Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2010
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 000-22855
AMERICAN SOIL TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 95-4780218
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7745 Alabama Ave #9 Canoga Park, CA 91304
(Address of principal executive offices)
(818) 899-4686
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
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 during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X}
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell Company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of February 18, 2011, the number of shares of common stock issued and
outstanding was 68,090,590.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited) 3
Consolidated Balance Sheets -
December 31, 2010 and September 30, 2010 3
Consolidated Statements of Operations -
For the three months ended December 31, 2010 and 2009 4
Consolidated Statements of Cash Flows -
For the three months ended December 31, 2010 and 2009 5
Consolidated Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Qualitative and Quantitative Disclosures About Market Risk 13
Item 4. Controls and Procedures 13
Item 4T. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 1A. Risk Factors 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits 15
SIGNATURES 16
2
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, September 30,
2010 2010
------------ ------------
Assets:
Current assets
Cash and cash equivalents $ 1,142 $ 2,045
Accounts receivable, net of allowance of $38,538 and $38,538
at December 31,2010 and September 30, 2010, respectively 15,671 6,010
Inventories 12,311 13,622
Prepaid expenses and other current assets 2,520 14,541
------------ ------------
Total current assets 31,644 36,218
Property and equipment, net 4,791 15,014
Intangible assets 149,674 162,147
------------ ------------
Total assets $ 186,109 $ 213,379
============ ============
Liabilities and Stockholders' Deficit:
Current liabilities
Accounts payable $ 1,663,896 $ 1,625,758
Accrued liabilities 1,753,579 1,626,652
Notes payable 1,919,585 1,919,585
Capital lease obligations -- 3,527
Notes payable to related parties 1,104,866 1,101,866
------------ ------------
Total current liabilities 6,441,926 6,277,388
------------ ------------
Stockholders' deficit:
Series A preferred stock, $0.50 stated value, 25,000,000
shares authorized, 2,763,699 shares issued and outstanding
at December 31,2010 and September 30, 2010, respectively 1,381,849 1,381,849
Common stock, $0.001 par value, 100,000,000 shares
authorized, 68,090,590 shares issued and outstanding at
December 31, 2010 and September 30, 2010, respectively 68,091 68,091
Additional paid-in capital 19,804,992 19,796,056
Accumulated deficit (27,510,749) (27,310,005)
------------ ------------
Total stockholders' deficit (6,255,817) (6,064,009)
------------ ------------
Total liabilities and stockholders' deficit $ 186,109 $ 213,379
============ ============
See accompanying Notes to Consolidated Financial Statements.
3
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Montbs Three Montbs
Ended Ended
December 31, December 31,
2010 2009
------------ ------------
Revenue $ 21,014 $ 10,258
Cost of goods sold (excluding amortization of
intangible assets) 13,644 6,831
------------ ------------
Gross profit 7,370 3,427
------------ ------------
Operating expenses:
General and administrative 167,622 299,571
Sales and marketing 75 317
Amortization of intangible assets 12,473 12,473
------------ ------------
Total operating expenses 180,170 312,361
------------ ------------
Loss from operations (172,800) (308,934)
Other (income) expense
Interest expense 26,744 26,567
Loss on sale of property and equipment 1,200 --
------------ ------------
Loss before income taxes (200,744) (335,501)
Provision for income taxes -- --
------------ ------------
Net loss $ (200,744) $ (335,501)
============ ============
Net loss per share basic and diluted $ (0.00) $ (0.00)
============ ============
Weighted average common shares outstanding
used in per share calculations 68,090,590 67,427,547
============ ============
See accompanying Notes to Consolidated Financial Statements.
4
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Montbs Three Montbs
Ended Ended
December 31, December 31,
2010 2009
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (200,744) $ (335,501)
Adjustments to reconcile net loss to net cash
Loss on disposal of assets 1,200 --
Depreciation and amortization 18,496 20,125
Stock-based compensation 8,936 136,936
Changes in operating assets and liabilities:
Accounts receivable (6,661) 9,633
Inventory 1,312 1,202
Prepaids and other current assets -- 762
Accounts payable 38,137 (32,149)
Accrued expenses 138,948 145,416
---------- ----------
Net cash used in operating activities (376) (53,576)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party notes 3,000 48,500
Payments on capital lease obligations (3,527) (4,524)
Repayments on notes payable -- (2,181)
---------- ----------
Net cash provided by (used in) financing activities (527) 41,795
---------- ----------
Net decrease in cash and cash equivalents (903) (11,781)
NONCASH INVESTING & FINANCING ACTIVITIES:
Cash and cash equivalents at beginning of period 2,045 13,604
---------- ----------
Cash and cash equivalents at end of period $ 1,142 $ 1,823
========== ==========
See accompanying Notes to Consolidated Financial Statements.
5
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
(UNAUDITED)
1. BUSINESS
The Company is primarily engaged in the marketing 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 also expanded to provide next-generation and sustainable fertilizers
thru 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 deemed not to be proprietary and subsequently deemed to have little
or no value. Smart World sells homogenized fertilizers, non-toxic insect
controls, plant protectants, seed, and soil and silage inoculants. Smart World
also provides advanced, custom-formulated products built to suit unusual growing
conditions and environments. Due to losses incurred in 2008, management
terminated Smart World employees and seeks to operate through commission-based
sales representatives. Additionally, the Company has several debt obligations
that are past the contractual maturity date or are due and payable due to non
payment of interest.
2. GOING CONCERN AND MANAGEMENT'S PLAN
The Company has sustained significant losses and has an accumulated deficit of
$27,510,749 and negative working capital of $6,410,282 as of December 31, 2010.
The ability of the Company to continue as a going concern is dependent upon
obtaining additional capital and financing, and ultimately generating positive
cash flows from operations. Management intends to seek additional capital either
through debt or equity offerings. 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. 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.
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3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements of the Company are unaudited and have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information, pursuant to the
rules and regulations of the Securities and Exchange Commission. Notes to the
consolidated financial statements which would substantially duplicate the
disclosures contained in the audited financial statements for the most recent
fiscal year 2010 as reported in the Company's Form 10-K have been omitted. The
results of operations for the three month periods ended December 31, 2010 and
2009 are not necessarily indicative of the results to be expected for the full
year. In the opinion of management, the consolidated financial statements
include all adjustments, consisting of normal recurring accruals, necessary to
present fairly the Company's financial position, results of operations and cash
flows. These statements should be read in conjunction with the financial
statements and related notes which are part of the Company's Annual Report on
Form 10-K for the year ended September 30, 2010.
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 December 31:
2010
----
Percent of accounts receivable 76%
Number of customers 2
Sales from individual customers representing 10% or more of sales consist of the
following customers for the three months ended December 31:
2010 2009
---- ----
Percent of sales 95% 85%
Number of customers 4 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.
NET LOSS PER SHARE
Basic net 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 net loss per share that could occur
7
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 net 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 three months ended December 31:
2010 2009
---------- ----------
Series A convertible preferred stock 2,763,699 2,763,699
---------- ----------
2,763,699 2,763,699
========== ==========
4. INVENTORIES
Inventories consist of the following at:
December 31, September 30,
2010 2010
-------- --------
Unaudited
Raw materials $ 7,767 $ 9,167
Finished goods 4,544 4,455
-------- --------
$ 12,311 $ 13,622
======== ========
5. ACCRUED EXPENSES
Accrued expenses consist of the following at:
December 31, September 30,
2010 2010
-------- --------
Unaudited
Interest $ 336,876 $ 325,434
Interest to related parties 163,320 150,675
Compensation and related 1,253,383 1,150,543
---------- ----------
$1,753,579 $1,626,652
========== ==========
6. NOTES PAYABLES AND RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
During the quarter ended December 31, 2010, The Louie Visco Estate loaned the
Company an additional $3,000. This note was consolidated with a note issued in
August 2000 for $85,000, and accordingly the previous note has been superceeded.
The new note is for a total of $88,000. The principal is due on August 31, 2011.
Interest is payable monthly based upon the prime rate.
8
7. STOCKHOLDERS' DEFICIT
STOCK OPTIONS
As of December 31, 2010, there were 1,976,000 stock options outstanding with a
weighted average exercise price of $0.19 and a remaining contractual life of
1.75 years. Stock option expense for the quarters ending December 31, 2010 and
2009 was $8,936 and $8,936, respectively which is included in general and
administrative expenses in the accompanying Statement of Operations.
COMMON STOCK
On October 8, 2009, the Company issued 3,125,000 shares of common stock for
settlement of a note.
On October 9, 2009, the Company issued 4,000,000 shares of common stock at
$0.032 per share to officers and directors for services rendered. The shares
were immediately vested and accordingly, the Company valued the shares based on
the Company's stock price on the date of grant.
8. 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.
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. On January 21, 2011, we agreed to pay interest on the settlement
amount at 4%, per annum.
To the best knowledge of our management, there are no other legal proceedings
pending against us.
9
ITEM 2. 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.
FORWARD-LOOKING STATEMENTS
The following information contains certain forward-looking statements.
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 cutting-edge technology that decreases the
need for water and improves the soil in the "Green Industry" consisting of
agriculture, turf and horticulture.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, our selected
financial information:
Three Months Ended Three Months Ended
December 31, 2010 December 31, 2009
----------------- -----------------
(Unaudited) (Unaudited)
STATEMENT OF OPERATIONS DATA:
Revenue $ 21,014 $ 10,258
Net Loss (200,744) (335,501)
Net Loss per Share $ (0.00) $ (0.00)
December 31, 2010 September 30, 2010
----------------- ------------------
(Unaudited)
BALANCE SHEET DATA:
Current Assets $ 31,644 $ 36,218
Total Property & Equipment, Net 4,791 15,014
Intellectual Property, Net 149,674 162,147
Total Assets 186,109 213,379
Total Current Liabilities 6,441,926 6,277,388
Accumulated Deficit $(27,510,749) $(27,310,005)
10
THREE MONTHS ENDED DECEMBER 31, 2010 (UNAUDITED) COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 2009 (UNAUDITED)
REVENUES
Revenues for the three months ended December 31, 2010 were $21,014, compared to
$10,258 for the three months ended December 31, 2009, an increase of 105%. This
increase in revenue is a direct result of repeat customers that now have the
ability to purchase more product because of the economic improvements in the
industry.
COST OF SALES
Cost of goods sold increased to $13,644 for the three months ended December 31,
2010 from $6,831, for the three months ended December 31, 2009. The increase in
the cost of sales is the result of the increased revenues during this period.
Our gross margins were 35% and 33% for the three months ended December 31, 2010
and 2009, respectively. The increase in our gross margins was due to an increase
in sales in relation to our costs of sale during three months ending December
31, 2010.
OPERATING EXPENSES
Operating expenses decreased 42% to $180,170 from $312,361 for the three month
period ended December 31, 2010 and 2009, respectively.
This decrease in operating expenses was a result in decreased operations. Our
general and administrative expenses decreased to $167,622 for the three months
ended December 31, 2010 from $299,571 for the three months ended December 31,
2009 due to the continued reduction in compensation and other administrative
costs.
NET LOSS
We experienced a net loss from operations of $200,744 for the three months ended
December 31, 2010 as compared to a net loss of $335,501 for the three months
ended December 31, 2009. Our general and administrative expense decreased from
$299,571 in the three months ended December 31, 2009 to $167,622 for the three
months ended December 31, 2010.
The decrease in the net loss is directly related to a reduction in certain
staff, reduced operations, and an increase in revenue noted above.
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 sufficient enough or the geographic
11
distribution of sales concentrated enough to determine if a seasonal trend
exists although the initial indication is that our markets will become diverse
and therefore not indicate significant seasonal variations. As we 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. As we expand into the hydroponics organic market, we should experience
a significant lessening of seasonal variations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $1,142 and $2,045 at December 31, 2010 and
September 30, 2010, respectively. Net cash used in operations was $376, for the
period ended December 31, 2010 compared to net cash used in operations of
$53,576 for the comparable period ended December 31, 2009. We have historically
relied upon one of our officers and significant shareholders to provide cash to
meet short term operating cash requirements.
At December 31, 2010, the outstanding balance of notes payable was $3,024,451.
These debentures consisted of: a) $1,500,000, 8% per annum debenture at which is
currently in default and in dispute; (b) various debentures totaling $419,585
with interest per annum from 8-10%; (c) a loan from an officer and shareholder
for $789,842 bearing interest at prime; (d) various loans from related parties
totaling $315,024 bearing interest from prime to 12%.
Interest expense for the three months ended December 31, 2010 and 2009 was
$26,744 and $26,567, respectively.
We have a working capital deficit $6,410,282 as of December 31, 2010 compared to
working capital deficit of $6,241,170 as of September 30, 2010. Our increase in
current liabilities is directly related to an increase in our notes payable,
accounts payable and accrued liabilities.
As shown in the accompanying financial statements, we have incurred an
accumulated deficit of $27,510,749 and a working capital deficit of
approximately $6,410,282 as of December 31, 2010. 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.
We will consider both the public and private sale of securities and/or 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.
12
Our auditors issued an explanatory paragraph regarding substantial doubt about
the Company's ability to continue as a going concern in our most recent 10-K for
the year ended September 30, 2010.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to provide
reasonable assurance that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives and in reaching a reasonable level of assurance
management necessarily was required to apply its judgment in evaluating the cost
benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b) of the Exchange Act, we carried out an evaluation
under the supervision and with the participation of our management, including
our Chief Executive Officer, 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. For the year ended September 30, 2010, the Chief Executive Officer
had evaluated the effectiveness of our disclosure controls and procedures and
had determined that asset recoverability analysis needs to be improved. In
response to this deficiency, we hired a financial expert to assist us in
improving our disclosure controls and procedures. We believe that the changes
implemented enabled the Company to improve its timely reporting of the required
assessment analysis and related disclosures. Based on the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective at the reasonable assurance level as of
December 31, 2010.
There has been no other change in our internal controls over financial reporting
during our most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal controls over financial
reporting.
ITEM 4T. CONTROLS AND PROCEDURES
Not applicable
13
PART II - OTHER INFORMATION
ITEM 1. 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
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 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
14
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following Exhibits are filed herein:
No. Title
--- -----
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
15
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, duly authorized.
DATED: February 22, 2011 AMERICAN SOIL TECHNOLOGIES, INC.
By: /s/ Carl P. Ranno
------------------------------------------
Carl P. Ranno
Its: President, Chief Executive Officer, Chief
Financial Officer (Principal Executive
Officer, Principal Financial Officer
and Principal Accounting Officer)
1