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 March 31, 2011
[ ] 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 May 16, 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 -
March 31, 2011 and September 30, 2010 3
Consolidated Statements of Operations -
For the three and six months ended March 31, 2011 and 2010 4
Consolidated Statements of Cash Flow -
For the six months ended March 31, 2011 and 2010 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)
March 31, 2011 September 30, 2010
-------------- ------------------
Assets:
Current assets
Cash and cash equivalents $ 18,672 $ 2,045
Accounts receivable, net of allowance of $38,538 at
March 31, 2011 and September 30, 2010 19,596 6,010
Inventories 10,695 13,622
Prepaid expenses and other current assets 2,520 14,541
------------ ------------
Total current assets 51,483 36,218
Property and equipment, net 1,494 15,014
Intangible assets 137,201 162,147
------------ ------------
Total assets $ 190,178 $ 213,379
============ ============
Liabilities and Stockholders' Deficit:
Current liabilities
Accounts payable $ 1,708,543 $ 1,625,758
Accrued liabilities 1,884,817 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 6,617,811 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 March 31, 2011 and
September 30, 2010 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
March 31, 2011 and September 30, 2010 68,091 68,091
Additional paid-in capital 19,813,928 19,796,056
Accumulated deficit (27,691,501) (27,310,005)
------------ ------------
Total stockholders' deficit (6,427,633) (6,064,009)
------------ ------------
Total liabilities and stockholders' deficit $ 190,178 $ 213,379
============ ============
See accompanying Notes to Consolidated Financial Statements.
3
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2011 2010 2011 2010
------------ ------------ ------------ ------------
Revenue $ 62,804 $ 41,329 $ 83,818 $ 51,587
Cost of goods sold (excluding amortization
of intangible assets) 19,359 14,955 33,003 21,786
------------ ------------ ------------ ------------
Gross profit 43,445 26,374 50,815 29,801
------------ ------------ ------------ ------------
Operating expenses:
General and administrative 180,193 270,999 347,815 570,591
Sales and marketing 75 434 150 751
Amortization of intangible assets 12,473 12,473 24,946 24,946
------------ ------------ ------------ ------------
Total operating expenses 192,741 283,906 372,911 596,288
------------ ------------ ------------ ------------
Loss from operations (149,296) (257,532) (322,096) (566,487)
Other (income) expense
Interest expense 36,321 31,230 63,065 57,776
Gain on sale of property and equipment (4,865) (3,206) (3,665) (3,206)
------------ ------------ ------------ ------------
Loss before income taxes (180,752) (285,556) (381,496) (621,057)
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (180,752) $ (285,556) $ (381,496) $ (621,057)
============ ============ ============ ============
Net loss per share basic and diluted $ (0.00) $ (0.00) $ (0.01) $ (0.01)
============ ============ ============ ============
Weighted average common shares outstanding
used in per share calculations 68,090,590 68,090,590 68,090,590 67,759,069
============ ============ ============ ============
See accompanying Notes to Consolidated Financial Statements.
4
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Six Months
Ended Ended
March 31, March 31,
2011 2010
---------- ----------
Cash flows from operating activities:
Net loss $ (381,496) $ (621,057)
Adjustments to reconcile net loss to net cash
Gain on disposal of assets and inventory (3,665) (3,206)
Depreciation and amortization 31,467 40,333
Stock-based compensation 17,872 145,872
Changes in operating assets and liabilities:
Accounts receivable (13,586) (3,374)
Inventory 10,591 9,559
Prepaid expenses and other assets 12,022 (2,233)
Accounts payable 76,468 49,249
Due to related parties 6,316 24,135
Deferred revenue -- 23,937
Accrued expenses 258,165 270,649
---------- ----------
Net cash provided by (used in) operating activities 14,154 (66,136)
---------- ----------
Cash flows from investing activities:
Proceeds from sale of assets 3,000 3,206
---------- ----------
Net cash used in investing activities 3,000 3,206
---------- ----------
Cash flows from financing activities:
Proceeds from related party notes 3,000 84,225
Payments on capital lease obligations (3,527) (9,237)
Repayments on notes payable -- (4,454)
---------- ----------
Net cash provided by (used in) financing activities (527) 70,534
---------- ----------
Net decrease in cash and cash equivalents 16,627 7,604
Cash and cash equivalents at beginning of period 2,045 12,604
---------- ----------
Cash and cash equivalents at end of period $ 18,672 $ 20,208
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ --
========== ==========
Cash paid during the period for income taxes $ -- $ --
========== ==========
Supplemental disclosure of non-cash investing and financing activities:
Conversion of debt and accrued interest into common stock $ -- $ 125,000
========== ==========
See accompanying Notes to Consolidated Financial Statements.
5
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(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. 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
$27,691,501 and negative working capital of $6,566,328 as of March 31, 2011. 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.
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
6
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 and six-month periods ended March 31, 2011
and 2010 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 March 31:
2011 2010
---- ----
Percent of accounts receivable 79% 100%
Number of customers 2 4
Sales from individual customers representing 10% or more of sales consist of the
following customers for the three months ended March 31:
2011 2010
---- ----
Percent of sales 95% 83%
Number of customers 4 3
Sales from individual customers representing 10% or more of sales consist of the
following customers for the six months ended March 31:
2011 2010
---- ----
Percent of sales 86% 75%
Number of customers 3 3
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
upon conversion or exercise of securities, options or other such items to common
7
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. As of March 31, 2011, the Company has 1,976,000
stock options for which all of the exercise prices were in excess of the average
closing price of the Company's stock during the three and six months ended March
31, 2011 and 2010, and thus no shares are considered dilutive under the treasury
stock method.
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 and six months:
March 31, March 31,
2011 2010
---------- ----------
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:
March 31, September 30,
2011 2010
---------- ----------
Raw materials $ 6,350 $ 9,167
Finished goods 4,345 4,455
---------- ----------
$ 10,695 $ 13,622
========== ==========
5. ACCRUED EXPENSES
Accrued expenses consist of the following at:
March 31, September 30,
2011 2010
---------- ----------
Interest $ 348,072 $ 325,434
Interest to related parties 175,706 150,675
Compensation and related 1,361,039 1,150,543
---------- ----------
$1,884,817 $1,626,652
========== ==========
6. NOTES PAYABLES AND RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
During the six-months ended March 31, 2011, 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. Principal is due August 31, 2011.
Interest is payable monthly based upon the current prime rate.
8
7. COMMON STOCK
STOCK OPTIONS
As of March 31, 2011, there were 1,976,000 stock options outstanding with a
weighted average exercise price of $0.19 and a remaining contractual life of 1.5
years. Stock option expense for the quarters ending March 31, 2011 and 2010 was
$8,936 and $8,936, respectively which is included in general and administrative
expenses in the accompanying Statements of Operations.
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 February 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 significant 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:
Six Months Ended Six Months Ended
March 31, 2011 March 31, 2010
-------------- --------------
(Unaudited) (Unaudited)
STATEMENT OF OPERATIONS DATA:
Revenue $ 83,818 $ 51,587
Net Loss (381,496) (621,057)
Net Loss per Share $ (0.01) $ (0.01)
March 31, 2011 September 30, 2010
-------------- ------------------
(Unaudited) (Audited)
BALANCE SHEET DATA:
Current Assets $ 51,483 $ 36,218
Total Property & Equipment, Net 1,494 15,014
Intellectual Property, Net 137,201 162,147
Total Assets 190,178 213,379
Total Current Liabilities 6,617,811 6,277,388
Accumulated Deficit $(27,691,501) $(27,310,005)
10
SIX MONTHS ENDED MARCH 31, 2011 (UNAUDITED) COMPARED TO SIX MONTHS ENDED MARCH
31, 2010 (UNAUDITED)
REVENUES
Revenues for the six months ended March 31, 2011 were $83,818, compared to
$51,587 for the six months ended March 31, 2010, an increase of 62%. 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 $33,003 for the six months ended March 31, 2011
from $21,786, for the six months ended March 31, 2010. The increase in the cost
of sales is the result of the increased revenues during this period. Our gross
margins were 61% and 58% for the six months ended March 31, 2011 and 2010,
respectively. The increase in our gross margins was due to an increase in sales
in relation to our costs of sales during six months ending March 31, 2011.
OPERATING EXPENSES
Operating expenses decreased 37% to $372,911 from $596,288 for the six month
period ended March 31, 2011 and 2010, respectively.
This decrease in operating expenses was a result in decreased operations. Our
general and administrative expenses decreased to $347,815 for the six months
ended March 31, 2011 from $570,591 for the six months ended March 31, 2010 due
to the continued reduction in compensation and other administrative costs.
NET LOSS
We experienced a net loss from operations of $381,496 for the six months ended
March 31, 2011 as compared to a net loss of $621,057 for the six months ended
March 31, 2010. Our sales and marketing expenses decreased from $751 in the six
months ended March 31, 2010, to $150 for the six months ended March 31, 2011.
Our general and administrative expense decreased from $570,591 in the six months
ended March 31, 2010 to $347,815 for the six months ended March 31, 2011.
The decrease in the net loss is directly related to a reduction in certain staff
and reduced operations. Revenue from the sale of products increased from $51,587
for the six months ended March 31, 2010 to $83,818 for the six months ended
March 31, 2011. This increase in revenue is a direct result of the economic
improvement found in the industry.
11
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
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 $18,672 and $2,045 at March 31, 2011 and
September 30, 2010, respectively. Net cash provided by operations was $14,154
for the period ended March 31, 2011 compared to net cash used in operations of
$66,136 for the comparable period ended March 31, 2010. We have historically
relied upon one of our officers and significant shareholders to provide cash to
meet short term operating cash requirements.
At March 31, 2011, the outstanding balance of notes payable was $3,024,451.
These convertible debentures consisted of: a) $1,500,000, 8% per annum
convertible debentures at the closing price on the day immediately preceding the
day of conversion 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 six months ended March 31, 2011 and 2010 was $63,065
and $57,776, respectively.
We have a working capital deficit $6,566,328 as of March 31, 2011 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 $27,691,501 and a working capital deficit of
approximately $6,566,328 as of March 31, 2011. 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.
12
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.
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.
Our President and Chief Financial Officer (the "Certifying Officers") is
responsible for establishing and maintaining our disclosure controls and
procedures. The Certifying Officer have designed such disclosure controls and
procedures to ensure that material information is made known to him,
particularly during the period in which this report was prepared. The Certifying
Officer has evaluated the effectiveness of our disclosure controls and
procedures and has determined that they are adequate.
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
$603,92 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: May 16, 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
