------- * Less than 1%. 1. C/o our address, 7745 Alabama Ave, #9, Canoga Park, CA 91304, unless otherwise noted. 2. Except as otherwise indicated, we believe that the beneficial owners of common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Visco Family are the owners and directors of FLD Corporation, and own 17,907,003 shares of our common stock. Note payable to Diana Visco for $834,842, bearing interest at the prime rate of 3.25% at September 30, 2012 and 2011, respectively with interest payable monthly. The note is unsecured and is due in January 2013. Subsequent to September 30, 2012, Ms. Visco loaned the Company an additional $38,000, increasing the note to $872,842. The terms of the amended note stayed the same while extending the due date to October 2013. On April 1, 2004, we entered into a Sublease Agreement to sublet 923.50 square feet located at a facility in Pacoima, California from a related party, which required monthly rental payments of approximately $554. The Sublease Agreement expired on December 31, 2008 and we continued to rent the facilities through December 2010. In January 2011, we moved offices to a location in Canoga Park and sublease the space from a related party, The Benz Group. The new lease is month to month and does not require lease payments as our presence in the facility is nominal. We also rent storage space in Tucson and Phoenix, Arizona for approximately $200 per month. 21 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES DBBMCKENNON dbbmckennon, a registered public accounting firm, was our independent auditor and examined our financial statements to September 30, 2012 and performed the services listed below. AUDIT FEES dbbmckennon fees for professional services rendered for the audit of our annual financial statements included in this Form 10-K and for the reviews of the financial statements included in our quarterly reports on Form 10-Q during the years ended September 30, 2012 and 2011 was $37,000 and $37,000, respectively. AUDIT RELATED FEES dbbmckennon was not paid additional fees during that period for assurance and related services reasonably related to the performance of the audit or review of our financial statements. TAX FEES Tax filings have not been completed for the 2012 or 2011 fiscal year, thus no fees were paid. ALL OTHER FEES None AUDIT COMMITTEE We do not have an audit committee. 22 ITEM 13. EXHIBITS 3.1 Articles of Incorporation of New Directions Manufacturing, Inc., a Nevada corporation, dated January 9, 1997 (1) 3.2 Amendment to Articles of Incorporation of New Directions Manufacturing, Inc., a Nevada corporation, dated May 29, 1997 (1) 3.3 Amendment to Articles of Incorporation of New Directions Manufacturing, Inc., dated January 4, 2000 (2) 3.4 Amendment to Articles of Incorporation of American Soil Technologies, Inc., dated August 4, 2003 (3) 3.4 Bylaws of New Directions Manufacturing, Inc., dated May 29, 1997 (1) 3.5 Amended and Restated Bylaws of New Directions Manufacturing, Inc., dated July 20, 1998 (4) 3.6 Amendment to Articles of Incorporation, dated November 30, 2006 4.1 Convertible Debenture - Lump Sum Contribution (Form) (5) 4.2 Convertible Debenture - Incremental (Form) (5) 10.1 License Agreement between Ron Salestrom, American Soil Technologies, Inc., and Polymers Plus, L.L.C., dated January 4, 2000 (2) 10.2 Sublease Agreement with The Customized Box Company, dated April 1, 2004 (6) 10.8 Employment Contract with Donette Lamson, dated January 18, 2006 (7) 10.12 Acquisition Agreement for Smart World Organics, dated July 7, 2006 (8) 10.14 Intellectual Property Purchase Agreement with Ray Nielsen, dated December 20, 2006 (9) 10.15 Security Agreement with Ray Nielsen, dated December 22, 2006 (9) 10.16 Purchase and Sale Agreement and Joint Escrow Instructions for Silver Terrace Nurseries, dated November 27, 2007 (12) 10.17 Employment Contract with Carl Ranno, dated May 23, 2008 (13) 10.18 Employment Contract with Neil Kitchen, dated May 23, 2008 (13) 10.19 Employment Contract with Diana Visco, dated May 23, 2008 (13) 10.21 Subsidiaries: Smart World Organics Inc. a Florida corporation 31.1 Certification of Chief Executive Officer Pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer Pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 101 Interactive data files pursuant to Rule 405 of Regulation S-T ---------- 1. Incorporated by reference from our Registration Statement on Form SB-2, filed on July 2, 1997, as amended (Registration No. 333-30583). 2. Incorporated by reference from our Form 10-KSB for the fiscal year ended June 30, 2000, filed on September 27, 2000 (File No. 000-22855). 3. Incorporated by reference from our Form 10-KSB for the fiscal year ended December 31, 2005, filed on April 3, 2006. 4. Incorporated by reference from our Form 10-KSB for the fiscal year ended June 30, 1998, filed on September 16, 1998. 5. Incorporated by reference from our Form 10-QSB for the quarterly period ended March 31, 2000, filed on May 15, 2000. 6. Incorporated by reference from our Form 10-QSB for the quarterly period ended March 31, 2004, filed on May 5, 2004. 7. Incorporated by reference from our Form 10-QSB for the quarterly period ended March 31, 2006, filed on May 17, 2006. 8. Incorporated by reference from our Form 10-QSB for the quarterly period ended June 30, 2006, filed on August 14, 2006. 9. Incorporated by reference from our Form 10-KSB for the fiscal year ended December 31, 2006, filed on April 18, 2007. 10. Incorporated by reference from our Form 10-KSB for the fiscal year ended December 31, 2006, filed on April 18, 2007. 11. Incorporated by reference from our Form 10-KSB for the fiscal year ended December 31, 2006, filed on April 18, 2007. 12. Incorporated by reference from our Form 10-KSB for the transition period ended September 30, 2007, filed on February 15, 2008. 13. Incorporated by reference from our Form 10-K for the period ended September 30, 2008, filed on January 13, 2009 23 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, duly authorized. AMERICAN SOIL TECHNOLOGIES, INC. DATED: January 7, 2013 By: /s/ Carl P. Ranno --------------------------------------------- Carl P. Ranno Director, Chief Executive Officer, President, and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) 24 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders American Soil Technologies, Inc. and subsidiary We have audited the accompanying consolidated balance sheets of American Soil Technologies, Inc. and subsidiary (collectively the "Company") as of September 30, 2012 and 2011, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as of September 30, 2012 and 2011. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Soil Technologies, Inc. and subsidiary as of September 30, 2012 and 2011, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 of the consolidated financial statements, the Company has generated minimal operating revenues, incurred losses from operations, and used significant cash in operating activities. Its viability is dependent upon its ability to obtain future financing and successful operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with respect to these matters are also discussed in Note 1. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ dbbmckennon Newport Beach, California January 7, 2013 F-1 American Soil Technologies, Inc. Consolidated Balance Sheets

See Notes to Consolidated Financial Statements. F-2 American Soil Technologies, Inc. Consolidated Statements of Operations

See Notes to Consolidated Financial Statements F-3 American Soil Technologies, Inc. Consolidated Statements of Stockholders' Deficit

See Notes to Consolidated Financial Statements. F-4 American Soil Technologies, Inc. Consolidated Statements of Cash Flows

See Notes to Consolidated Financial Statements. F-5 American Soil Technologies, Inc. Notes to Consolidated Financial Statements 1. ORGANIZATION AND BASIS OF PRESENTATION ORGANIZATION American Soil Technologies, Inc. (the "Company" or "American Soil"), formerly Soil Wash Technologies, Inc., was incorporated in the state of California on September 22, 1993. On November 24, 1999, the Company entered into an exchange agreement for the reverse acquisition of New Directions Manufacturing, Inc., a publicly traded Nevada corporation incorporated on January 9, 1997 ("New Directions"), wherein New Directions would acquire the assets of the Company and change its name to American Soil Technologies, Inc. This exchange agreement was effective as of the close of business on December 31, 1999. The Company is primarily engaged in the marketing and selling of polymer and other soil amendments to the agricultural turf and horticulture industries. The Company's products are used to decrease water usage, increase nutrient retention in soil, enhance seed germination and sprout emergence, clarify ponds and increase the effectiveness of chemical fertilizers and biological additives. In 2006, the Company acquired the patent to a slow release fertilizer. The Company also has exclusive license rights to the use of patented polymer application techniques, as well as numerous patents on a unique machine designed to inject polymer and other liquid products into existing turf and some crops. The Company expanded to provide next-generation and sustainable fertilizers through the acquisition of Smart World Organics, Inc. ("Smart World") on December 20, 2006. Simultaneously, the Company entered into an Intellectual Property Purchase Agreement with the founder of Smart World, Ray Nielsen ("Nielsen") that included certain formulas originally believed to be proprietary and intellectual properties used in the business of Smart World. The formulas acquired from Nielsen were later deemed not to be proprietary and subsequently deemed to have little or no value (see Note 5). Smart World sold homogenized fertilizers, non-toxic insect controls, plant protectants, seed, soil and silage inoculants, and also provided advanced, custom-formulated products built to suit unusual growing conditions and environments. Due to losses incurred in 2008, management terminated Smart World employees, consolidated Smart Worlds operation with those of American Soil, and continues to seek sales of certain of its products. Additionally, the Company has several debt obligations related to Smart World that are past the contractual maturity date or are due and payable due to non payment of interest. Operations of Smart World have been limited subsequent to fiscal 2008 due to insufficient working capital GOING CONCERN AND MANAGEMENT'S PLANS The Company has sustained significant losses and has an accumulated deficit of $28,675,193 and negative working capital of $7,445,480 as of September 30, 2012. The ability of the Company to continue as a going concern is dependent upon obtaining additional capital and financing, and generating positive cash flows from operations. The Company intends to seek additional capital either through debt or equity offerings and is attempting to increase sales volume and operating margins to achieve profitability. Due to the current economic environment and the Company's current financial condition, management cannot be assured there will be adequate capital available when needed and on acceptable terms. These factors raise substantial doubt about the Company's ability to continue as a going concern. If the Company is unable to raise capital of sustain profitable operations, the Company may have to curtail or discontinue operations. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of American Soil Technologies, Inc, and its wholly-owned subsidiary, Smart World Organics, Inc. All intercompany balances and transactions have been eliminated in consolidation. F-6 USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The Company's significant estimates made in connection with the preparation of the accompanying financial statements include the carrying value of the intangible assets. CASH AND CASH EQUIVALENTS Cash and cash equivalents includes all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. ACCOUNTS AND NOTES RECEIVABLE The Company utilizes the allowance method to provide a reserve for uncollectible accounts. The Company determines any required allowance by considering a number of factors including length of time trade accounts receivable are past due and the Company's previous loss history. The Company records a reserve account for accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The Company performs ongoing credit evaluations and continually monitors its collection of amounts due from its customers. The Company adjusts credit limits and payment terms granted to its customers based upon payment history and the customer's current creditworthiness. The Company does not require collateral from its customers to secure amounts due from them. Reserves for uncollectible amounts are provided based on past experience and a specific analysis of the accounts which management believes is sufficient. INVENTORY Inventory consists primarily of purchased polymer soil amendments. Inventory is stated at the lower of cost (on a first-in, first-out basis) or market. PROPERTY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets ranging from three to 15 years. Betterments, renewals and extraordinary repairs that extend the lives of the assets are capitalized. Repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation applicable to assets disposed or retired are removed from the accounts, and the gain or loss on disposition is recognized in the respective period. LONG-LIVED ASSETS The Company reviews its fixed assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. ACCOUNTING FOR CONVERTIBLE DEBT Convertible debt is accounted for under the guidelines established by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 470 Topic 20, "Debt with Conversion and Other Options" and ASC No. 740, "Income Tax". The Company records a beneficial conversion feature ("BCF") related to the issuance of convertible debt that have conversion features at fixed or adjustable rates that are in-the-money when issued and records the fair value of F-7 warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to paid-in-capital. The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. INTELLECTUAL PROPERTY Intellectual property includes the exclusive licenses to the patented polymer application techniques and certain acquired intellectual property which are being amortized using the straight-line method over the respective estimated useful lives. ADVERTISING The Company expenses advertising costs as incurred. Advertising expense was $476 and $684, for year ended September 30, 2012 and 2011, respectively. REVENUE RECOGNITION In accordance with ASC No. 605, "Revenue Recognition", revenue is recognized when products are shipped to a customer and the risks and rewards of ownership have passed based on the terms of the sale. Royalty revenues are recognized monthly based on customer usage as defined by individual agreements. SHIPPING AND HANDLING COST Shipping and handling fees charged to customers are included in revenue in accordance with ASC No. 605, "Revenue Recognition". The shipping and handling costs incurred by the Company are included in cost of sales. INCOME TAXES The Company accounts for income taxes in accordance with ASC 740 "Income Taxes" ("ASC 740") which requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carry forwards. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. ASC 740 also prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company's income tax return. The Company utilizes a two-step approach for evaluating uncertain tax positions. Step one or recognition, requires a company to determine if the weight of available evidence indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step two or measurement, is based on the largest amount of benefit, which is more likely than not to be realized on settlement with the taxing authority. F-8 FAIR VALUE OF FINANCIAL INSTRUMENTS On October 1, 2009, the Company adopted ASC 820 ("ASC 820") Fair Value Measurements and Disclosures. The Company did not record an adjustment to retained earnings as a result of the adoption of the guidance for fair value measurements, and the adoption did not have a material effect on the Company's results of operations. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaids and other current assets, accounts receivable, accounts payable, accrued liabilities, and notes payable. Fair values for these items were assumed to approximate carrying values because of their short term nature or because they are payable on demand. As of September 30, 2012 and 2011, the Company had no material level 1,2, or 3 assets or liabilities. CONCENTRATION OF CREDIT RISK Accounts receivable from individual customers representing 10% or more of the net accounts receivable balance consists of the following as of September 30: 2012 2011 ---- ---- Percent of accounts receivable -- 83% Number of customers -- 3 Sales from individual customers representing 10% or more of sales consist of the following customers for the years ended September 30: 2012 2011 ---- ---- Percent of sales 95% 82% Number of customers 3 4 As a result of the Company's concentration of its customer base, the loss or cancellation of business from, or significant changes in scheduled deliveries of product sold to the above customers or a change in their financial position could materially and adversely affect the Company's consolidated financial position, results of operations and cash flows. F-9 STOCK-BASED COMPENSATION The Company accounts for equity based compensation under the provisions of ASC No. 718, "Compensation, Stock Compensation" ("ASC 718"). ASC 718 requires the recognition of the fair value of equity-based compensation in net income. The fair value of the Company's stock option awards are estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. The fair value of equity-based awards is amortized over the vesting period of the award. NET LOSS PER SHARE Basic loss per share is calculated by dividing net loss by the weighted average common shares outstanding during the period. Diluted net loss per share reflects the potential dilution to basic EPS that could occur upon conversion or exercise of securities, options or other such items to common shares using the treasury stock method, based upon the weighted average fair value of our common shares during the period. For each period presented, basic and diluted loss per share amounts are identical as the effect of potential common shares is antidilutive. The following is a summary of outstanding securities which have been excluded from the calculation of diluted net loss per share because the effect would have been antidilutive for the following periods: 2012 2011 ---------- ---------- Series A convertible preferred stock 2,763,699 2,763,699 ---------- ---------- 2,763,699 2,763,699 ========== ========== LEGAL COSTS ASSOCIATED WITH LOSS CONTINGENCIES The Company expenses legal costs in connection with loss contingencies as incurred. RECENT ACCOUNTING PRONOUNCEMENTS The FASB issues Accounting Standards Updates ("ASUs") to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (1) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. 3. INVENTORY Inventory consists of the following at September 30: 2012 2011 -------- -------- Raw materials $ -- $ -- Finished goods 5,144 6,286 -------- -------- $ 5,144 $ 6,286 ======== ======== F-10 4. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following at September 30: Estimated useful life (in years) 2012 2011 ---------- --------- --------- Machinery 10 $ 543,793 $ 543,793 Office furnishings, fixtures and equipment 3-5 25,068 25,068 --------- --------- 568,861 568,861 Less accumulated depreciation (568,642) (568,101) --------- --------- $ 219 $ 760 ========= ========= Depreciation expense for the year ended September 30, 2012 and 2011 was $541 and $7,255, respectively. Management assessed property and equipment for impairment due to the decreased revenue streams from operations and specifically the lack of revenues being generated. Because the net remaining property and equipment value is insignificant as of September 30, 2012 and will be fully depreciated in fiscal 2013 Management does not believe impairment is necessary as of September 30, 2012. 5. INTANGIBLE ASSETS AND GOODWILL The following table summarizes the components of intangible assets as of September 30: Soil Medic patent ------- Balance at September 30, 2010 $ 162,147 Additions -- Amortization (49,891) Impairment (19,000) --------- Balance at September 30, 2011 $ 93,256 Additions -- Amortization (41,447) Impairment -- --------- Balance at September 30, 2012 $ 51,809 ========= Weighted average remaining life at: September 30, 2012 1.2 September 30, 2011 2.2 As of September 30, 2011, Management evaluated the value of the remaining intangible asset. It was determined that the associated expected cash flow of future revenues required an impairment charge of $19,000. Per Management's evaluation, no impairment was necessary as of September 30, 2012 based on future expected cash flows. Amortization expense was $41,447 and $49,891 for the years ended September 30, 2012 and 2011, respectively. Amortization expense is expected to be $41,447 and $10,362 for fiscal 2013 and 2014, respetively. F-11 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable consisted of the following at September 30: 2012 2011 ---------- ---------- Accounts payable $ 712,845 $ 716,086 Accounts payable - related party 361,299 377,980 Accrued litigation 603,921 603,921 ---------- ---------- $1,678,065 $1,697,987 ========== ========== Accrued expenses consisted of the following at September 30: 2012 2011 ---------- ---------- Interest $ 415,861 $ 370,335 Interest to related parties 252,086 200,892 Compensation and related 2,040,629 1,587,569 ---------- ---------- $2,708,576 $2,158,796 ========== ========== 7. NOTES PAYABLE Notes payable consists of the following at September 30:

F-12

The prime rate as of September 30, 2012 and 2011 was 3.25%, respectively. All notes are currently in default and are no longer convertible. F-13 8. INCOME TAXES The provision for income taxes is comprised of the following for the years ended September 30: 2012 2011 -------- -------- Federal $ -- $ -- State (800) (800) -------- -------- Provision for income taxes $ (800) $ (800) ======== ======== The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The differences between the federal statutory tax rate of 34% and the effective tax rates are primarily due to state income tax provisions, net operating loss ("NOL") carry forwards, deferred tax valuation allowance and permanent differences as follows for the years ended September 30: 2012 2011 -------- -------- Statutory rate (34%) (34%) Increase (decrease) in taxes resulting from the following: State income taxes, net of federal benefit 5% 5% Change in valuation allowance 29% 29% ------ ------ --% --% ====== ====== Deferred income taxes reflect the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities consist of the following at September 30: 2012 2011 -------- -------- Deferred tax assets (liabilities): Current: Reserves and accruals $ 1,320,647 $ 1,104,915 Non-current: Intangible assets 597,000 597,000 Net operating losses 5,779,734 7,326,145 Other 60,031 62,547 Valuation allowance (7,757,412) (9,090,607) ----------- ----------- $ -- $ -- =========== =========== At September 30, 2012 and 2011, the valuation allowance was increased (decreased) by a total of $(1,333,195) and $168,431 respectively. At September 30, 2012, the Company had federal net operating loss carryforwards of approximately $22,049,098 that expire from 2012 through 2031 and state net operating carryforwards of $2,861,945 expiring from 2012 through 2016. These net operating losses may be suspended or limited due to changes in State and Federal legislation, as well as a possible change in ownership as defined under Section 382 of the IRC. In addition certain of these NOL's are not valid until the 2008-2011 tax returns are filed as noted below. The Company has not filed its United States Federal and State tax returns for the years ended September 30, 2011, 2010, 2009, and 2008. Management intends to comply with the requirements to file the tax returns upon raising capital. Failure to file the tax returns could result in penalties assessed against the Company. The Company has identified the United States Federal tax returns as its "major" tax jurisdiction. The United States Federal return years 2008 through 2011 are still subject to tax examination by the United States Internal Revenue Service, when filed; however, we do not currently have any ongoing tax F-14 examinations. The Company is subject to examination by the California Franchise Tax Board for the years ended 2008 through 2011 and currently does not have any ongoing tax examinations. 10. COMMITMENTS AND CONTINGENCIES OPERATING LEASES During the year ended September 30, 2011, the Company moved its headquarters and now shares office space with an entity owned by a related party, The Benz Group. The Company does not pay rent to the related party as the resources and space occupied the Company is minimal and the fair value of the rent is immaterial to the financial statements taken as a whole. LITIGATION On or about September 21, 2007, Stockhausen, Inc. ("Stockhausen") filed a Complaint in the United States District Court, for the Middle District of North Carolina, against us seeking damages. The parties entered into a settlement agreement on June 2, 2010. Under the settlement agreement, we agreed to pay Stockhausen $250,000 on or before June 23, 2010 as a compromise to Stockhausen's claims that currently total $603,921. We further agreed that we would consent to the entry of a Judgment against us in favor of Stockhausen in the amount of $603,921 if we failed to make complete and timely payment as agreed. The Company was unable to make the agreed upon payment and on July 8, 2010, Stockhausen entered a judgment for the above stated amount against the Company. The Company has accrued $603,921 related to the litigation as of September 30, 2012 and 2011, which is included in accounts payable in the accompanying balance sheets. On or about October 4, 2007, Raymond J. Nielsen and Cheryl K. Nielsen (collectively, "Plaintiffs"), filed a Complaint in the Circuit Court in the Sixth Judicial District of Pasco County, Florida, against us and Smart World (collectively "Defendants") seeking damages, declaratory, and injunctive relief. Plaintiffs allege that Defendants failed to pay interest when due on the Convertible Debenture from Defendants to Plaintiffs and, thus, the entire amount of the Convertible Debenture is accelerated and Plaintiffs are seeking a judgment in the amount of $1,500,000 plus interest. On December 29, 2009, the matter was settled for $400,000 and the Company had 60 days in which to remit the amount or a judgment in the entire amount claimed would be entered against us. The Company was not able to meet the terms of the settlement and have been actively communicating with the Plaintiffs to extend the terms of the settlement. 11. PREFERRED STOCK The Company has 10,000,000 shares of preferred stock authorized of which 2,763,699 shares of $0.50 stated value Series A convertible preferred stock ("Series A Preferred") are issued and outstanding as of September 30, 2012 and 2011. The Series A Preferred have the following characteristics: DIVIDENDS Each holder is entitled to receive preferential quarterly dividends equal to the prime interest rate as quoted in the Wall Street Journal when and if declared by the Board of Directors, out of any assets that are legally available. If the Board of Directors declares that such dividends may only be payable in shares of common stock for any quarter, holders of Series A preferred stock have the option of accepting the dividend paid in shares of common stock of the Company, or letting the dividend accrue for a cash payment. No dividends have been declared, accrued or paid during the years ended September 30, 2012 and 2011. CONVERSION Each holder has the option to convert each share of Series A Preferred into common stock at a rate of one share of common stock for each share of preferred stock tendered. F-15 VOTING The holders have no voting rights. LIQUIDATION PREFERENCE Each holder is entitled to be paid the stated value of their holdings out of the assets of the Company, prior and in preference to any payment or distribution out of the assets of the Company to the holders of common stock or any other class or series of capital stock. 12. COMMON STOCK STOCK OPTIONS In November 2002, the Company enacted a stock option plan (the "2002 Plan") to provide additional incentives to selected employees, directors and consultants. Two million shares were authorized for grant. The purchase price of the common stock subject to each Incentive Stock Option was not to be less than the fair market value or in the case of a grant of an incentive stock option to a principal shareholder, not less than 110% of the fair market value of such common stock at the time each option was granted. The 2002 Plan terminates in November 2012. The options are fully-vested when granted and are exercisable for a period of ten years from the date of grant and are subject to cancellation upon termination of employment. The Company has granted options to purchase 1,010,000 shares and 300,000 shares with exercise prices of $0.50 and $0.25, respectively. The market price at the date of grant was $0.12. At September 30, 2012 and 2011, 450,000 stock options were available for grant. On January 6, 2005, the Company enacted the 2005 Stock Option/Stock Issuance Plan (the "2005 Plan"). The 2005 Plan provides for the issuance of up to 10,000,000 shares of common stock to our directors, officers, employees and consultants in the form of stock options and shares of common stock. The 2005 Plan has two separate components: the option grant program and the stock issuance program. Grants under the option grant program may be structured as installment options which become exercisable for vested shares over the optionee's period of service or as immediately exercisable options for unvested shares which will be subject to repurchase by the Company, at the option exercise price paid per share, upon the optionee's termination of service prior to vesting in those shares. All option grants must have an exercise price not less than 100% of the fair market value of the option shares on the grant date. The stock issuance program allows eligible persons to purchase shares of common stock at fair market value or at a discount of up to 15% of fair market value. The shares may be fully vested when issued or may vest over time as the recipient provides services or as specified performance objectives are attained. In addition, shares of common stock may be issued as bonus awards in recognition of services rendered, without any cash outlay required of the recipient. Upon stock option exercise, the Company issues new shares of common stock. The following table summarizes stock option activity under the above stock option plans:

F-16 The fair value of stock options awarded were estimated at the date of grant using the Black-Scholes option-pricing model. The expected option term was estimated based upon the contractual term of the underlying stock option. The expected volatility of the Company's stock price was based upon the historical daily changes in the price of the Company's common stock. The risk-free interest rate was based upon the current yield on U.S. Treasury securities having a term similar to the expected option term. Dividend yield is estimated at zero because the Company does not anticipate paying dividends in the foreseeable future. There were no options issued during the years ended September 30, 2012 and 2011 that required valuation.

At September 30, 2012, all stock options are vested, and there is no remaining unrecognized compensation expense. The intrinsic value of options is zero as all options had an exercise price above the closing price of the stock at September 30, 2012. Stock based compensation expense was $0 and $35,744 for the years ended September 30, 2012 and 2011, respectively, which is included in general and administrative expenses in the accompanying statements of operations. 13. RELATED PARTY TRANSACTIONS During the year ended September 30, 2012, Ms. Visco loaned the Company an additional $45,000. The Company entered into a new note for $834,842 with Ms. Visco which superseded all previous notes. The principal is due on May 1, 2013. Interest is payable monthly based on the current Prime Rate of 3.25%. See Note 14 for additional loan subsequent to September 30, 2012. Interest expense incurred in connection with outstanding loans and notes payable to Ms. Visco or entities partially controlled was $26,563 and $25,670 for the year ended September 30, 2012 and 2011, respectively. 14. SUBSEQUENT EVENTS Subsequent to year end, Ms. Visco loaned the Company an additional $38,000. The previous note was amended to increase the principal due to $872,842. The terms of the note remained the same while extending the due date to October 2013. The note is in default for non-payment of interest. F-17 EX-31 2 ex31-1.txt Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of American Soil Technologies, Inc. (the "Company") on Form 10-K for the fiscal year ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carl P. Ranno, Chief Executive Officer and President of the Company, certify, pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act of 1934 (the "Exchange Act"), as adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that: 1. I have reviewed this Report; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of, and for, the periods presented in this Report; 4. I and the other certifying officers of the Company are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; (b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and (c) Disclosed in this Report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. I and the other certifying officers have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and to the audit committee of the Company's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. /s/ Carl P. Ranno ------------------------------------- Carl P. Ranno Chief Executive Officer and President January 7, 2013 EX-31 3 ex31-2.txt Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of American Soil Technologies, Inc. (the "Company") on Form 10-K, for the fiscal year ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carl P. Ranno, Chief Financial Officer of the Company, certify, pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act of 1934 (the "Exchange Act"), as adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that: 1. I have reviewed this Report; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of, and for, the periods presented in this Report; 4. I and the other certifying officers of the Company are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; (b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and (c) Disclosed in this Report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. I and the other certifying officers have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and to the audit committee of the Company's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. /s/ Carl P. Ranno -------------------------------- Carl P. Ranno Chief Financial Officer January 7, 2013 EX-32 4 ex32.txt Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of American Soil Technology, Inc. (the "Company") on Form 10-K for the fiscal year ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carl P. Ranno, Chief Executive Officer, President, and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Carl P. Ranno ---------------------------------- Carl P. Ranno Chief Executive Officer, President and Chief Financial Officer January 7, 2013 EX-101.INS 5 soyl-20120930.xml 10-K 2012-09-30 false AMERICAN SOIL TECHNOLOGIES INC 0001031896 --09-30 68090590 114777 Smaller Reporting Company Yes No No 2012 FY

3846

4356

387

25922

5144

6286

1235

1020

10612

37584

219

760

51808

93256

62639

131600

1678065

1697987

2708576

2158796

1919585

1149866

1104866

7456092

6881234

7456092

6881234

1381849

68091

19831800

-28675193

-28031374

-7393453

-6749634

62639

131600

35088

38538

0.50

25000000

2763699

0.01

100000000

68090590

70842

139025

25797

56728

45045

82297

541569

621988

476

684

41447

49891

19000

583492

691563

-538447

-609266

104572

114968

-3665

-643019

-720569

800

-643819

-721369

-0.01

68090590

-643819

-721369

-3665

19000

41988

57146

35744

2820

22715

-19912

1142

15000

-216

13521

-19920

72229

549780

532144

-45510

-162

3000

45000

3000

-3527

45000

-527

-510

2311

2045

7852

19850

2763699

1381849

68090590

68091

19796056

-27310005

-6064009

35744

-721369

2763699

1381849

68090590

68091

19831800

-28031374

-6749634

-643819

2763699

1381849

68090590

68091

19831800

-28675193

-7393453

<pre>1. ORGANIZATION AND BASIS OF PRESENTATION</pre><pre> </pre><pre>ORGANIZATION</pre><pre>American Soil  Technologies,  Inc. (the "Company" or "American Soil"),  formerly</pre><pre>Soil Wash  Technologies,  Inc., was  incorporated  in the state of California on</pre><pre>September 22, 1993. On November 24, 1999,  the Company  entered into an exchange</pre><pre>agreement for the reverse acquisition of New Directions  Manufacturing,  Inc., a</pre><pre>publicly  traded  Nevada  corporation  incorporated  on  January  9, 1997  ("New</pre><pre>Directions"), wherein New Directions would acquire the assets of the Company and</pre><pre>change its name to American Soil Technologies,  Inc. This exchange agreement was</pre><pre>effective as of the close of business on December 31, 1999.</pre><pre> </pre><pre>The Company is  primarily  engaged in the  marketing  and selling of polymer and</pre><pre>other soil amendments to the agricultural turf and horticulture industries.  The</pre><pre>Company's products are used to decrease water usage, increase nutrient retention</pre><pre>in soil,  enhance  seed  germination  and sprout  emergence,  clarify  ponds and</pre><pre>increase the effectiveness of chemical fertilizers and biological additives.  In</pre><pre>2006, the Company acquired the patent to a slow release fertilizer.  The Company</pre><pre>also has exclusive  license  rights to the use of patented  polymer  application</pre><pre>techniques,  as well as numerous  patents on a unique machine designed to inject</pre><pre>polymer and other liquid products into existing turf and some crops.</pre><pre> </pre><pre>The Company  expanded to provide  next-generation  and  sustainable  fertilizers</pre><pre>through  the  acquisition  of Smart  World  Organics,  Inc.  ("Smart  World") on</pre><pre>December  20, 2006.  Simultaneously,  the Company  entered into an  Intellectual</pre><pre>Property  Purchase  Agreement  with the  founder  of Smart  World,  Ray  Nielsen</pre><pre>("Nielsen") that included certain formulas originally believed to be proprietary</pre><pre>and  intellectual  properties used in the business of Smart World.  The formulas</pre><pre>acquired from Nielsen were later deemed not to be proprietary  and  subsequently</pre><pre>deemed to have  little or no value (see Note 5).  Smart  World sold  homogenized</pre><pre>fertilizers, non-toxic insect controls, plant protectants, seed, soil and silage</pre><pre>inoculants, and also provided advanced, custom-formulated products built to suit</pre><pre>unusual  growing  conditions and  environments.  Due to losses incurred in 2008,</pre><pre>management terminated Smart World employees, consolidated Smart Worlds operation</pre><pre>with  those of  American  Soil,  and  continues  to seek sales of certain of its</pre><pre>products.  Additionally,  the Company has several  debt  obligations  related to</pre><pre>Smart World that are past the  contractual  maturity date or are due and payable</pre><pre>due to non payment of  interest.  Operations  of Smart  World have been  limited</pre><pre>subsequent to fiscal 2008 due to insufficient working capital</pre><pre> </pre><pre>GOING CONCERN AND MANAGEMENT'S PLANS</pre><pre>The Company has sustained  significant losses and has an accumulated  deficit of</pre><pre>$28,675,193 and negative working capital of $7,445,480 as of September 30, 2012.</pre><pre>The  ability of the Company to continue  as a going  concern is  dependent  upon</pre><pre>obtaining  additional capital and financing,  and generating positive cash flows</pre><pre>from operations.  The Company intends to seek additional  capital either through</pre><pre>debt or  equity  offerings  and is  attempting  to  increase  sales  volume  and</pre><pre>operating  margins  to  achieve  profitability.  Due  to  the  current  economic</pre><pre>environment and the Company's current financial condition,  management cannot be</pre><pre>assured there will be adequate  capital  available when needed and on acceptable</pre><pre>terms.  These factors  raise  substantial  doubt about the Company's  ability to</pre><pre>continue  as a going  concern.  If the  Company  is unable to raise  capital  of</pre><pre>sustain  profitable  operations,  the Company may have to curtail or discontinue</pre><pre>operations.  The financial statements do not include any adjustments relating to</pre><pre>the  recoverability  and  classification of asset carrying amounts or the amount</pre><pre>and classification of liabilities that might result should the Company be unable</pre><pre>to continue as a going concern.</pre>

<pre>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</pre><pre> </pre><pre>PRINCIPLES OF CONSOLIDATION</pre><pre>The  consolidated  financial  statements  include the accounts of American  Soil</pre><pre>Technologies,  Inc, and its wholly-owned subsidiary,  Smart World Organics, Inc.</pre><pre>All   intercompany   balances  and   transactions   have  been   eliminated   in</pre><pre>consolidation.</pre><pre> </pre><pre>USE OF ESTIMATES</pre><pre>The  preparation  of  consolidated   financial  statements  in  conformity  with</pre><pre>accounting  principles  generally  accepted  in the  United  States of  America,</pre><pre>requires  management to make estimates and assumptions  that affect the reported</pre><pre>amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and</pre><pre>liabilities at the date of the financial  statements and the reported amounts of</pre><pre>revenues and expenses during the reporting periods.  Actual results could differ</pre><pre>from those  estimates.  The Company's  significant  estimates made in connection</pre><pre>with the  preparation  of the  accompanying  financial  statements  include  the</pre><pre>carrying value of the intangible assets.</pre><pre> </pre><pre>CASH AND CASH EQUIVALENTS</pre><pre>Cash and cash equivalents includes all short-term highly liquid investments that</pre><pre>are readily convertible to known amounts of cash and have original maturities of</pre><pre>three months or less.</pre><pre> </pre><pre>ACCOUNTS AND NOTES RECEIVABLE</pre><pre>The Company utilizes the allowance method to provide a reserve for uncollectible</pre><pre>accounts.  The Company determines any required allowance by considering a number</pre><pre>of factors  including length of time trade accounts  receivable are past due and</pre><pre>the Company's  previous loss history.  The Company records a reserve account for</pre><pre>accounts  receivable  when  they  become  uncollectible.  Payments  subsequently</pre><pre>received  on  such  receivables  are  credited  to the  allowance  for  doubtful</pre><pre>accounts.</pre><pre> </pre><pre>The Company  performs  ongoing credit  evaluations and continually  monitors its</pre><pre>collection of amounts due from its customers.  The Company adjusts credit limits</pre><pre>and payment terms granted to its  customers  based upon payment  history and the</pre><pre>customer's  current  creditworthiness.  The Company does not require  collateral</pre><pre>from its customers to secure amounts due from them.  Reserves for  uncollectible</pre><pre>amounts are provided  based on past  experience  and a specific  analysis of the</pre><pre>accounts which management believes is sufficient.</pre><pre> </pre><pre>INVENTORY</pre><pre>Inventory consists primarily of purchased polymer soil amendments.  Inventory is</pre><pre>stated at the lower of cost (on a first-in, first-out basis) or market.</pre><pre> </pre><pre>PROPERTY AND EQUIPMENT</pre><pre>Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.</pre><pre>Depreciation  is recorded on a  straight-line  basis over the  estimated  useful</pre><pre>lives of the assets  ranging from three to 15 years.  Betterments,  renewals and</pre><pre>extraordinary  repairs  that  extend the lives of the  assets  are  capitalized.</pre><pre>Repairs and  maintenance  costs are expensed as  incurred.  The cost and related</pre><pre>accumulated  depreciation  applicable to assets  disposed or retired are removed</pre><pre>from the  accounts,  and the gain or loss on  disposition  is  recognized in the</pre><pre>respective period.</pre><pre> </pre><pre>LONG-LIVED ASSETS</pre><pre>The Company  reviews its fixed assets and certain  identifiable  intangibles for</pre><pre>impairment  whenever  events  or  changes  in  circumstances  indicate  that the</pre><pre>carrying amount of an asset may not be recoverable.  Recoverability of assets to</pre><pre>be held and used is measured by a comparison of the carrying  amount of an asset</pre><pre>to the future  undiscounted  operating cash flow expected to be generated by the</pre><pre>asset.  If such assets are  considered  to be  impaired,  the  impairment  to be</pre><pre>recognized  is measured by the amount by which the carrying  amount of the asset</pre><pre>exceeds  the fair value of the asset.  Long-lived  assets to be  disposed of are</pre><pre>reported at the lower of carrying amount or fair value less costs to sell.</pre><pre> </pre><pre>ACCOUNTING  FOR  CONVERTIBLE  DEBT</pre><pre>Convertible  debt is  accounted  for under  the  guidelines  established  by the</pre><pre>Financial Accounting Standards Board ("FASB") Accounting Standards  Codification</pre><pre>("ASC") No. 470 Topic 20, "Debt with  Conversion  and Other Options" and ASC No.</pre><pre>740, "Income Tax". The Company records a beneficial  conversion  feature ("BCF")</pre><pre>related to the issuance of  convertible  debt that have  conversion  features at</pre><pre>fixed or adjustable rates that are in-the-money when issued and records the fair</pre><pre>value of warrants  issued with those  instruments.  The BCF for the  convertible</pre><pre>instruments  is recognized  and measured by allocating a portion of the proceeds</pre><pre>to  warrants  and as a  reduction  to the  carrying  amount  of the  convertible</pre><pre>instrument  equal to the intrinsic  value of the  conversion  features,  both of</pre><pre>which are credited to paid-in-capital.  The Company calculates the fair value of</pre><pre>warrants  issued  with  the  convertible  instruments  using  the  Black-Scholes</pre><pre>valuation method. Under these guidelines, the Company allocates the value of the</pre><pre>proceeds  received from a convertible  debt  transaction  between the conversion</pre><pre>feature and any other  detachable  instruments  (such as warrants) on a relative</pre><pre>fair value basis.  The  allocated  fair value is recorded as a debt  discount or</pre><pre>premium and is  amortized  over the  expected  term of the  convertible  debt to</pre><pre>interest expense.</pre><pre> </pre><pre>INTELLECTUAL PROPERTY</pre><pre>Intellectual  property  includes the exclusive  licenses to the patented polymer</pre><pre>application  techniques  and certain  acquired  intellectual  property which are</pre><pre>being amortized  using the  straight-line  method over the respective  estimated</pre><pre>useful lives.</pre><pre> </pre><pre>ADVERTISING</pre><pre>The Company expenses advertising costs as incurred. Advertising expense was $476</pre><pre>and $684, for year ended September 30, 2012 and 2011, respectively.</pre><pre> </pre><pre>REVENUE RECOGNITION</pre><pre>In accordance  with ASC No. 605,  "Revenue  Recognition",  revenue is recognized</pre><pre>when  products  are shipped to a customer and the risks and rewards of ownership</pre><pre>have passed  based on the terms of the sale.  Royalty  revenues  are  recognized</pre><pre>monthly based on customer usage as defined by individual agreements.</pre><pre> </pre><pre>SHIPPING AND HANDLING COST</pre><pre>Shipping  and  handling  fees  charged to  customers  are included in revenue in</pre><pre>accordance with ASC No. 605,  "Revenue  Recognition".  The shipping and handling</pre><pre>costs incurred by the Company are included in cost of sales.</pre><pre> </pre><pre>INCOME TAXES</pre><pre>The Company  accounts for income taxes in accordance with ASC 740 "Income Taxes"</pre><pre>("ASC  740")  which   requires  the  Company  to  provide  a  net  deferred  tax</pre><pre>asset/liability  equal to the expected future tax  benefit/expense  of temporary</pre><pre>reporting  differences between book and tax accounting methods and any available</pre><pre>operating loss or tax credit carry forwards. If available evidence suggests that</pre><pre>it is more likely than not that some  portion or all of the  deferred tax assets</pre><pre>will not be realized,  a valuation  allowance is required to reduce the deferred</pre><pre>tax assets to the amount  that is more likely  than not to be  realized.  Future</pre><pre>changes in such  valuation  allowance are included in the provision for deferred</pre><pre>income taxes in the period of change.</pre><pre> </pre><pre>ASC 740 also  prescribes,  among  other  things,  a  recognition  threshold  and</pre><pre>measurement  attributes for the financial statement  recognition and measurement</pre><pre>of uncertain tax positions  taken or expected to be taken in a company's  income</pre><pre>tax return.  The Company utilizes a two-step  approach for evaluating  uncertain</pre><pre>tax positions.  Step one or recognition,  requires a company to determine if the</pre><pre>weight of available evidence indicates a tax position is more likely than not to</pre><pre>be sustained upon audit,  including  resolution of related appeals or litigation</pre><pre>processes,  if any. Step two or  measurement,  is based on the largest amount of</pre><pre>benefit,  which is more likely than not to be  realized on  settlement  with the</pre><pre>taxing authority.</pre><pre> </pre><pre>FAIR VALUE OF FINANCIAL INSTRUMENTS</pre><pre>On  October  1,  2009,  the  Company  adopted  ASC 820 ("ASC  820")  Fair  Value</pre><pre>Measurements  and  Disclosures.  The  Company  did not record an  adjustment  to</pre><pre>retained  earnings as a result of the  adoption of the  guidance  for fair value</pre><pre>measurements,  and the adoption did not have a material  effect on the Company's</pre><pre>results of operations.</pre><pre> </pre><pre>Fair value is defined as the exit price, or the amount that would be received to</pre><pre>sell an asset or paid to transfer a liability in an orderly  transaction between</pre><pre>market  participants as of the measurement date. The guidance also establishes a</pre><pre>hierarchy  for inputs used in  measuring  fair value that  maximizes  the use of</pre><pre>observable inputs and minimizes the use of unobservable inputs by requiring that</pre><pre>the most observable inputs be used when available.  Observable inputs are inputs</pre><pre>market  participants  would  use in  valuing  the  asset  or  liability  and are</pre><pre>developed based on market data obtained from sources independent of the Company.</pre><pre>Unobservable inputs are inputs that reflect the Company's  assumptions about the</pre><pre>factors  market  participants  would use in valuing the asset or liability.  The</pre><pre>guidance  establishes  three  levels of inputs that may be used to measure  fair</pre><pre>value:</pre><pre> </pre><pre>Level 1.  Observable  inputs such as quoted prices in active  markets;  Level 2.</pre><pre>Inputs,  other than the quoted  prices in active  markets,  that are  observable</pre><pre>either directly or indirectly;  and Level 3. Unobservable  inputs in which there</pre><pre>is little or no market data,  which require the reporting  entity to develop its</pre><pre>own assumptions.</pre><pre> </pre><pre>The respective carrying value of certain on-balance-sheet  financial instruments</pre><pre>approximated  their fair  values.  These  financial  instruments  include  cash,</pre><pre>prepaids  and other  current  assets,  accounts  receivable,  accounts  payable,</pre><pre>accrued liabilities, and notes payable. Fair values for these items were assumed</pre><pre>to  approximate  carrying  values  because of their short term nature or because</pre><pre>they are payable on demand.</pre><pre> </pre><pre>As of September 30, 2012 and 2011,  the Company had no material  level 1,2, or 3</pre><pre>assets or liabilities.</pre><pre> </pre><pre>CONCENTRATION OF CREDIT RISK</pre><pre>Accounts  receivable from individual  customers  representing 10% or more of the</pre><pre>net accounts receivable balance consists of the following as of September 30:</pre><pre> </pre><pre>                                      2012           2011</pre><pre>                                      ----           ----</pre><pre>Percent of accounts receivable          --            83%</pre><pre>Number of customers                     --             3</pre><pre> </pre><pre>Sales from individual customers representing 10% or more of sales consist of the</pre><pre>following customers for the years ended September 30:</pre><pre> </pre><pre>                                      2012           2011</pre><pre>                                      ----           ----</pre><pre>Percent of sales                       95%            82%</pre><pre>Number of customers                     3              4</pre><pre> </pre><pre>As a result of the Company's  concentration  of its customer  base,  the loss or</pre><pre>cancellation of business from, or significant changes in scheduled deliveries of</pre><pre>product  sold to the above  customers  or a change in their  financial  position</pre><pre>could  materially  and  adversely  affect the Company's  consolidated  financial</pre><pre>position, results of operations and cash flows.</pre><pre> </pre><pre>STOCK-BASED  COMPENSATION</pre><pre>The Company accounts for equity based  compensation  under the provisions of ASC</pre><pre>No. 718,  "Compensation,  Stock  Compensation" ("ASC 718"). ASC 718 requires the</pre><pre>recognition of the fair value of equity-based  compensation  in net income.  The</pre><pre>fair  value  of  the  Company's  stock  option  awards  are  estimated  using  a</pre><pre>Black-Scholes  option valuation  model.  This model requires the input of highly</pre><pre>subjective  assumptions and elections  including expected stock price volatility</pre><pre>and the estimated life of each award.  The fair value of equity-based  awards is</pre><pre>amortized over the vesting period of the award.</pre><pre> </pre><pre>NET LOSS PER SHARE</pre><pre>Basic loss per share is calculated by dividing net loss by the weighted  average</pre><pre>common shares outstanding during the period. Diluted net loss per share reflects</pre><pre>the potential dilution to basic EPS that could occur upon conversion or exercise</pre><pre>of  securities,  options or other such items to common shares using the treasury</pre><pre>stock  method,  based upon the weighted  average fair value of our common shares</pre><pre>during the period.  For each period presented,  basic and diluted loss per share</pre><pre>amounts are identical as the effect of potential common shares is antidilutive.</pre><pre> </pre><pre>The following is a summary of  outstanding  securities  which have been excluded</pre><pre>from the calculation of diluted net loss per share because the effect would have</pre><pre>been antidilutive for the following periods:</pre><pre> </pre><pre>                                                      2012               2011</pre><pre>                                                   ----------         ----------</pre><pre>Series A convertible preferred stock                2,763,699          2,763,699</pre><pre>                                                   ----------         ----------</pre><pre>                                                    2,763,699          2,763,699</pre><pre>                                                   ==========         ==========</pre><pre> </pre><pre>LEGAL COSTS ASSOCIATED WITH LOSS CONTINGENCIES</pre><pre>The  Company  expenses  legal costs in  connection  with loss  contingencies  as</pre><pre>incurred.</pre><pre> </pre><pre>RECENT ACCOUNTING PRONOUNCEMENTS</pre><pre>The FASB issues Accounting Standards Updates ("ASUs") to amend the authoritative</pre><pre>literature  in ASC.  There  have been a number  of ASUs to date  that  amend the</pre><pre>original  text of ASC.  The  Company  believes  those  issued to date either (1)</pre><pre>provide supplemental  guidance,  (ii) are technical  corrections,  (iii) are not</pre><pre>applicable to the Company or (iv) are not expected to have a significant  impact</pre><pre>on the Company.</pre>

<pre>3. INVENTORY</pre><pre> </pre><pre>Inventory consists of the following at September 30:</pre><pre> </pre><pre>                                       2012            2011</pre><pre>                                     --------        --------</pre><pre>Raw materials                        $     --        $     --</pre><pre>Finished goods                          5,144           6,286</pre><pre>                                     --------        --------</pre><pre>                                     $  5,144        $  6,286</pre><pre>                                     ========        ========</pre>

<pre>4. PROPERTY AND EQUIPMENT, NET</pre><pre> </pre><pre>Property and equipment consisted of the following at September 30:</pre><pre> </pre><pre>                                    Estimated</pre><pre>                                   useful life</pre><pre>                                   (in years)        2012              2011</pre><pre>                                   ----------      ---------         ---------</pre><pre>Machinery                             10           $ 543,793         $ 543,793</pre><pre>Office furnishings, fixtures</pre><pre> and equipment                       3-5              25,068            25,068</pre><pre>                                                   ---------         ---------</pre><pre>                                                     568,861           568,861</pre><pre>Less accumulated depreciation                       (568,642)         (568,101)</pre><pre>                                                   ---------         ---------</pre><pre>                                                   $     219         $     760</pre><pre>                                                   =========         =========</pre><pre> </pre><pre>Depreciation expense for the year ended September 30, 2012 and 2011 was $541 and</pre><pre>$7,255, respectively.</pre><pre> </pre><pre>Management  assessed  property and equipment for impairment due to the decreased</pre><pre>revenue  streams from  operations  and  specifically  the lack of revenues being</pre><pre>generated.   Because  the  net  remaining   property  and  equipment   value  is</pre><pre>insignificant  as of September 30, 2012 and will be fully  depreciated in fiscal</pre><pre>2013  Management  does not believe  impairment is necessary as of September 30,</pre><pre>2012.</pre>

<pre>5. INTANGIBLE ASSETS AND GOODWILL</pre><pre> </pre><pre>The  following  table  summarizes  the  components  of  intangible  assets as of</pre><pre>September 30:</pre><pre> </pre><pre>                                             Soil Medic</pre><pre>                                               patent</pre><pre>                                               -------</pre><pre> </pre><pre>Balance at September 30, 2010                 $ 162,147</pre><pre>  Additions                                          --</pre><pre>  Amortization                                  (49,891)</pre><pre>  Impairment                                    (19,000)</pre><pre>                                              ---------</pre><pre>Balance at September 30, 2011                 $  93,256</pre><pre>  Additions                                          --</pre><pre>  Amortization                                  (41,447)</pre><pre>  Impairment                                         --</pre><pre>                                              ---------</pre><pre>Balance at September 30, 2012                 $  51,809</pre><pre>                                              =========</pre><pre> </pre><pre>Weighted average remaining life at:</pre><pre>September 30, 2012                                  1.2</pre><pre>September 30, 2011                                  2.2</pre><pre> </pre><pre>As of  September  30,  2011,  Management  evaluated  the value of the  remaining</pre><pre>intangible  asset. It was determined  that the associated  expected cash flow of</pre><pre>future  revenues  required an  impairment  charge of $19,000.  Per  Management's</pre><pre>evaluation, no impairment was necessary as of September 30, 2012 based on future</pre><pre>expected cash flows.</pre><pre> </pre><pre>Amortization  expense was $41,447 and $49,891 for the years ended  September 30,</pre><pre>2012 and 2011, respectively.  Amortization expense is expected to be $41,447 and</pre><pre>$10,362 for fiscal 2013 and 2014, respetively.</pre>

<pre>6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES</pre><pre> </pre><pre>Accounts payable consisted of the following at September 30:</pre><pre> </pre><pre>                                              2012                 2011</pre><pre>                                           ----------           ----------</pre><pre>Accounts payable                           $  712,845           $  716,086</pre><pre>Accounts payable - related party              361,299              377,980</pre><pre>Accrued litigation                            603,921              603,921</pre><pre>                                           ----------           ----------</pre><pre>                                           $1,678,065           $1,697,987</pre><pre>                                           ==========           ==========</pre><pre> </pre><pre>Accrued expenses consisted of the following at September 30:</pre><pre> </pre><pre>                                              2012                 2011</pre><pre>                                           ----------           ----------</pre><pre> </pre><pre>Interest                                   $  415,861           $  370,335</pre><pre>Interest to related parties                   252,086              200,892</pre><pre>Compensation and related                    2,040,629            1,587,569</pre><pre>                                           ----------           ----------</pre><pre>                                           $2,708,576           $2,158,796</pre>

<pre>7. NOTES PAYABLE</pre><pre> </pre><pre>Notes payable consists of the following at September 30:</pre><pre> </pre><pre>                                                                  2012                  2011</pre><pre>                                                               -----------           -----------</pre><pre>Debenture payable to a related party. Original balance              25,000                25,000</pre><pre>of $25,000 bearing interest at 8% per annum with</pre><pre>interest payable quarterly. The principal was</pre><pre>convertible into common stock at a conversion price of</pre><pre>$0.50 per share prior to maturity. The principal was due</pre><pre>February 1, 2008.</pre><pre> </pre><pre>Debenture payable to a related party bearing interest at            25,000                25,000</pre><pre>8% per annum with interest payable quarterly. The</pre><pre>principal was convertible into common stock at a</pre><pre>conversion price of $0.50 per share prior to maturity.</pre><pre>The principal was due February 1, 2008.</pre><pre> </pre><pre>Note payable to a related  party,  original  balance of             88,000                88,000</pre><pre>$85,000 bearing interest at prime rate payable monthly.</pre><pre>Note is unsecured and was due August 31, 2011.</pre><pre> </pre><pre>Note payable to Diana Visco  bearing  interest at                  834,842               789,842</pre><pre>prime rate with interest payable monthly. The note is</pre><pre>unsecured and is due in May 2013.</pre><pre> </pre><pre>Debenture payable to a related party. Original balance             177,024               177,024</pre><pre>of $250,000 bearing interest at a rate of 10% per annum.</pre><pre>Monthly principal and interest payments of $3,000 are</pre><pre>due through 2014. The note is in default for</pre><pre>non-payment. Principal was convertible into common stock</pre><pre>at a conversion price of $3.00 per share prior to</pre><pre>initial maturity in 2002. The note is unsecured.</pre><pre> </pre><pre>Dbenture payable to Ray Nielsen bearing interest at a            1,500,000             1,500,000</pre><pre>rate of 8% per annum with interest payable quarterly.</pre><pre>The principal balance was convertible at the proceeding</pre><pre>day's rate for one share of common stock prior to</pre><pre>maturity. The note is secured by the intellectual</pre><pre>property acquired from the note holder. The principal</pre><pre>was due on January 19, 2008.</pre><pre> </pre><pre>Debenture payable to an unrelated party bearing interest            30,000                30,000</pre><pre>at a rate of 8% per annum with interest payable</pre><pre>quarterly. The principal balance was convertible into</pre><pre>common stock at a rate of $0.25 per share prior to</pre><pre>maturity. The note is unsecured. The principal was due</pre><pre>on October 1, 2008.</pre><pre> </pre><pre>Debenture payable to an unrelated party bearing interest            30,000                30,000</pre><pre>at a rate of 8% per annum with interest payable</pre><pre>quarterly. The principal was convertible into common</pre><pre>stock at a rate of $0.10 per share prior to maturity.</pre><pre>The note is unsecured and was due on October 1, 2008.</pre><pre> </pre><pre>Debenture payable to an unrelated party bearing interest            30,000                30,000</pre><pre>at a rate of 8% per annum with interest payable</pre><pre>quarterly. The principal was convertible into common</pre><pre>stock at a rate of $0.10 per share prior to maturity.</pre><pre>Note is unsecured and was due October 1, 2008.</pre><pre> </pre><pre>Notes  payable to  various  individuals  with  interest            254,585               254,585</pre><pre>rates  ranging from 6% to 20%. The notes are  currently</pre><pre>in default.</pre><pre> </pre><pre>Debenture to an unrelated party bearing interest at a               75,000                75,000</pre><pre>rate of 10% per annum with interest payable quarterly.</pre><pre>The principal was convertible into common stock at a</pre><pre>conversion price of $0.19 per share prior to maturity.</pre><pre>Note is unsecured and was due on July 18, 2009.</pre><pre>                                                               -----------           -----------</pre><pre>                                                                 3,069,451             3,024,451</pre><pre>Less: debt discounts                                                    --                    --</pre><pre>                                                               -----------           -----------</pre><pre>                                                                 3,069,451             3,024,451</pre><pre> </pre><pre>   Current portion                                              (3,069,451)           (3,024,451)</pre><pre>                                                               -----------           -----------</pre><pre>   Long-term portion                                           $        --           $        --</pre><pre>                                                               ===========           ===========</pre><pre> </pre><pre>The prime rate as of September 30, 2012 and 2011 was 3.25%, respectively.</pre><pre> </pre><pre>All notes are currently in default and are no longer convertible.</pre>

<pre>8. INCOME TAXES</pre><pre> </pre><pre>The provision for income taxes is comprised of the following for the years ended</pre><pre>September 30:</pre><pre> </pre><pre>                                                    2012                 2011</pre><pre>                                                  --------             --------</pre><pre>Federal                                           $     --             $     --</pre><pre>State                                                 (800)                (800)</pre><pre>                                                  --------             --------</pre><pre>Provision for income taxes                        $   (800)            $   (800)</pre><pre>                                                  ========             ========</pre><pre> </pre><pre>The provision for income taxes differs from the amount  computed by applying the</pre><pre>statutory  federal income tax rate to income before  provision for income taxes.</pre><pre>The differences  between the federal statutory tax rate of 34% and the effective</pre><pre>tax rates are primarily due to state income tax  provisions,  net operating loss</pre><pre>("NOL")  carry  forwards,   deferred  tax  valuation   allowance  and  permanent</pre><pre>differences as follows for the years ended September 30:</pre><pre> </pre><pre>                                                    2012                 2011</pre><pre>                                                  --------             --------</pre><pre>Statutory rate                                       (34%)                (34%)</pre><pre>Increase (decrease) in taxes resulting from</pre><pre>the following:</pre><pre>  State income taxes, net of federal benefit           5%                   5%</pre><pre>  Change in valuation allowance                       29%                  29%</pre><pre>                                                   ------               ------</pre><pre>                                                       --%                  --%</pre><pre>                                                   ======               ======</pre><pre> </pre><pre>Deferred  income  taxes  reflect  the net tax effects of  temporary  differences</pre><pre>between the carrying  value of assets and  liabilities  for financial  reporting</pre><pre>purposes and the amounts used for income tax purposes.</pre><pre> </pre><pre>Significant  components  of the  Company's  deferred tax assets and  liabilities</pre><pre>consist of the following at September 30:</pre><pre> </pre><pre>                                                      2012              2011</pre><pre>                                                    --------          --------</pre><pre>Deferred tax assets (liabilities):</pre><pre>Current:</pre><pre>  Reserves and accruals                           $ 1,320,647       $ 1,104,915</pre><pre>Non-current:</pre><pre>  Intangible assets                                   597,000           597,000</pre><pre>  Net operating losses                              5,779,734         7,326,145</pre><pre>  Other                                                60,031            62,547</pre><pre>  Valuation allowance                              (7,757,412)       (9,090,607)</pre><pre>                                                  -----------       -----------</pre><pre>                                                  $        --       $        --</pre><pre>                                                  ===========       ===========</pre><pre> </pre><pre>At  September  30,  2012  and  2011,  the  valuation   allowance  was  increased</pre><pre>(decreased) by a total of $(1,333,195) and $168,431  respectively.  At September</pre><pre>30,  2012,  the  Company  had  federal  net  operating  loss   carryforwards  of</pre><pre>approximately  $22,049,098  that  expire  from 2012  through  2031 and state net</pre><pre>operating carryforwards of $2,861,945 expiring from 2012 through 2016. These net</pre><pre>operating losses may be suspended or limited due to changes in State and Federal</pre><pre>legislation,  as well as a possible change in ownership as defined under Section</pre><pre>382 of the IRC.  In  addition  certain  of these  NOL's are not valid  until the</pre><pre>2008-2011 tax returns are filed as noted below.</pre><pre> </pre><pre>The  Company has not filed its United  States  Federal and State tax returns for</pre><pre>the years ended September 30, 2011, 2010, 2009, and 2008.  Management intends to</pre><pre>comply with the  requirements  to file the tax  returns  upon  raising  capital.</pre><pre>Failure to file the tax returns could result in penalties  assessed  against the</pre><pre>Company. The Company has identified the United States Federal tax returns as its</pre><pre>"major" tax  jurisdiction.  The United States  Federal return years 2008 through</pre><pre>2011 are still subject to tax examination by the United States Internal  Revenue</pre><pre>Service,  when  filed;  however,  we do  not  currently  have  any  ongoing  tax</pre><pre>examinations.  The Company is subject to examination by the California Franchise</pre><pre>Tax Board for the years ended 2008 through 2011 and currently  does not have any</pre><pre>ongoing tax examinations.</pre>

<pre>09. COMMITMENTS AND CONTINGENCIES</pre><pre> </pre><pre>OPERATING LEASES</pre><pre>During the year ended September 30, 2011, the Company moved its headquarters and</pre><pre>now shares office space with an entity owned by a related party, The Benz Group.</pre><pre>The Company does not pay rent to the related  party as the  resources  and space</pre><pre>occupied the Company is minimal and the fair value of the rent is  immaterial to</pre><pre>the financial statements taken as a whole.</pre><pre> </pre><pre>LITIGATION</pre><pre>On or about  September  21,  2007,  Stockhausen,  Inc.  ("Stockhausen")  filed a</pre><pre>Complaint in the United States District Court,  for the Middle District of North</pre><pre>Carolina,  against us seeking  damages.  The parties  entered  into a settlement</pre><pre>agreement  on June 2, 2010.  Under the  settlement  agreement,  we agreed to pay</pre><pre>Stockhausen $250,000 on or before June 23, 2010 as a compromise to Stockhausen's</pre><pre>claims that currently total $603,921. We further agreed that we would consent to</pre><pre>the entry of a  Judgment  against  us in favor of  Stockhausen  in the amount of</pre><pre>$603,921 if we failed to make complete and timely payment as agreed. The Company</pre><pre>was  unable to make the agreed  upon  payment  and on July 8, 2010,  Stockhausen</pre><pre>entered a judgment for the above stated amount against the Company.  The Company</pre><pre>has accrued  $603,921  related to the  litigation  as of September  30, 2012 and</pre><pre>2011, which is included in accounts payable in the accompanying balance sheets.</pre><pre> </pre><pre>On or  about  October  4,  2007,  Raymond  J.  Nielsen  and  Cheryl  K.  Nielsen</pre><pre>(collectively,  "Plaintiffs"),  filed a Complaint  in the  Circuit  Court in the</pre><pre>Sixth  Judicial  District of Pasco County,  Florida,  against us and Smart World</pre><pre>(collectively "Defendants") seeking damages, declaratory, and injunctive relief.</pre><pre>Plaintiffs  allege  that  Defendants  failed  to pay  interest  when  due on the</pre><pre>Convertible Debenture from Defendants to Plaintiffs and, thus, the entire amount</pre><pre>of the  Convertible  Debenture  is  accelerated  and  Plaintiffs  are  seeking a</pre><pre>judgment in the amount of $1,500,000  plus  interest.  On December 29, 2009, the</pre><pre>matter was  settled for  $400,000  and the Company had 60 days in which to remit</pre><pre>the amount or a judgment in the entire amount  claimed would be entered  against</pre><pre>us. The Company was not able to meet the terms of the  settlement  and have been</pre><pre>actively   communicating  with  the  Plaintiffs  to  extend  the  terms  of  the</pre><pre>settlement.</pre>

<pre>10. PREFERRED STOCK</pre><pre> </pre><pre>The  Company  has  10,000,000  shares of  preferred  stock  authorized  of which</pre><pre>2,763,699  shares of $0.50  stated value Series A  convertible  preferred  stock</pre><pre>("Series A Preferred")  are issued and  outstanding as of September 30, 2012 and</pre><pre>2011. The Series A Preferred have the following characteristics:</pre><pre> </pre><pre>DIVIDENDS</pre><pre>Each holder is entitled to receive preferential quarterly dividends equal to the</pre><pre>prime interest rate as quoted in the Wall Street Journal when and if declared by</pre><pre>the Board of  Directors,  out of any assets that are legally  available.  If the</pre><pre>Board of Directors declares that such dividends may only be payable in shares of</pre><pre>common  stock for any  quarter,  holders  of Series A  preferred  stock have the</pre><pre>option of accepting  the dividend paid in shares of common stock of the Company,</pre><pre>or letting  the  dividend  accrue for a cash  payment.  No  dividends  have been</pre><pre>declared, accrued or paid during the years ended September 30, 2012 and 2011.</pre><pre> </pre><pre>CONVERSION</pre><pre>Each  holder  has the option to convert  each share of Series A  Preferred  into</pre><pre>common  stock at a rate of one share of common stock for each share of preferred</pre><pre>stock tendered.</pre><pre> </pre><pre>VOTING</pre><pre>The holders have no voting rights.</pre><pre> </pre><pre>LIQUIDATION  PREFERENCE</pre><pre>Each holder is entitled to be paid the stated value of their holdings out of the</pre><pre>assets of the Company,  prior and in preference  to any payment or  distribution</pre><pre>out of the  assets of the  Company to the  holders of common  stock or any other</pre><pre>class or series of capital stock.</pre>

<pre>11. COMMON STOCK</pre><pre> </pre><pre>STOCK  OPTIONS</pre><pre>In November 2002,  the Company  enacted a stock option plan (the "2002 Plan") to</pre><pre>provide additional incentives to selected employees,  directors and consultants.</pre><pre>Two million shares were  authorized for grant.  The purchase price of the common</pre><pre>stock  subject to each  Incentive  Stock Option was not to be less than the fair</pre><pre>market  value  or in the  case of a grant  of an  incentive  stock  option  to a</pre><pre>principal  shareholder,  not less  than  110% of the fair  market  value of such</pre><pre>common stock at the time each option was granted.  The 2002 Plan  terminates  in</pre><pre>November 2012. The options are fully-vested when granted and are exercisable for</pre><pre>a period of ten years  from the date of grant and are  subject  to  cancellation</pre><pre>upon  termination  of  employment.  The Company has granted  options to purchase</pre><pre>1,010,000  shares and 300,000  shares with  exercise  prices of $0.50 and $0.25,</pre><pre>respectively.  The market price at the date of grant was $0.12. At September 30,</pre><pre>2012 and 2011, 450,000 stock options were available for grant.</pre><pre> </pre><pre>On January 6, 2005,  the Company  enacted the 2005 Stock  Option/Stock  Issuance</pre><pre>Plan  (the  "2005  Plan").  The 2005 Plan  provides  for the  issuance  of up to</pre><pre>10,000,000  shares of common stock to our  directors,  officers,  employees  and</pre><pre>consultants  in the form of stock options and shares of common  stock.  The 2005</pre><pre>Plan has two  separate  components:  the  option  grant  program  and the  stock</pre><pre>issuance program.</pre><pre> </pre><pre>Grants under the option grant program may be structured as  installment  options</pre><pre>which become exercisable for vested shares over the optionee's period of service</pre><pre>or as immediately  exercisable options for unvested shares which will be subject</pre><pre>to repurchase by the Company,  at the option exercise price paid per share, upon</pre><pre>the  optionee's  termination  of service prior to vesting in those  shares.  All</pre><pre>option grants must have an exercise  price not less than 100% of the fair market</pre><pre>value of the option shares on the grant date.</pre><pre> </pre><pre>The stock issuance  program allows eligible persons to purchase shares of common</pre><pre>stock at fair market  value or at a discount of up to 15% of fair market  value.</pre><pre>The  shares  may be  fully  vested  when  issued  or may vest  over  time as the</pre><pre>recipient provides services or as specified performance objectives are attained.</pre><pre>In addition, shares of common stock may be issued as bonus awards in recognition</pre><pre>of services rendered, without any cash outlay required of the recipient.</pre><pre> </pre><pre>Upon stock option exercise, the Company issues new shares of common stock.</pre><pre> </pre><pre>The  following  table  summarizes  stock option  activity  under the above stock</pre><pre>option plans:</pre><pre> </pre><pre>                                                                                 Remaining</pre><pre>                                          Number of     Weighted-Average      Contractual Term</pre><pre>                                           Shares       Exercise Price           (in years)</pre><pre>                                           ------       --------------           ----------</pre><pre>Outstanding at September 30, 2010         1,976,000          $0.20                   2.0</pre><pre>  Granted                                        --</pre><pre>  Exercised                                      --</pre><pre>  Cancelled                                      --</pre><pre>                                        -----------</pre><pre>Outstanding at September 30, 2011         1,976,000          $0.20                   1.0</pre><pre>  Granted                                        --</pre><pre>  Exercised                                      --</pre><pre>  Cancelled                               1,526,000          $0.11                   0.0</pre><pre>                                        -----------</pre><pre>Outstanding at September 30, 2012           450,000          $0.50                   0.1</pre><pre>                                        ===========</pre><pre> </pre><pre>The fair value of stock  options  awarded  were  estimated  at the date of grant</pre><pre>using the  Black-Scholes  option-pricing  model.  The  expected  option term was</pre><pre>estimated based upon the contractual  term of the underlying  stock option.  The</pre><pre>expected  volatility of the Company's  stock price was based upon the historical</pre><pre>daily changes in the price of the Company's common stock. The risk-free interest</pre><pre>rate was based upon the current yield on U.S. Treasury  securities having a term</pre><pre>similar to the expected option term. Dividend yield is estimated at zero because</pre><pre>the Company does not  anticipate  paying  dividends in the  foreseeable  future.</pre><pre>There were no options issued during the years ended  September 30, 2012 and 2011</pre><pre>that required valuation.</pre><pre> </pre><pre>                                       Outstanding                                      Exercisable</pre><pre>                    ----------------------------------------------     -------------------------------------------</pre><pre>                                   Weighted      Weighted Average                   Weighted     Weighted Average</pre><pre>                                    Average          Remaining                       Average         Remaining</pre><pre>                    Number of       Exercise      Contractual Life     Number of     Exercise     Contractual Life</pre><pre>Exercise Prices       shares         Price           (in years)          shares       Price          (in years)</pre><pre>---------------       ------         -----           ----------          ------       -----          ----------</pre><pre>    $0.50             450,000        $0.50               0.1             450,000      $0.50             1.1</pre><pre> </pre><pre>At September 30, 2012,  all stock options are vested,  and there is no remaining</pre><pre>unrecognized compensation expense. The intrinsic value of options is zero as all</pre><pre>options had an exercise  price above the closing price of the stock at September</pre><pre>30, 2012.</pre><pre> </pre><pre>Stock  based  compensation  expense  was $0 and  $35,744  for  the  years  ended</pre><pre>September  30,  2012 and 2011,  respectively,  which is  included in general and</pre><pre>administrative expenses in the accompanying statements of operations.</pre>

<pre>12. RELATED PARTY TRANSACTIONS</pre><pre> </pre><pre>During the year ended  September  30,  2012,  Ms.  Visco  loaned the  Company an</pre><pre>additional  $45,000.  The Company  entered into a new note for $834,842 with Ms.</pre><pre>Visco which  superseded all previous notes. The principal is due on May 1, 2013.</pre><pre>Interest is payable monthly based on the current Prime Rate of 3.25%.</pre><pre> </pre><pre>See Note 13 for additional loan subsequent to September 30, 2012.</pre><pre> </pre><pre>Interest expense incurred in connection with outstanding loans and notes payable</pre><pre>to Ms. Visco or entities  partially  controlled  was $26,563 and $25,670 for the</pre><pre>year ended September 30, 2012 and 2011, respectively.</pre>

<pre>13. SUBSEQUENT EVENTS</pre><pre> </pre><pre>Subsequent to year end, Ms. Visco loaned the Company an additional $38,000.  The</pre><pre>previous note was amended to increase the  principal due to $872,842.  The terms</pre><pre>of the note remained the same while  extending the due date to October 2013. The</pre><pre>note is in default for non-payment of interest.</pre>

<pre>PRINCIPLES OF CONSOLIDATION</pre><pre>The  consolidated  financial  statements  include the accounts of American  Soil</pre><pre>Technologies,  Inc, and its wholly-owned subsidiary,  Smart World Organics, Inc.</pre><pre>All   intercompany   balances  and   transactions   have  been   eliminated   in</pre><pre>consolidation.</pre>

<pre>USE OF ESTIMATES</pre><pre>The  preparation  of  consolidated   financial  statements  in  conformity  with</pre><pre>accounting  principles  generally  accepted  in the  United  States of  America,</pre><pre>requires  management to make estimates and assumptions  that affect the reported</pre><pre>amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and</pre><pre>liabilities at the date of the financial  statements and the reported amounts of</pre><pre>revenues and expenses during the reporting periods.  Actual results could differ</pre><pre>from those  estimates.  The Company's  significant  estimates made in connection</pre><pre>with the  preparation  of the  accompanying  financial  statements  include  the</pre><pre>carrying value of the intangible assets.</pre>

<pre>CASH AND CASH EQUIVALENTS</pre><pre>Cash and cash equivalents includes all short-term highly liquid investments that</pre><pre>are readily convertible to known amounts of cash and have original maturities of</pre><pre>three months or less.</pre>

<pre>ACCOUNTS AND NOTES RECEIVABLE</pre><pre>The Company utilizes the allowance method to provide a reserve for uncollectible</pre><pre>accounts.  The Company determines any required allowance by considering a number</pre><pre>of factors  including length of time trade accounts  receivable are past due and</pre><pre>the Company's  previous loss history.  The Company records a reserve account for</pre><pre>accounts  receivable  when  they  become  uncollectible.  Payments  subsequently</pre><pre>received  on  such  receivables  are  credited  to the  allowance  for  doubtful</pre><pre>accounts.</pre><pre> </pre><pre>The Company  performs  ongoing credit  evaluations and continually  monitors its</pre><pre>collection of amounts due from its customers.  The Company adjusts credit limits</pre><pre>and payment terms granted to its  customers  based upon payment  history and the</pre><pre>customer's  current  creditworthiness.  The Company does not require  collateral</pre><pre>from its customers to secure amounts due from them.  Reserves for  uncollectible</pre><pre>amounts are provided  based on past  experience  and a specific  analysis of the</pre><pre>accounts which management believes is sufficient.</pre>

<pre>INVENTORY</pre><pre>Inventory consists primarily of purchased polymer soil amendments.  Inventory is</pre><pre>stated at the lower of cost (on a first-in, first-out basis) or market.</pre>

<pre>PROPERTY AND EQUIPMENT</pre><pre>Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.</pre><pre>Depreciation  is recorded on a  straight-line  basis over the  estimated  useful</pre><pre>lives of the assets  ranging from three to 15 years.  Betterments,  renewals and</pre><pre>extraordinary  repairs  that  extend the lives of the  assets  are  capitalized.</pre><pre>Repairs and  maintenance  costs are expensed as  incurred.  The cost and related</pre><pre>accumulated  depreciation  applicable to assets  disposed or retired are removed</pre><pre>from the  accounts,  and the gain or loss on  disposition  is  recognized in the</pre><pre>respective period.</pre>

<pre>LONG-LIVED ASSETS</pre><pre>The Company  reviews its fixed assets and certain  identifiable  intangibles for</pre><pre>impairment  whenever  events  or  changes  in  circumstances  indicate  that the</pre><pre>carrying amount of an asset may not be recoverable.  Recoverability of assets to</pre><pre>be held and used is measured by a comparison of the carrying  amount of an asset</pre><pre>to the future  undiscounted  operating cash flow expected to be generated by the</pre><pre>asset.  If such assets are  considered  to be  impaired,  the  impairment  to be</pre><pre>recognized  is measured by the amount by which the carrying  amount of the asset</pre><pre>exceeds  the fair value of the asset.  Long-lived  assets to be  disposed of are</pre><pre>reported at the lower of carrying amount or fair value less costs to sell.</pre>

<pre>ACCOUNTING  FOR  CONVERTIBLE  DEBT</pre><pre>Convertible  debt is  accounted  for under  the  guidelines  established  by the</pre><pre>Financial Accounting Standards Board ("FASB") Accounting Standards  Codification</pre><pre>("ASC") No. 470 Topic 20, "Debt with  Conversion  and Other Options" and ASC No.</pre><pre>740, "Income Tax". The Company records a beneficial  conversion  feature ("BCF")</pre><pre>related to the issuance of  convertible  debt that have  conversion  features at</pre><pre>fixed or adjustable rates that are in-the-money when issued and records the fair</pre><pre>value of warrants  issued with those  instruments.  The BCF for the  convertible</pre><pre>instruments  is recognized  and measured by allocating a portion of the proceeds</pre><pre>to  warrants  and as a  reduction  to the  carrying  amount  of the  convertible</pre><pre>instrument  equal to the intrinsic  value of the  conversion  features,  both of</pre><pre>which are credited to paid-in-capital.  The Company calculates the fair value of</pre><pre>warrants  issued  with  the  convertible  instruments  using  the  Black-Scholes</pre><pre>valuation method. Under these guidelines, the Company allocates the value of the</pre><pre>proceeds  received from a convertible  debt  transaction  between the conversion</pre><pre>feature and any other  detachable  instruments  (such as warrants) on a relative</pre><pre>fair value basis.  The  allocated  fair value is recorded as a debt  discount or</pre><pre>premium and is  amortized  over the  expected  term of the  convertible  debt to</pre><pre>interest expense.</pre>

<pre>INTELLECTUAL PROPERTY</pre><pre>Intellectual  property  includes the exclusive  licenses to the patented polymer</pre><pre>application  techniques  and certain  acquired  intellectual  property which are</pre><pre>being amortized  using the  straight-line  method over the respective  estimated</pre><pre>useful lives.</pre>

<pre>ADVERTISING</pre><pre>The Company expenses advertising costs as incurred. Advertising expense was $476</pre><pre>and $684, for year ended September 30, 2012 and 2011, respectively.</pre>

<pre>REVENUE RECOGNITION</pre><pre>In accordance  with ASC No. 605,  "Revenue  Recognition",  revenue is recognized</pre><pre>when  products  are shipped to a customer and the risks and rewards of ownership</pre><pre>have passed  based on the terms of the sale.  Royalty  revenues  are  recognized</pre><pre>monthly based on customer usage as defined by individual agreements.</pre>

<pre>SHIPPING AND HANDLING COST</pre><pre>Shipping  and  handling  fees  charged to  customers  are included in revenue in</pre><pre>accordance with ASC No. 605,  "Revenue  Recognition".  The shipping and handling</pre><pre>costs incurred by the Company are included in cost of sales.</pre>

<pre>INCOME TAXES</pre><pre>The Company  accounts for income taxes in accordance with ASC 740 "Income Taxes"</pre><pre>("ASC  740")  which   requires  the  Company  to  provide  a  net  deferred  tax</pre><pre>asset/liability  equal to the expected future tax  benefit/expense  of temporary</pre><pre>reporting  differences between book and tax accounting methods and any available</pre><pre>operating loss or tax credit carry forwards. If available evidence suggests that</pre><pre>it is more likely than not that some  portion or all of the  deferred tax assets</pre><pre>will not be realized,  a valuation  allowance is required to reduce the deferred</pre><pre>tax assets to the amount  that is more likely  than not to be  realized.  Future</pre><pre>changes in such  valuation  allowance are included in the provision for deferred</pre><pre>income taxes in the period of change.</pre><pre> </pre><pre>ASC 740 also  prescribes,  among  other  things,  a  recognition  threshold  and</pre><pre>measurement  attributes for the financial statement  recognition and measurement</pre><pre>of uncertain tax positions  taken or expected to be taken in a company's  income</pre><pre>tax return.  The Company utilizes a two-step  approach for evaluating  uncertain</pre><pre>tax positions.  Step one or recognition,  requires a company to determine if the</pre><pre>weight of available evidence indicates a tax position is more likely than not to</pre><pre>be sustained upon audit,  including  resolution of related appeals or litigation</pre><pre>processes,  if any. Step two or  measurement,  is based on the largest amount of</pre><pre>benefit,  which is more likely than not to be  realized on  settlement  with the</pre><pre>taxing authority.</pre>

<pre>FAIR VALUE OF FINANCIAL INSTRUMENTS</pre><pre>On  October  1,  2009,  the  Company  adopted  ASC 820 ("ASC  820")  Fair  Value</pre><pre>Measurements  and  Disclosures.  The  Company  did not record an  adjustment  to</pre><pre>retained  earnings as a result of the  adoption of the  guidance  for fair value</pre><pre>measurements,  and the adoption did not have a material  effect on the Company's</pre><pre>results of operations.</pre><pre> </pre><pre>Fair value is defined as the exit price, or the amount that would be received to</pre><pre>sell an asset or paid to transfer a liability in an orderly  transaction between</pre><pre>market  participants as of the measurement date. The guidance also establishes a</pre><pre>hierarchy  for inputs used in  measuring  fair value that  maximizes  the use of</pre><pre>observable inputs and minimizes the use of unobservable inputs by requiring that</pre><pre>the most observable inputs be used when available.  Observable inputs are inputs</pre><pre>market  participants  would  use in  valuing  the  asset  or  liability  and are</pre><pre>developed based on market data obtained from sources independent of the Company.</pre><pre>Unobservable inputs are inputs that reflect the Company's  assumptions about the</pre><pre>factors  market  participants  would use in valuing the asset or liability.  The</pre><pre>guidance  establishes  three  levels of inputs that may be used to measure  fair</pre><pre>value:</pre><pre> </pre><pre>Level 1.  Observable  inputs such as quoted prices in active  markets;  Level 2.</pre><pre>Inputs,  other than the quoted  prices in active  markets,  that are  observable</pre><pre>either directly or indirectly;  and Level 3. Unobservable  inputs in which there</pre><pre>is little or no market data,  which require the reporting  entity to develop its</pre><pre>own assumptions.</pre><pre> </pre><pre>The respective carrying value of certain on-balance-sheet  financial instruments</pre><pre>approximated  their fair  values.  These  financial  instruments  include  cash,</pre><pre>prepaids  and other  current  assets,  accounts  receivable,  accounts  payable,</pre><pre>accrued liabilities, and notes payable. Fair values for these items were assumed</pre><pre>to  approximate  carrying  values  because of their short term nature or because</pre><pre>they are payable on demand.</pre><pre> </pre><pre>As of September 30, 2012 and 2011,  the Company had no material  level 1,2, or 3</pre><pre>assets or liabilities.</pre>

<pre>CONCENTRATION OF CREDIT RISK</pre><pre>Accounts  receivable from individual  customers  representing 10% or more of the</pre><pre>net accounts receivable balance consists of the following as of September 30:</pre><pre> </pre><pre>                                      2012           2011</pre><pre>                                      ----           ----</pre><pre>Percent of accounts receivable          --            83%</pre><pre>Number of customers                     --             3</pre><pre> </pre><pre>Sales from individual customers representing 10% or more of sales consist of the</pre><pre>following customers for the years ended September 30:</pre><pre> </pre><pre>                                      2012           2011</pre><pre>                                      ----           ----</pre><pre>Percent of sales                       95%            82%</pre><pre>Number of customers                     3              4</pre><pre> </pre><pre>As a result of the Company's  concentration  of its customer  base,  the loss or</pre><pre>cancellation of business from, or significant changes in scheduled deliveries of</pre><pre>product  sold to the above  customers  or a change in their  financial  position</pre><pre>could  materially  and  adversely  affect the Company's  consolidated  financial</pre><pre>position, results of operations and cash flows.</pre>

<pre>STOCK-BASED  COMPENSATION</pre><pre>The Company accounts for equity based  compensation  under the provisions of ASC</pre><pre>No. 718,  "Compensation,  Stock  Compensation" ("ASC 718"). ASC 718 requires the</pre><pre>recognition of the fair value of equity-based  compensation  in net income.  The</pre><pre>fair  value  of  the  Company's  stock  option  awards  are  estimated  using  a</pre><pre>Black-Scholes  option valuation  model.  This model requires the input of highly</pre><pre>subjective  assumptions and elections  including expected stock price volatility</pre><pre>and the estimated life of each award.  The fair value of equity-based  awards is</pre><pre>amortized over the vesting period of the award.</pre>

<pre>NET LOSS PER SHARE</pre><pre>Basic loss per share is calculated by dividing net loss by the weighted  average</pre><pre>common shares outstanding during the period. Diluted net loss per share reflects</pre><pre>the potential dilution to basic EPS that could occur upon conversion or exercise</pre><pre>of  securities,  options or other such items to common shares using the treasury</pre><pre>stock  method,  based upon the weighted  average fair value of our common shares</pre><pre>during the period.  For each period presented,  basic and diluted loss per share</pre><pre>amounts are identical as the effect of potential common shares is antidilutive.</pre><pre> </pre><pre>The following is a summary of  outstanding  securities  which have been excluded</pre><pre>from the calculation of diluted net loss per share because the effect would have</pre><pre>been antidilutive for the following periods:</pre><pre> </pre><pre>                                                      2012               2011</pre><pre>                                                   ----------         ----------</pre><pre>Series A convertible preferred stock                2,763,699          2,763,699</pre><pre>                                                   ----------         ----------</pre><pre>                                                    2,763,699          2,763,699</pre><pre>                                                   ==========         ==========</pre>

<pre>LEGAL COSTS ASSOCIATED WITH LOSS CONTINGENCIES</pre><pre>The  Company  expenses  legal costs in  connection  with loss  contingencies  as</pre><pre>incurred.</pre>

<pre>RECENT ACCOUNTING PRONOUNCEMENTS</pre><pre>The FASB issues Accounting Standards Updates ("ASUs") to amend the authoritative</pre><pre>literature  in ASC.  There  have been a number  of ASUs to date  that  amend the</pre><pre>original  text of ASC.  The  Company  believes  those  issued to date either (1)</pre><pre>provide supplemental  guidance,  (ii) are technical  corrections,  (iii) are not</pre><pre>applicable to the Company or (iv) are not expected to have a significant  impact</pre><pre>on the Company.</pre>

<pre>Accounts  receivable from individual  customers  representing 10% or more of the</pre><pre>net accounts receivable balance consists of the following as of September 30:</pre><pre> </pre><pre>                                      2012           2011</pre><pre>                                      ----           ----</pre><pre>Percent of accounts receivable          --            83%</pre><pre>Number of customers                     --             3</pre><pre> </pre><pre>Sales from individual customers representing 10% or more of sales consist of the</pre><pre>following customers for the years ended September 30:</pre><pre> </pre><pre>                                      2012           2011</pre><pre>                                      ----           ----</pre><pre>Percent of sales                       95%            82%</pre><pre>Number of customers                     3              4</pre>

<pre>The following is a summary of  outstanding  securities  which have been excluded</pre><pre>from the calculation of diluted net loss per share because the effect would have</pre><pre>been antidilutive for the following periods:</pre><pre> </pre><pre>                                                      2012               2011</pre><pre>                                                   ----------         ----------</pre><pre>Series A convertible preferred stock                2,763,699          2,763,699</pre><pre>                                                   ----------         ----------</pre><pre>                                                    2,763,699          2,763,699</pre><pre>                                                   ==========         ==========</pre>

<pre>Inventory consists of the following at September 30:</pre><pre> </pre><pre>                                       2012            2011</pre><pre>                                     --------        --------</pre><pre>Raw materials                        $     --        $     --</pre><pre>Finished goods                          5,144           6,286</pre><pre>                                     --------        --------</pre><pre>                                     $  5,144        $  6,286</pre><pre>                                     ========        ========</pre>

<pre>Property and equipment consisted of the following at September 30:</pre><pre> </pre><pre>                                    Estimated</pre><pre>                                   useful life</pre><pre>                                   (in years)        2012              2011</pre><pre>                                   ----------      ---------         ---------</pre><pre>Machinery                             10           $ 543,793         $ 543,793</pre><pre>Office furnishings, fixtures</pre><pre> and equipment                       3-5              25,068            25,068</pre><pre>                                                   ---------         ---------</pre><pre>                                                     568,861           568,861</pre><pre>Less accumulated depreciation                       (568,642)         (568,101)</pre><pre>                                                   ---------         ---------</pre><pre>                                                   $     219         $     760</pre><pre>                                                   =========         =========</pre>

<pre>The  following  table  summarizes  the  components  of  intangible  assets as of</pre><pre>September 30:</pre><pre> </pre><pre>                                             Soil Medic</pre><pre>                                               patent</pre><pre>                                               -------</pre><pre> </pre><pre>Balance at September 30, 2010                 $ 162,147</pre><pre>  Additions                                          --</pre><pre>  Amortization                                  (49,891)</pre><pre>  Impairment                                    (19,000)</pre><pre>                                              ---------</pre><pre>Balance at September 30, 2011                 $  93,256</pre><pre>  Additions                                          --</pre><pre>  Amortization                                  (41,447)</pre><pre>  Impairment                                         --</pre><pre>                                              ---------</pre><pre>Balance at September 30, 2012                 $  51,809</pre><pre>                                              =========</pre>

<pre>Accounts payable consisted of the following at September 30:</pre><pre> </pre><pre>                                              2012                 2011</pre><pre>                                           ----------           ----------</pre><pre>Accounts payable                           $  712,845           $  716,086</pre><pre>Accounts payable - related party              361,299              377,980</pre><pre>Accrued litigation                            603,921              603,921</pre><pre>                                           ----------           ----------</pre><pre>                                           $1,678,065           $1,697,987</pre><pre>                                           ==========           ==========</pre>

<pre>Accrued expenses consisted of the following at September 30:</pre><pre> </pre><pre>                                              2012                 2011</pre><pre>                                           ----------           ----------</pre><pre> </pre><pre>Interest                                   $  415,861           $  370,335</pre><pre>Interest to related parties                   252,086              200,892</pre><pre>Compensation and related                    2,040,629            1,587,569</pre><pre>                                           ----------           ----------</pre><pre>                                           $2,708,576           $2,158,796</pre><pre>                                           ==========           ==========</pre>

<pre>Notes payable consists of the following at September 30:</pre><pre> </pre><pre>                                                                  2012                  2011</pre><pre>                                                               -----------           -----------</pre><pre>Debenture payable to a related party. Original balance              25,000                25,000</pre><pre>of $25,000 bearing interest at 8% per annum with</pre><pre>interest payable quarterly. The principal was</pre><pre>convertible into common stock at a conversion price of</pre><pre>$0.50 per share prior to maturity. The principal was due</pre><pre>February 1, 2008.</pre><pre> </pre><pre>Debenture payable to a related party bearing interest at            25,000                25,000</pre><pre>8% per annum with interest payable quarterly. The</pre><pre>principal was convertible into common stock at a</pre><pre>conversion price of $0.50 per share prior to maturity.</pre><pre>The principal was due February 1, 2008.</pre><pre> </pre><pre>Note payable to a related  party,  original  balance of             88,000                88,000</pre><pre>$85,000 bearing interest at prime rate payable monthly.</pre><pre>Note is unsecured and was due August 31, 2011.</pre><pre> </pre><pre>Note payable to Diana Visco  bearing  interest at                  834,842               789,842</pre><pre>prime rate with interest payable monthly. The note is</pre><pre>unsecured and is due in May 2013.</pre><pre> </pre><pre>Debenture payable to a related party. Original balance             177,024               177,024</pre><pre>of $250,000 bearing interest at a rate of 10% per annum.</pre><pre>Monthly principal and interest payments of $3,000 are</pre><pre>due through 2014. The note is in default for</pre><pre>non-payment. Principal was convertible into common stock</pre><pre>at a conversion price of $3.00 per share prior to</pre><pre>initial maturity in 2002. The note is unsecured.</pre><pre> </pre><pre>Dbenture payable to Ray Nielsen bearing interest at a            1,500,000             1,500,000</pre><pre>rate of 8% per annum with interest payable quarterly.</pre><pre>The principal balance was convertible at the proceeding</pre><pre>day's rate for one share of common stock prior to</pre><pre>maturity. The note is secured by the intellectual</pre><pre>property acquired from the note holder. The principal</pre><pre>was due on January 19, 2008.</pre><pre> </pre><pre>Debenture payable to an unrelated party bearing interest            30,000                30,000</pre><pre>at a rate of 8% per annum with interest payable</pre><pre>quarterly. The principal balance was convertible into</pre><pre>common stock at a rate of $0.25 per share prior to</pre><pre>maturity. The note is unsecured. The principal was due</pre><pre>on October 1, 2008.</pre><pre> </pre><pre>Debenture payable to an unrelated party bearing interest            30,000                30,000</pre><pre>at a rate of 8% per annum with interest payable</pre><pre>quarterly. The principal was convertible into common</pre><pre>stock at a rate of $0.10 per share prior to maturity.</pre><pre>The note is unsecured and was due on October 1, 2008.</pre><pre> </pre><pre>Debenture payable to an unrelated party bearing interest            30,000                30,000</pre><pre>at a rate of 8% per annum with interest payable</pre><pre>quarterly. The principal was convertible into common</pre><pre>stock at a rate of $0.10 per share prior to maturity.</pre><pre>Note is unsecured and was due October 1, 2008.</pre><pre> </pre><pre>Notes  payable to  various  individuals  with  interest            254,585               254,585</pre><pre>rates  ranging from 6% to 20%. The notes are  currently</pre><pre>in default.</pre><pre> </pre><pre>Debenture to an unrelated party bearing interest at a               75,000                75,000</pre><pre>rate of 10% per annum with interest payable quarterly.</pre><pre>The principal was convertible into common stock at a</pre><pre>conversion price of $0.19 per share prior to maturity.</pre><pre>Note is unsecured and was due on July 18, 2009.</pre><pre>                                                               -----------           -----------</pre><pre>                                                                 3,069,451             3,024,451</pre><pre>Less: debt discounts                                                    --                    --</pre><pre>                                                               -----------           -----------</pre><pre>                                                                 3,069,451             3,024,451</pre><pre> </pre><pre>   Current portion                                              (3,069,451)           (3,024,451)</pre><pre>                                                               -----------           -----------</pre><pre>   Long-term portion                                           $        --           $        --</pre><pre>                                                               ===========           ===========</pre>

<pre>The provision for income taxes is comprised of the following for the years ended</pre><pre>September 30:</pre><pre> </pre><pre>                                                    2012                 2011</pre><pre>                                                  --------             --------</pre><pre>Federal                                           $     --             $     --</pre><pre>State                                                 (800)                (800)</pre><pre>                                                  --------             --------</pre><pre>Provision for income taxes                        $   (800)            $   (800)</pre><pre>                                                  ========             ========</pre>

<pre>differences as follows for the years ended September 30:</pre><pre> </pre><pre>                                                    2012                 2011</pre><pre>                                                  --------             --------</pre><pre>Statutory rate                                       (34%)                (34%)</pre><pre>Increase (decrease) in taxes resulting from</pre><pre>the following:</pre><pre>  State income taxes, net of federal benefit           5%                   5%</pre><pre>  Change in valuation allowance                       29%                  29%</pre><pre>                                                   ------               ------</pre><pre>                                                       --%                  --%</pre><pre>                                                   ======               ======</pre>

<pre>Significant  components  of the  Company's  deferred tax assets and  liabilities</pre><pre>consist of the following at September 30:</pre><pre> </pre><pre>                                                      2012              2011</pre><pre>                                                    --------          --------</pre><pre>Deferred tax assets (liabilities):</pre><pre>Current:</pre><pre>  Reserves and accruals                           $ 1,320,647       $ 1,104,915</pre><pre>Non-current:</pre><pre>  Intangible assets                                   597,000           597,000</pre><pre>  Net operating losses                              5,779,734         7,326,145</pre><pre>  Other                                                60,031            62,547</pre><pre>  Valuation allowance                              (7,757,412)       (9,090,607)</pre><pre>                                                  -----------       -----------</pre><pre>                                                  $        --       $        --</pre><pre>                                                  ===========       ===========</pre>

<pre>The  following  table  summarizes  stock option  activity  under the above stock</pre><pre>option plans:</pre><pre> </pre><pre>                                                                                 Remaining</pre><pre>                                          Number of     Weighted-Average      Contractual Term</pre><pre>                                           Shares       Exercise Price           (in years)</pre><pre>                                           ------       --------------           ----------</pre><pre>Outstanding at September 30, 2010         1,976,000          $0.20                   2.0</pre><pre>  Granted                                        --</pre><pre>  Exercised                                      --</pre><pre>  Cancelled                                      --</pre><pre>                                        -----------</pre><pre>Outstanding at September 30, 2011         1,976,000          $0.20                   1.0</pre><pre>  Granted                                        --</pre><pre>  Exercised                                      --</pre><pre>  Cancelled                               1,526,000          $0.11                   0.0</pre><pre>                                        -----------</pre><pre>Outstanding at September 30, 2012           450,000          $0.50                   0.1</pre><pre>                                        ===========</pre>

<pre>                                       Outstanding                                      Exercisable</pre><pre>                    ----------------------------------------------     -------------------------------------------</pre><pre>                                   Weighted      Weighted Average                   Weighted     Weighted Average</pre><pre>                                    Average          Remaining                       Average         Remaining</pre><pre>                    Number of       Exercise      Contractual Life     Number of     Exercise     Contractual Life</pre><pre>Exercise Prices       shares         Price           (in years)          shares       Price          (in years)</pre><pre>---------------       ------         -----           ----------          ------       -----          ----------</pre><pre>    $0.50             450,000        $0.50               0.1             450,000      $0.50             1.1</pre>

28675193 7445480

476

684

0.83 3 0.95 0.82 3 4

5144

6286

5144 6286

543793

25068

568861

-568642

-568101

219 760 10 3 5

541

7255

162147

-49891

-19000

93256

-41447

51809

19000 41447 49891 41447 10362 712845 716086

361299

377980

603921

1678065 1697987

415861

370335

252086

200892

2040629

1587569

2708576 2158796

-800

-0.34

0.05

0.29

1320647

1104915

5779734

7326145

60031

62547

-7757412

-9090607

597000

-1333195

168431

22049098 2861945 250000 603921 603921 603921 603921 1500000 400000 1010000 0.50 300000 0.25 0.12 45000 45000 10000000

1976000

0.20

2.0

0.00

1976000

0.20

1.0

0.00

1526000 0.11 0.0

450000

0.50

0.1

0.50 450000

0.5

0.1 0.50 450000

0.50

1.1 45000

834842

26563

25670

38000 872842 2763699 2763699 2763699 2763699 25000 25000 25000 25000 88000 88000 834842 789842 177024 177024 1500000 1500000 30000 30000 30000 30000 30000 30000 254585 254585 75000 75000

3069451

3024451

0 0 3069451 3024451

-3069451

-3024451

0001031896 2011-10-01 2012-09-30 0001031896 2013-01-03 0001031896 2012-09-30 0001031896 2011-09-30 0001031896 2010-10-01 2011-09-30 0001031896 2010-09-30 0001031896 fil:SeriesAPreferredSharesMember 2010-09-30 0001031896 us-gaap:PreferredStockMember 2010-09-30 0001031896 us-gaap:CapitalUnitsMember 2010-09-30 0001031896 us-gaap:CommonStockMember 2010-09-30 0001031896 us-gaap:AdditionalPaidInCapitalMember 2010-09-30 0001031896 us-gaap:RetainedEarningsMember 2010-09-30 0001031896 us-gaap:ParentMember 2010-09-30 0001031896 us-gaap:PreferredStockMember 2010-10-01 2011-09-30 0001031896 us-gaap:CommonStockMember 2010-10-01 2011-09-30 0001031896 us-gaap:AdditionalPaidInCapitalMember 2010-10-01 2011-09-30 0001031896 us-gaap:RetainedEarningsMember 2010-10-01 2011-09-30 0001031896 us-gaap:ParentMember 2010-10-01 2011-09-30 0001031896 fil:SeriesAPreferredSharesMember 2011-09-30 0001031896 us-gaap:PreferredStockMember 2011-09-30 0001031896 us-gaap:CapitalUnitsMember 2011-09-30 0001031896 us-gaap:CommonStockMember 2011-09-30 0001031896 us-gaap:AdditionalPaidInCapitalMember 2011-09-30 0001031896 us-gaap:RetainedEarningsMember 2011-09-30 0001031896 us-gaap:ParentMember 2011-09-30 0001031896 us-gaap:PreferredStockMember 2011-10-01 2012-09-30 0001031896 us-gaap:CommonStockMember 2011-10-01 2012-09-30 0001031896 us-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0001031896 us-gaap:RetainedEarningsMember 2011-10-01 2012-09-30 0001031896 us-gaap:ParentMember 2011-10-01 2012-09-30 0001031896 fil:SeriesAPreferredSharesMember 2012-09-30 0001031896 us-gaap:PreferredStockMember 2012-09-30 0001031896 us-gaap:CapitalUnitsMember 2012-09-30 0001031896 us-gaap:CommonStockMember 2012-09-30 0001031896 us-gaap:AdditionalPaidInCapitalMember 2012-09-30 0001031896 us-gaap:RetainedEarningsMember 2012-09-30 0001031896 us-gaap:ParentMember 2012-09-30 0001031896 fil:SoilMedicPatentMember 2010-09-30 0001031896 fil:SoilMedicPatentMember 2010-10-01 2011-09-30 0001031896 fil:SoilMedicPatentMember 2011-09-30 0001031896 fil:SoilMedicPatentMember 2011-10-01 2012-09-30 0001031896 fil:SoilMedicPatentMember 2012-09-30 0001031896 2012-10-01 2013-09-30 0001031896 2013-10-01 2014-09-30 0001031896 2007-10-04 0001031896 2010-06-23 0001031896 2005-01-06 0001031896 fil:NumberOfSharesMember 2010-09-30 0001031896 fil:WeightedAverageExercisePriceMember 2010-09-30 0001031896 fil:WeightedAverageRemainingContractualTermInYearsMember 2010-09-30 0001031896 fil:WeightedAverageExercisePriceMember 2010-10-01 2011-09-30 0001031896 fil:NumberOfSharesMember 2011-09-30 0001031896 fil:WeightedAverageExercisePriceMember 2011-09-30 0001031896 fil:WeightedAverageRemainingContractualTermInYearsMember 2011-09-30 0001031896 fil:NumberOfSharesMember 2011-10-01 2012-09-30 0001031896 fil:WeightedAverageExercisePriceMember 2011-10-01 2012-09-30 0001031896 fil:WeightedAverageRemainingContractualTermInYearsMember 2011-10-01 2012-09-30 0001031896 fil:NumberOfSharesMember 2012-09-30 0001031896 fil:WeightedAverageExercisePriceMember 2012-09-30 0001031896 fil:WeightedAverageRemainingContractualTermInYearsMember 2012-09-30 iso4217:USD shares iso4217:USD shares pure EX-101.SCH 6 soyl-20120930.xsd 000320 - Statement - Summary of outstanding securities (Details) link:presentationLink link:definitionLink link:calculationLink 000240 - Disclosure - PROPERTY AND EQUIPMENT (Tables) link:presentationLink link:definitionLink link:calculationLink 000130 - Disclosure - NOTES PAYABLE link:presentationLink link:definitionLink link:calculationLink 000250 - Disclosure - GOODWILL AND INTANGIBLE ASSETS (Tables) link:presentationLink link:definitionLink link:calculationLink 000470 - Statement - Stock Option Outstanding and Exercisable (Details) link:presentationLink link:definitionLink link:calculationLink 000040 - Statement - Consolidated Statements of Operations link:presentationLink link:definitionLink link:calculationLink 000400 - Statement - Provision For Income Taxes Comprised Of The Following (Details) link:presentationLink link:definitionLink link:calculationLink 000410 - Statement - Provision For Income Taxes Rate Difference (Details) link:presentationLink link:definitionLink link:calculationLink 000440 - Statement - COMMITMENTS AND CONTINGENCIES CONSISTS OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink 000110 - Disclosure - INTANGIBLE ASSETS AND GOODWILL link:presentationLink link:definitionLink link:calculationLink 000100 - Disclosure - PROPERTY AND EQUIPMENT, NET link:presentationLink link:definitionLink link:calculationLink 000020 - Statement - Consolidated Balance Sheets link:presentationLink link:definitionLink link:calculationLink 000290 - Disclosure - Summarizes Stock Options (Table) link:presentationLink link:definitionLink link:calculationLink 000140 - Disclosure - INCOME TAXES link:presentationLink link:definitionLink link:calculationLink 000450 - Statement - CAPITAL STOCK TRANSACTIONS (Details) link:presentationLink link:definitionLink link:calculationLink 000350 - Statement - PROPERTY AND EQUIPMENT CONSISTED OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink 000310 - Statement - ADVERTISING CONSISTS OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink 000160 - Disclosure - PREFERRED STOCK link:presentationLink link:definitionLink link:calculationLink 000120 - Disclosure - ACCOUNTS PAYABLE AND ACCRUED EXPENSES link:presentationLink link:definitionLink link:calculationLink 000380 - Statement - ACCOUNTS PAYABLE AND ACCRUED EXPENSES CONSISTS OF (Details) link:presentationLink link:definitionLink link:calculationLink 000280 - Disclosure - INCOME TAXES AS FOLLOWS (Tables) link:presentationLink link:definitionLink link:calculationLink 000060 - Statement - Consolidated Statements of Cash Flows link:presentationLink link:definitionLink link:calculationLink 000430 - Statement - Income Tax Transactions (Details) link:presentationLink link:definitionLink link:calculationLink 000220 - Disclosure - The following is a summary of outstanding securities (Tables) link:presentationLink link:definitionLink link:calculationLink 000300 - Statement - GOING CONCERN AND MANAGEMENT'S PLANS (Details) link:presentationLink link:definitionLink link:calculationLink 000030 - Statement - Consolidated Balance Sheets Parentheticals link:presentationLink link:definitionLink link:calculationLink 000210 - Disclosure - CONCENTRATION OF CREDIT RISK AS FOLLOWS (Tables) link:presentationLink link:definitionLink link:calculationLink 000420 - Statement - Deferred Tax Assets And Liabilities (Details) link:presentationLink link:definitionLink link:calculationLink 000090 - Disclosure - INVENTORY link:presentationLink link:definitionLink link:calculationLink 000260 - Disclosure - ACCOUNTS PAYABLE AND ACCRUED EXPENSES AS FOLLOWS (Tables) link:presentationLink link:definitionLink link:calculationLink 000360 - Statement - INTANGIBLE ASSETS AND GOODWILL CONSISTED OF THE FOLLOWING (Details) {Stockholders' Equity} link:presentationLink link:definitionLink link:calculationLink 000480 - Statement - RELATED PARTY and SUBSEQUENT EVENTS TRANSACTIONS CONSISTS OF (Details) link:presentationLink link:definitionLink link:calculationLink 000080 - Disclosure - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES link:presentationLink link:definitionLink link:calculationLink 000370 - Statement - INTANGIBLE ASSETS CONSISTS OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink 000190 - Disclosure - SUBSEQUENT EVENTS link:presentationLink link:definitionLink link:calculationLink 000010 - Document - Document and Entity Information link:presentationLink link:definitionLink link:calculationLink 000230 - Disclosure - INVENTORY AS OF (Tables) link:presentationLink link:definitionLink link:calculationLink 000170 - Disclosure - COMMON STOCK link:presentationLink link:definitionLink link:calculationLink 000460 - Statement - Summarizes Stock Option Activity (Details) {Stockholders' Equity} link:presentationLink link:definitionLink link:calculationLink 000340 - Statement - INVENTORY CONSISTED OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink 000390 - Statement - NOTES PAYABLE CONSISTS OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink 000270 - Disclosure - Notes Payable As Follows (Tables) link:presentationLink link:definitionLink link:calculationLink 000150 - Disclosure - COMMITMENTS AND CONTINGENCIES link:presentationLink link:definitionLink link:calculationLink 000070 - Disclosure - ORGANIZATION AND BASIS OF PRESENTATION link:presentationLink link:definitionLink link:calculationLink 000050 - Statement - Consolidated Statements of Stockholders' Deficit link:presentationLink link:definitionLink link:calculationLink 000180 - Disclosure - RELATED PARTY TRANSACTIONS link:presentationLink link:definitionLink link:calculationLink 000200 - Disclosure - ACCOUNTING POLICIES (Policies) link:presentationLink link:definitionLink link:calculationLink 000330 - Statement - CONCENTRATION OF CREDIT RISK CONSISTED OF THE FOLLOWING (Details) link:presentationLink link:definitionLink link:calculationLink EX-101.CAL 7 soyl-20120930_cal.xml EX-101.DEF 8 soyl-20120930_def.xml EX-101.LAB 9 soyl-20120930_lab.xml Previous note was amended to increase the principal due Previous note was amended to increase the principal due Ms. Visco loaned Additional Loan From Visco Interest expense incurred Stock Option Exercisable: Deferred tax assets (liabilities): State Interest to related parties Less accumulated depreciation ACCRUED EXPENSES AS FOLLOWS INVENTORY Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents Proceeds from sale of assets Impairment of intangible equipment Series A Preferred Amount Revenue Preferred Stock, par value Parentheticals Total liabilities Total liabilities Property and equipment, net Amendment Flag Stock Option Activity STOCKHOLDERS EQUITY Options to purchase Shares exercise price Options to purchase Shares exercise price Total Debenture Payable Note payable to a related party Note payable to a related party Finished goods INVENTORY AS OF NET LOSS PER SHARE POLICY ACCOUNTS AND NOTES RECEIVABLE Cash flows from financing activities: Accrued expenses Entity Filer Category Current Fiscal Year End Date Weighted Average Remaining Contractual Life (in Years) Weighted Average Remaining Contractual Life (in Years) Number of Shares. Number of Shares Granted options to purchase Shares Granted options to purchase Shares Accrued Litigation Expenses Accrued Litigation Expenses. Judgements payable to Stockhausen The agreed amount of judgements payable to Stockhausen. Federal net operating loss carryforwards Federal net operating loss carryforwards Note payable to Diana Visco bearing interest at Note payable to Diana Visco bearing interest at Interest Notes Payable As Follows INVENTORY POLICY PREFERRED STOCK ORGANIZATION AND BASIS OF PRESENTATION {1} ORGANIZATION AND BASIS OF PRESENTATION Series A Preferred Shares Accounts Receivable, allowance for doubtful accounts Document Fiscal Period Focus Exercise Price Exercise Prices Weighted Average Remaining Contractual Term (in Years) Increase (decrease) in taxes resulting from the following: Statutory rate Provision for income taxes. Debenture payable to an unrelated party bearing interest. Debenture payable to an unrelated party bearing interest Future revenues required an impairment charge Future revenues required an impairment charge PROPERTY AND EQUIPMENT GROSS Total Series A convertible preferred stock Total Series A convertible preferred stock Advertising expenses Negative working capital Sum of the carrying values as of the balance sheet date of negative working capital INVENTORY AS OF {1} INVENTORY AS OF INCOME TAXES POLICY REVENUE RECOGNITION RELATED PARTY TRANSACTIONS {1} RELATED PARTY TRANSACTIONS NOTES PAYABLE {1} NOTES PAYABLE Entire disclosure for notes payable during the period PROPERTY AND EQUIPMENT, NET {1} PROPERTY AND EQUIPMENT, NET INVENTORY {1} INVENTORY Cash paid during the year for interest Stock-based compensation General and administrative Common Stock, Par Value Weighted Average Remaining Contract Life (Years). Number of Shares Cancelled Cancelled CAPITAL STOCK TRANSACTIONS: Amount to pay to Raymond and Cheryl The amount to be payable to Raymond and Cheryl Nielsen Stockhausen claim present total The agreed amount of present total of Stockhausen claim. Notes payable to various individuals with interest Notes payable to various individuals with interest Number of customers Percent of accounts receivable The following is a summary of outstanding securities {1} The following is a summary of outstanding securities The following is a summary of outstanding securities ADVERTISING Net cash provided by (used in) financing activities Net cash provided by (used in) financing activities Common Stock, Shares Authorized Preferred Stock, shares authorized Series A preferred stock, $0.50 stated value, 25,000,000 shares authorized, 2,763,699 shares issued and outstanding at September 30, 2012 and 2011, respectively Liabilities and Stockholders' Deficit: Entered into a new note with Ms. Visco Additional Loan From Visco Additional Loan From Visco Weighted Average Exercise Price. Exercised INTANGIBLE ASSETS CONSISTS OF THE FOLLOWING STOCK HOLDERS EQUITY: ADVERTISING CONSISTS OF THE FOLLOWING: GOODWILL AND INTANGIBLE ASSETS {1} GOODWILL AND INTANGIBLE ASSETS RECENT ACCOUNTING PRONOUNCEMENTS COMMITMENTS AND CONTINGENCIES {1} COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES INTANGIBLE ASSETS AND GOODWILL ORGANIZATION AND BASIS OF PRESENTATION Net cash provided by investing activities Net cash provided by investing activities Total Loss before income taxes Additional paid-in capital Stockholders' deficit: Accounts receivable, net of allowance of $35,088 and $38,538 at September 30, 2012 and 2011, respectively Assets: Number of Shares State net operating loss carryforwards State net operating loss carryforwards Income Tax Transactions: Federal Net Debenture Payable Net Debenture Payable Debenture payable to an unrelated party bearing interest Debenture payable to an unrelated party bearing interest Total Accounts Payable Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). INTANGIBLE ASSETS CONSISTS OF THE FOLLOWING: ACCOUNTS PAYABLE AND ACCRUED EXPENSES AS FOLLOWS INTELLECTUAL PROPERTY Entire policy disclosure for intellectual property LONG-LIVED ASSETS Cash paid during the year for income taxes Proceeds from related party notes Gain on sale/disposal of equipment {1} Gain on sale/disposal of equipment Loss from operations Loss from operations Amortization of intangible assets Total assets Total assets Statement [Table] Document Fiscal Year Focus Entity Well-known Seasoned Issuer SUBSEQUENT EVENTS: Agreed amount to pay to Stockhausen Agreed amount to pay to Stockhausen Valuation Allowance increased decreased Provision For Income Taxes Rate Difference: Provision For Income Taxes Comprised Of The Following: Amortization expense for the year ended Amortization expense for the year ended Additions Depreciation expense Estimated useful life (in years) Office furnishings maximum Estimated useful life (in years) Office furnishings maximum Number of customers. Number of customers. Summary of outstanding securities: Table Summarizes Stock Option Activity CONCENTRATION OF CREDIT RISK LEGAL COSTS ASSOCIATED WITH LOSS CONTINGENCIES ACCOUNTS PAYABLE AND ACCRUED EXPENSES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Stock compensation expense Provision for income taxes Intangible assets Document Type Cancelled. Cancelled. Stock options were available for grant Stock options were available for grant options to purchase Shares options to purchase Shares LITIGATION: Total Accrued Expenses Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Accrued expenses consisted of: Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Amortization {1} Amortization Machinery Summarizes Stock Options INCOME TAXES Accounts payable {1} Accounts payable Inventory {1} Inventory Accumulated Deficit Additional Paid-in Capital Common Stock Shares CHANGES IN STOCK HOLDERS EQUITY Gain on sale/disposal of equipment Total operating expenses Total operating expenses Preferred Stock, shares outstanding Current liabilities Cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Current assets Issuance of shares of commonstock under plan 2005 Issuance of shares of commonstock under plan 2005 Debenture to an unrelated party bearing interest Debenture to an unrelated party bearing interest Debenture payable to a related party Original balance Debenture payable to a related party Original balance Accounts payable {2} Accounts payable Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Accounts payable consisted of : Amortization expense is expected Amortization expense is expected for the year ended Estimated useful life (in years) Office furnishings minimum Estimated useful life (in years) Office furnishings minimum Accounts receivable from individual customers: Notes Payable As Follows {1} Notes Payable As Follows Entire table text block for notes payable GOODWILL AND INTANGIBLE ASSETS ACCOUNTING FOR CONVERTIBLE DEBT SUBSEQUENT EVENTS {1} SUBSEQUENT EVENTS SUBSEQUENT EVENTS INTANGIBLE ASSETS AND GOODWILL {1} INTANGIBLE ASSETS AND GOODWILL Payments on capital lease obligations Cash flows from investing activities: Accounts receivable Common Stock Amount Sales and marketing Common Stock, Shares Outstanding Document Period End Date Granted Weighted-Average Exercise Price Granted options to purchase Shares exercise price Granted options to purchase Shares exercise price Current: Office furnishings, fixtures and equipment PROPERTY AND EQUIPMENT CONSISTED OF THE FOLLOWING: INVENTORY CONSISTED OF THE FOLLOWING: EX-101.PRE 10 soyl-20120930_pre.xml XML 11 R39.htm IDEA: XBRL DOCUMENT

NOTES PAYABLE CONSISTS OF THE FOLLOWING (Details) (USD $)	Sep. 30, 2012	Sep. 30, 2011
Debenture payable to a related party	$ 25,000	$ 25,000
Debenture payable to a related party bearing interest at	25,000	25,000
Note payable to a related party	88,000	88,000
Note payable to Diana Visco bearing interest at	834,842	789,842
Debenture payable to a related party Original balance	177,024	177,024
Dbenture payable to Ray Nielsen bearing interest at a	1,500,000	1,500,000
Debenture payable to an unrelated party bearing interest	30,000	30,000
Debenture payable to an unrelated party bearing interest,	30,000	30,000
Debenture payable to an unrelated party bearing interest.	30,000	30,000
Notes payable to various individuals with interest	254,585	254,585
Debenture to an unrelated party bearing interest	75,000	75,000
Total Debenture Payable	3,069,451	3,024,451
Less: debt discounts	0	0
Net Debenture Payable	3,069,451	3,024,451
Current portion	(3,069,451)	(3,024,451)
Long-term portion	$ 0	$ 0