<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                     ---------------------------------------
                                    FORM 10-Q

(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 For the quarterly period ended March 31, 2001

[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange Act.
For the transition period from ___________ to ___________

Commission File Number:  0-21975

                             ECO SOIL SYSTEMS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                 NEBRASKA                                  47-0709577
                ----------                                ------------
     (State or Other Jurisdiction of                    (I.R.S. Employer
      Incorporation or Organization)                   Identification No.)

                              10740 THORNMINT ROAD
                           SAN DIEGO, CALIFORNIA 92127
          (Address, Including Zip Code, of Principal Executive Offices)

                                 (858) 675-1660
              (Registrant's Telephone Number, Including Area Code)


Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
    -------        -------

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 4, 2001, 19,681,464 shares
of the Registrant's Common Stock, $.005 par value per share, were outstanding.



<PAGE>   2

                                      INDEX
                             ECO SOIL SYSTEMS, INC.
                                    FORM 10-Q

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Consolidated Balance Sheets as of March 31, 2001
         and December 31, 2000                                                 3

         Consolidated Statements of Operations for the
         Three Months Ended March 31, 2001 and 2000                            4

         Consolidated Statements of Cash Flows for the Three Months
         Ended March 31, 2001 and 2000                                         5

         Notes to Financial Statements                                         6

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                 8

Item 3.  Quantitative and Qualitative Disclosure of Market Risk               11

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings                                                    12

Item 3.  Defaults upon Senior Securities                                      12

Item 5.  Other Information                                                    12

Item 6.  Exhibits and Reports on Form 8-K                                     19
</TABLE>



                                       2
<PAGE>   3

                             ECO SOIL SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                  ASSETS
                                                                   MARCH 31,    DECEMBER 31,
                                                                     2001           2000
                                                                   ---------    ------------
                                                                  (UNAUDITED)     (NOTE)
<S>                                                                <C>          <C>
Current Assets:
     Cash and cash equivalents                                     $     86      $    903
     Accounts receivable, net of allowance for doubtful
        accounts of $398 and $773 at March 31, 2001 and
        December 31, 2000, respectively                               3,972         4,031
     Inventories                                                     10,956        10,254
     Prepaid expenses and other current assets                          646           987
                                                                   --------      --------
Total current assets                                                 15,660        16,175
Equipment under construction                                          5,208         5,870
Property and equipment, net                                           4,589         4,978
Intangible assets, net                                                6,542         6,597
Debt issuance costs, net                                                523           282
Note Receivable-Long Term                                             1,089         1,064
Other assets                                                            439           428
                                                                   --------      --------
Total assets                                                       $ 34,050      $ 35,394
                                                                   ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Accounts payable                                              $  5,435      $  4,103
     Accrued expenses                                                 1,899         2,303
     Current portion of long-term obligations                         8,646         8,913
                                                                   --------      --------
Total current liabilities                                            15,980        15,319

Long-term obligations, net of current portion                         3,224         3,251
Deferred gain on sale/leaseback of building                             450           465
Other                                                                   385           377
Shareholders' equity:
     Preferred stock
        $.005 par value; 5,000,000 shares authorized;
            none issued and outstanding                                  --            --
     Common stock
        $.005 par value; 50,000,000 shares authorized at
            March 31, 2001 and December 31, 2000, 19,681,464
            and 18,915,547 shares issued, issuable and outstanding
            at March 31, 2001 and December 31, 2000, respectively       100            96
     Additional paid-in capital                                      59,677        58,713
     Warrants                                                         4,733         4,362
     Accumulated deficit                                            (50,362)      (47,037)
                                                                   --------      --------
                                                                     14,148        16,134
     Treasury stock                                                    (112)         (112)
     Note Receivable-Shareholders                                       (25)          (40)
                                                                   --------      --------
Total shareholders' equity                                           14,011        15,982
                                                                   --------      --------

Total liabilities and shareholders' equity                         $ 34,050      $ 35,394
                                                                   ========      ========
</TABLE>

See accompanying notes.

Note: The Balance Sheet at December 31, 2000 is derived from the audited
financial statements at that date, but does not include all of the disclosures
required by generally accepted accounting principles.



                                       3
<PAGE>   4

                             ECO SOIL SYSTEMS, INC.
                 UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED MARCH 31,
                                                  ----------------------------
                                                    2001                2000
                                                  --------            --------
<S>                                               <C>                 <C>
Revenues:
     Proprietary Products                         $  1,767            $  1,935
     Distributed Products                            3,898               4,924
                                                  --------            --------
Total revenues                                       5,665               6,859

Cost of revenues:
     Proprietary Products                            1,173               1,139
     Distributed Products                            3,337               3,778
                                                  --------            --------
Total cost of revenues                               4,510               4,917

Gross profit                                         1,155               1,942

Operating expenses:
     Selling, general and administrative             3,424               3,865
     Research and development                           37                 114
     Amortization of intangibles                       133                 141
                                                  --------            --------
Loss from operations                                (2,439)             (2,178)
Interest expense                                       923                 877
Interest income                                         36                  28
                                                  --------            --------
Loss from continuing operations                     (3,326)             (3,027)
Loss from discontinued operations                       --              (3,028)
                                                  --------            --------

Net loss                                          $ (3,326)           $ (6,055)
                                                  ========            ========

Net loss from continuing operations               $  (0.17)           $  (0.16)
Loss from discontinued operations                       --               (0.17)
                                                  --------            --------
Net loss per share basic and diluted              $  (0.17)           $  (0.33)
                                                  ========            ========

Shares used in calculating net loss per share,
   basic and diluted                                19,449              18,535
                                                  ========            ========
</TABLE>

See accompanying notes.



                                       4
<PAGE>   5

                             ECO SOIL SYSTEMS, INC.
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                          --------------------

                                                                            2001         2000
                                                                          -------      -------
<S>                                                                       <C>          <C>
OPERATING ACTIVITIES:
Net loss                                                                  $(3,212)     $(3,027)
Adjustments to reconcile net cash used in operating activities:
        Depreciation and amortization                                         405          795
        Amortization of debt issuance costs and discount on long-term
          debt                                                                533          802
        Deferred rent                                                          (7)         (15)
        Provision for losses on accounts receivable                           (99)         104
        Loss/(gain) on sale of property and equipment                          46           17
        Issuance of stock options/warrants for services                       210           51
        Changes in operating assets and liabilities                         1,469         (352)
                                                                          -------      -------
Net cash used in operating activities of continuing operations               (655)      (1,625)
Net cash used in operating activities of discontinued operations               --       (3,193)
                                                                          -------      -------
Net cash used in operating activities                                        (655)      (4,818)

INVESTING ACTIVITIES:
Proceeds from the sale of property, equipment and intangibles                  16           (2)
Purchase of property and equipment                                            (44)        (277)
                                                                          -------      -------
Net cash used in investing activities of continuing operating                 (28)        (279)
Net cash used in investing activities of discontinued operations               --          (29)
                                                                          -------      -------
Net cash used in investing activities                                         (28)        (308)

FINANCING ACTIVITIES:
Proceeds from short-term obligations                                           --        4,613
Repayments from short-term obligations                                        (37)      (1,002)
Repayments of long-term obligations                                           (24)        (100)
Net proceeds from issuance of common stock                                     --           44
Debt issuance costs                                                           (73)        (595)
                                                                          -------      -------
Net cash (used in) provided by financing activities of continuing            (134)       2,960
operations
Net cash provided by financing activities of discontinued operations           --        2,162
                                                                          -------      -------
Net cash (used in) provided by financing activities                          (134)       5,122
                                                                          -------      -------

Net decrease in cash and cash equivalents                                    (817)          (4)
Cash and cash equivalents at beginning of period of continuing
  operations                                                                  903          131
Decrease in cash and cash equivalents of discontinued operations               --          204
                                                                          -------      -------
Cash and cash equivalents at end of period of continuing operations       $    86      $   331
                                                                          =======      =======
NON CASH ITEMS:
Warrants issued relating to debt issuance costs                           $   371      $ 1,152
                                                                          =======      =======
Shares of common stock issued upon conversion of debt                     $   416      $    --
                                                                          =======      =======
</TABLE>

See accompanying notes.



                                       5
<PAGE>   6

                             ECO SOIL SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.  BASIS OF PRESENTATION

    The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of Eco Soil Systems, Inc. (the "Company"), all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair statement of the results for the three-month periods ended March 31, 2001
and 2000 have been made. The results of operations for the three-month period
ended March 31, 2001 are not necessarily indicative of the results to be
expected for the full fiscal year. For further information, refer to the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000.

2.  NET LOSS PER SHARE

    In accordance with Financial Accounting Standards Board Statement No. 128,
"Earnings per share" ("SFAS 128"), basic earnings per share is calculated by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of the Company such as common stock
which may be issuable upon exercise of outstanding stock options and warrants
and conversion of debt. These shares are excluded when their effects are
antidilutive.


3.  DISCONTINUED OPERATIONS

    On July 28, 2000, the Company completed the sale of substantially all of the
assets of its Turf Partners subsidiary (the "Asset Sale") to the J.R. Simplot
Company ("Simplot") and as a result, the March 2000 financials have been
retroactively restated to give effect to the discontinued segment. At the
closing of the Asset Sale, Simplot made a cash payment of $23 million and
assumed Turf Partners' existing long-term debt and vendor payables totaling
$37.3 million. Simplot also assumed Turf Partners' outstanding contracts and
leases. The Asset Sale was consummated pursuant to an Amended and Restated Asset
Purchase Agreement dated April 5, 2000, as amended by a First Amendment to
Amended and Restated Asset Purchase Agreement dated June 9, 2000.

The unaudited results of the discontinued operations (in thousands) were as
follows:

<TABLE>
<CAPTION>
                                            THREE MONTHS
                                        ENDED MARCH 31, 2000
                                        --------------------
<S>                                         <C>
Revenues                                      $11,532
Cost of revenues                                8,552
                                              -------
Gross profit                                    2,980

Operating expenses:
   Selling, general and administrative          4,695
   Amortization of intangibles                    152
                                              -------
Loss from operations                           (1,867)
   Interest expense                             1,161
                                              -------
Net Loss                                      $(3,028)
                                              =======
</TABLE>



                                       6
<PAGE>   7

    For the periods presented, the Company borrowed funds from institutional
lenders and accredited investors to provide working capital for the parent
company and its subsidiaries. The interest expense associated with this debt was
originally recorded by the parent company, but a portion of interest expense
associate with this debt has been allocated to the discontinued operations noted
above. Interest expense allocated to the discontinued operations totaled
$789,000 for the three months ended March 31, 2000. Also, selling, general and
administrative expenses that were recorded by the parent company but were
specifically an expense of the discontinued operations have been allocated to
the discontinued operations as shown above. The amount of selling, general and
administrative expenses allocated by the parent company to the discontinued
operations totaled $425,000 for the three months ended March 31, 2000.

    The historical consolidated balance sheets reflect the assets and
liabilities of discontinued operations as current or non-current assets based on
the original classification of the accounts, except that current liabilities are
netted against current assets and non-current liabilities are netted against
non-current assets.

4.  SEGMENT INFORMATION

    For purposes of analyzing and understanding the financial statements, the
Company's continuing operations have been classified into the following business
segments:

    Proprietary: This segment enters into contracts with golf courses, turf
maintenance service businesses and agricultural growers, or distributors that
sell to those end-user markets to manage the health and productivity of their
soil during their respective type of season. The contracts require the Company
to perform a comprehensive soil analysis at the beginning of the season, develop
a treatment regimen, install the Company's proprietary BioJect system at the
customer's site and provide the microbials throughout the season.

    Distributed: This segment distributes a wide range of irrigation and other
agricultural supplies to growers.

    The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies. The Company
allocates resources and evaluates the performance of segments based on net
profit or loss.

<TABLE>
<CAPTION>
                                          OPERATING PROFIT
                      REVENUES                (LOSS)                  SEGMENT ASSETS
                  -----------------      -------------------        ------------------
                     FOR THE THREE MONTHS ENDED MARCH 31,             AS OF MARCH 31,
                  ------------------------------------------        ------------------
                    2001      2000         2001        2000           2001       2000
                   ------    ------      -------     -------        -------    -------
<S>                <C>       <C>         <C>         <C>            <C>        <C>
 Proprietary       $1,767    $1,935      $   (23)    $    21        $15,411    $13,806
 Distributed        3,898     4,924       (1,094)       (884)        13,786     20,791
 Corporate             --        --       (2,209)     (2,164)         4,853     12,723
                   ------    ------      -------     -------        -------    -------
 Total             $5,665    $6,859      $(3,326)    $(3,027)       $34,050    $47,320
                   ======    ======      =======     =======        =======    =======
</TABLE>


Depreciation that is separately identified to proprietary and distributed
segments are charged to those segments. All other general and administrative
costs are recognized by corporate. Foreign assets are included in segment
assets.



                                       7
<PAGE>   8

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

    Certain statements contained in this Management's Discussion and Analysis
that are not related to historical results are forward-looking statements.
Actual results may differ materially from those projected or implied in the
forward-looking statements. Further, certain forward-looking statements are
based upon assumptions of future events, which may not prove to be accurate.
These forward-looking statements involve risks and uncertainties including but
not limited to those referred to in "Item 5. Other Information. Factors That
Could Affect Future Performance."

    This information should be read in conjunction with the financial statements
and notes thereto included in Item 1 of this report for the quarter ended March
31, 2001 and 2000. Additionally, the financial statements and notes thereto and
Management's Discussion and Analysis in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000 will provide additional information.

OVERVIEW

    The Company develops, markets and sells proprietary biological products, and
their delivery systems, for the golf and agricultural industries. The Company's
most unique delivery system is the BioJect, a patented and EPA-approved device
that stimulates and dispenses biological products through irrigation systems.
The Company's proprietary products are sold both directly and through
traditional distribution channels into the turf market and through direct sales
along with irrigation products into the agricultural market.

    On July 28, 2000, the Company completed the sale of substantially all of the
assets of its Turf Partners subsidiary (the "Asset Sale") to the Simplot Company
("Simplot"). At the closing of the Asset Sale, Simplot made a cash payment of
$23 million and assumed Turf Partners' exiting long-term debt and vendor
payables totaling $37.3 million. Simplot also assumed Turf Partners' outstanding
contracts and leases. The Asset Sale was consummated pursuant to an Amended and
Restated Asset Purchase Agreement dated April 5, 2000, as amended by a First
Amendment to Amended and Restated Asset Purchase Agreement dated June 9, 2000.

    In connection with the Asset Sale, the Company entered into two distribution
agreements with Simplot. In the first agreement, a Distribution and License
Agreement, Simplot agreed to purchase and distribute a minimum of $5 million of
the Company's proprietary FreshPack(TM) products during the first two years of
the five-year agreement. In the second agreement, Simplot agreed to distribute
the Company's proprietary products in Simplot's Soilbuilders stores. The Company
and Simplot also entered into a field trials agreement pursuant to which Simplot
will pay the Company to perform Field Trials of the Company's BioJect system and
microbials on selected Simplot crops in 2001.

    Following the Asset Sale, the Company began invoicing the BioJect customers
directly and paying a commission to the Simplot salesmen for renewed microbial
and service contracts and the sale of BioJect system units.

FIRST QUARTER ENDED MARCH 31, 2001 COMPARED TO FIRST QUARTER ENDED MARCH 31,
2000

RESULTS OF OPERATIONS

REVENUES

    For the first quarter of 2001, our revenues were $5.7 million, a decrease of
17.4% versus $6.9 million for the first quarter of 2000. The decrease in
revenues is primarily due to the decrease in distributed revenues.

    For the first quarter of 2001, proprietary revenues were $1.8 million, a
decrease of 8.7% versus $1.9 million for the first quarter of 2000. The decrease
was due to the inclement weather in the Midwest and East, which delayed the
orders of products such as FreshPack(TM) and primarily the start-up of the
BioJect system units for the season. However, the overall decrease was mitigated
by sales of the RhizUp(TM) product, which increased by $457,000 or 93.5%
compared to first quarter of 2000. Distributed revenues were $3.9 million, a
decrease of 20.8% versus $4.9 million for the first quarter of 2000. The
decrease in distributed revenues is due to the closing of five unprofitable
stores that were operated by the Company's Agricultural Supply subsidiary.


                                       8
<PAGE>   9

GROSS PROFIT

    For the first quarter of 2001, our gross profit was $1.2 million, a decrease
of 40.5% versus $1.9 million for the first quarter of 2000. For the first
quarter of 2001, our gross margin was 20.4% versus 28.3% for the first quarter
of 2000. The decrease in gross margin resulted primarily from decreased
distributed products margin, which was negatively impacted by the liquidity
problems of the Company that prohibited the taking of cash and volume purchase
discounts and rebates.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

    For the first quarter 2001, selling, general and administrative ("SG&A")
expense was $3.4 million, a decrease of 11.4% versus $3.9 million for the first
quarter of 2000. SG&A expense as a percentage of revenues was 60.4% for the
first quarter 2001 compared to 56.4% for the first quarter 2000. The decrease in
the SG&A is primarily due to the overall cost control efforts employed by the
Company and the restructuring actions taken by the Company in the second quarter
of 2000. As part of these actions, the Company closed five unprofitable stores
and eliminated redundant positions within the Company.

    Also, in the first quarter of 2001, the Company included in SG&A a
non-recurring charge of $209,000 related to the accelerated vesting of stock
options granted to former employees.

RESEARCH AND DEVELOPMENT

    For the first quarter of 2001, research and development ("R&D") expense was
$37,000, compared to $114,000 for the first quarter of 2000. The decrease in R&D
expense is due to the Company being continually more selective in the R&D
programs that are being supported.

AMORTIZATION EXPENSE

    For the first quarter of 2001, amortization expense was $133,000, compared
to $141,000 for the first quarter of 2000.

INTEREST EXPENSE

    For the first quarter 2001, interest expense was $923,000, an increase of
5.2% versus $877,000 for the first quarter 2000. The increase is due to
additional non-recurring debt issuance costs of $581,000 related to the
convertible debentures.

NET LOSS FROM CONTINUING OPERATIONS

    For the first quarter of 2001, net loss was $3.3 million or $0.17 per share
compared to a net loss of $3.0 million or $0.16 per share for the first quarter
of 2000.

LIQUIDITY AND CAPITAL RESOURCES

    We have financed our operations since inception from revenues from sales of
our products, sales of our common stock, borrowings from our principal
shareholders and debt financing. For the first quarter of 2001, our operating
and investing activities used cash of $683,000.

      On August 25, 1998, the Company issued an aggregate of $15 million
principal amount of the Company's Senior Subordinated Notes due 2003 (the
"Notes") to two lenders. On July 28, 2000, the Company retired $14 million of
the Notes from the proceeds of the Asset Sale. Also, the Company amended the
Note and Warrant Purchase Agreements with the Lenders to eliminate financial
covenants. The Company replaced the Notes with amended Senior Subordinated Notes
(the "Amended Notes") with an aggregate principal amount of $1.4 million
covering the principal and accrued interest of the Notes not paid on July 28,
2000. The Amended Notes bear interest at an annual rate of 14% and are due on
January 28, 2002. Monthly payments of $87,000 in the


                                       9
<PAGE>   10

aggregate began on August 28, 2000. As a result of the retirement, the Company
wrote-off $3.8 million of unamortized debt issuance costs associated with the
Notes.

    On June 30, 1999, our Turf Partners subsidiary entered into a credit
agreement with Coast Business Credit (the "Coast Working Capital Facility"). The
Coast Working Capital Facility was a $25 million three-year credit facility
based upon Turf Partners' eligible inventory and receivables and has an interest
rate of prime rate plus 1.00%. On July 2, 1999 the Company drew down on the
facility and paid all amounts due under and terminated a line of credit with
Imperial Bank. On July 28, 2000 at the closing of the Asset Sale the Coast
Business Credit working capital facility was assumed by Simplot.

    On June 30, 1999 the Company's wholly owned subsidiary Agricultural Supply,
Inc. entered into a credit agreement with First National Bank (the "FNB Working
Capital Facility"). The FNB Working Capital Facility is a $10 million three-year
credit facility based upon Agricultural Supply's eligible inventory and
receivables and has an interest rate of prime plus .25%. Effective June 1, 2000,
the following changes were made to the terms of the FNB Working Capital
Facility: (a) fixed assets (BioJect system units) were added to the description
of collateral, (b) maturity date changed to December 31, 2000, (c) interest rate
was changed to Prime plus 1.5%, and (d) personal guarantees were provided by key
executives. As of December 31, 2000, of the $6.5 million availability (based on
eligible receivables, inventory and fixed assets) under the FNB Working Capital
Facility, Agricultural Supply had borrowed $5.2 million. On March 21, 2001 the
Company entered into a Change in Terms Agreement with FNB that extended the
working capital facility to March 31, 2001 and waived the covenant violations as
of December 31, 2000. The Change in Terms Agreement further prohibits the
Company from making any payments to subordinated debt holders, thereby putting
the Company in default with the Debentures (discussed below) and the Amended
Notes. The Company has not obtained extensions and waivers from its debt holders
beyond March 31, 2001 but is in the process of negotiating further extensions at
this time.

    On July 31, 1999, the Company obtained a $2.5-million, two-year term loan
from Coast Business Credit (The "Coast Term Loan"). The Coast Term Loan bears
interest at coast's prime rate plus 2.25%, payable monthly. One third of the
principal must be repaid in level monthly payments during the first year of the
term, with the remainder due in level monthly payments during the second year of
the term. The Coast Term Loan is secured by substantially all of the assets of
the parent Company. Effective January 5, 2001 Coast Business Credit drew on the
Letter of Credit provided by Simplot as part of the Asset Sale and Term Loan
agreement (discussed below). As a result, the debt to Coast Business Credit has
been retired and the Company owes Simplot $1.2 million plus interest pursuant to
Term Loan Agreement.

    On January 24, 2000, the Company issued $4.5 million of Senior Secured
Convertible Debentures (the "Debentures") and warrants to purchase 356,436
shares of common stock. The Debentures were originally due January 24, 2001 and
bear interest at a rate of 7% per annum, which is due quarterly beginning March
31, 2000, and is payable in cash or common stock at our option. In June 2000,
the Company reduced the exercise price of the warrants to purchase 356,436
shares of common stock to $1.00 and issued additional warrants to purchase an
aggregate of 75,000 shares of common stock with an exercise price of $2.50 per
share to the Debenture holders in connection with obtaining the Debenture
holders' consent to the Term Loan from Simplot described below. On December 11,
2000, the Company and the Debenture holders entered into Amendment No. 1 of the
Debentures Agreement, which called for a modification of the maturity of the
Debentures to $1.5 million (plus 10% premium thereon) due on January 24, 2001
and $2.9 million due January 24, 2002. On March 7, 2000, the Company and the
Debenture holders entered into Amendment No. 2 of the Debentures Agreement,
which called for a closing prior to March 31, 2001 at which the maturity of the
Debentures would be modified to $1.5 million (plus a 10% premium thereon) due on
March 31, 2001 and $2.9 million due January 24, 2002. On April 26, 2001, the
Company issued Amended and Restated Debentures to the holders that were in
accordance with these terms. In connection with Amendment No. 2, the Debenture
holders were issued additional warrants to purchase 500,000 shares of common
stock with an exercise price of $1.10 per share. In addition, as part of the
Amendment No. 2, the Company agreed that if the Company did not make the March
31, 2001 payment, the Debenture holders would be entitled to additional warrants
to purchase an additional 200,000 shares of common stock with an exercise price
of $1.10 per share valued at approximately $305,000; of which $113,000 was
charged to interest expense and the remaining $191,000 is debt issuance costs.
The Company did not meet the March 31, 2001 payment requirement and is in
default under the Debentures. As a result the Company is required to issue the
additional 200,000 warrants to the Debenture holders.

                                       10
<PAGE>   11

    On April 12, 2000, the Company entered into a Term Loan Agreement ("Term
Loan") with Simplot. The $3 million Term Loan was paid to the Company in July
2000 and used for working capital purposes. The Term Loan was repaid in the same
month, July 2000, from the proceeds of the Asset Sale, described above.

    The FNB Working Capital Facility contain certain restrictions and
limitations on the Company's operations, including restrictions on capital
expenditures, sale of assets, lease liabilities, mergers or other forms of
business combinations, as well as the prohibition on the payments of cash
dividends. The FNB Working Capital Facility also contain certain covenants which
require the Company to maintain minimum levels of net worth, working capital and
other financial ratios, as defined. As of March 31, 2001, the Company was not in
compliance with certain of these covenants. First National Bank provided a
waiver of such covenants through March 31, 2001.

    The Company intends to finance its future operations and growth through a
combination of product revenues, borrowings available under lines of credit and
public or private debt or equity financing. During 2001, the Company also
intends to sell or lease all of the BioJect system units it presently has in
service to the end user. This change in strategy will increase cash flows from
operations over the previous method of renting the BioJect system units. There
can be no assurance that Eco Soil will be successful in selling the BioJect
system units or in obtaining additional financing on acceptable terms or at all,
which would result in a material adverse effect on the Company's ability to meet
its business objectives and continue as a going concern.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The Company's foreign sales are principally to Mexico. All foreign
transactions are denominated in U.S. dollars; therefore, the Company's exposure
to foreign currency fluctuations is minimal. The Company's working capital
facility with First National Bank is based on the prime rate of interest. A 200
basis point change in the prime rate of interest for one year would change the
interest the Company would pay on the $5.2 million loan balance of $104,000 per
year.










                                       11
<PAGE>   12

                                     PART II

                                OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS

    On March 12, 2001, an arbitrator formally ruled on an arbitration case
between the Company and John C. Wells, William Wells and John Pothoff ("former
owners") of Agricultural Supply, Inc., which was purchased by the Company in
1998. The result of the arbitration was that the Company was awarded an
indemnification of $465,000 for uncollectible receivables included in the assets
purchased from the former owners. However, the former owners were awarded an
earn-out for the fiscal year 1999 of $449,000. The earn-out will be paid by
offsetting it with the indemnification, plus a combination of cash and Company
Common Stock. The earn-out is classified as an adjustment to the purchase price,
effective January 1, 2000.

    From time to time, the Company is involved in legal proceedings, claims and
litigation arising in the ordinary course of business, the outcome of which, in
the opinion of management, would not have a material adverse effect on the
Company.

ITEM 3.  DEFAULTS UPON SECURITIES

The Company is in default under the FNB Working Capital Facility. The FNB
Working Capital Facility matured as of December 31, 2000. On March 21, 2001 the
Company entered into a Change in Terms Agreement with FNB that extended the
working capital facility to March 31, 2001 and waived the covenant violations as
of December 31, 2000. The Company has not obtained extensions and waivers from
FNB beyond March 31, 2001. The FNB Working Capital Facility is due and payable
in full. The total amount outstanding is approximately $5.2 million.

    The Company also is in default under the terms of the Debentures. On March
7, 2000, the Company and the Debenture holders entered into Amendment No. 2 of
the Debentures Agreement, which called for a closing prior to March 31, 2001 at
which the maturity of the Debentures would be modified to $1.5 million (plus a
10% premium thereon) due on March 31, 2001 and $2.9 million due January 24,
2002. On April 26, 2001, the Company issued Amended and Restated Debentures to
the holders that were in accordance with these terms. In connection with
Amendment No. 2, the Debenture holders were issued additional warrants to
purchase 500,000 shares of common stock with an exercise price of $1.10 per
share. In addition, as part of the Amendment No. 2, the Company agreed that if
the Company did not make the March 31, 2001 payment, the Debenture holders would
be entitled to additional warrants to purchase an additional 200,000 shares of
common stock with an exercise price of $1.10 per share. The Company did not meet
the March 31, 2001 payment requirement. As a result, at March 31, 2001, the
Company's obligations under the Debentures had accelerated and the Debentures
were due and payable in full. On April 26,2001, in conjunction with the issuance
of the amended and restated Debentures, the Company cured the default. The total
amount outstanding is approximately $4.0 million. The Company also is required
to issue the additional 200,000 warrants to the Debenture holders.

    The Company also is in default for failure to pay the Notes and the Simplot
Term Loan as a result of the blockage of payments imposed by the FNB Change in
Terms Agreement. As a result, the Notes and the Simplot Term Loan are due and
payable in full. The total amount outstanding under the Notes is approximately
$900,000 and the total amount outstanding under the Simplot Term Loan is
approximately $1.2 million. Simplot has the right to offset amounts owed to Eco
Soil under product supply agreements against amounts owed by Eco Soil to Simplot
under the Term Loan Agreement. Simplot currently owes Eco Soil amounts in excess
of the total amount outstanding under the Term Loan Agreement.

    The Company is currently seeking waivers of the defaults described above and
is engaged in negotiations to obtain a new working capital facility.


ITEM 5.  OTHER INFORMATION


FACTORS THAT COULD AFFECT FUTURE PERFORMANCE

    This report contains certain forward-looking statements about the business
and financial condition of the Company, including various statements contained
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations." The actual results of the Company could differ materially from any
forward-looking statements contained herein. The following information sets
forth certain factors that could cause the actual results to


                                       12
<PAGE>   13

differ materially from those contained in the forward-looking statements. For a
more detailed discussion of the factors that could cause actual results to
differ, see "Item 1: Business -- Factors That Could Affect Future Performance"
in the Company's Form 10-K for the fiscal year ended December 31, 2000.

    We are in default under our principal debt arrangement, have an
indispensable need for capital, and the report of our independent accountants
accompanying our financial statements contains an explanatory paragraph
regarding our ability to continue as a going concern. Primarily because of our
history of operating losses and because of our need to refinance our working
capital line of credit with the First National Bank of San Diego, there is
substantial doubt about our ability to continue as a going concern unless we are
able to obtain additional debt and/or equity financing. We anticipate that
without additional financing we would likely run out of cash to fund our
operations during the second quarter of 2001.

    On June 30, 1999 the Company's wholly owned subsidiary Agricultural Supply,
Inc. entered into a credit agreement with First National Bank (the "FNB Working
Capital Facility"). The FNB Working Capital Facility is a $10 million,
three-year credit facility based upon Agricultural Supply's eligible inventory
and receivables and has an interest rate of prime plus .25%. Effective June 1,
2000, the following changes were made to the terms of the FNB Working Capital
Facility: (a) fixed assets (BioJect(R) system units) were added to the
description of collateral, (b) maturity date changed to December 31, 2000, (c)
interest rate was changed to Prime plus 1.5%, and (d) personal guarantees were
provided by key executives. As of March 31, 2001, of the $6.5 million
availability (based on eligible receivables, inventory and fixed assets) under
the FNB Working Capital Facility, Agricultural Supply had borrowed $5.2 million.
On March 21, 2001 the Company entered into a Change in Terms Agreement with FNB
that extended the working capital facility to March 31, 2001 and waived the
covenant violations as of December 31, 2000. The Change in Terms Agreement
further prohibits the Company from making any payments to subordinated debt
holders, thereby putting the Company in default under its Term Loan Agreement
with J.R. Simplot Company, its Convertible Subordinated Debentures and its
Amended Senior Subordinated Notes. The extension provided by the Change in Terms
Agreement expired on March 31, 2001.

    On December 11, 2000, the Company entered into Amendment No. 1 to the
Convertible Debentures and Warrants Purchase Agreement pursuant to which the
Company sold the Convertible Subordinated Debentures, which amendment called for
the extension of the maturity of a portion of the debentures to January 24,
2002. On March 7, 2001, the Company entered into Amendment No. 2 in which the
Company agreed to repay in cash $1,500,000 in principal plus a 10% premium
required under the terms of the Convertible Subordinated Debentures on or before
March 31, 2001. In connection with Amendment No. 2, the Company issued warrants
to purchase 500,000 shares of the Company's common stock with an exercise price
of $1.10 per share to the holders of the Convertible Subordinated Debentures.
Amendment No. 2 further provides that if the $1.5 million principal repayment is
not made on or before March 31, 2001, the Company must issue warrants to
purchase an additional 200,000 shares at the same $1.10 strike price and seek to
enter into an additional extension agreement. The Company did not make the
payment on March 31, 2001. As a result, the Company is in default under the
Convertible Subordinated Debentures and is required to issue the additional
200,000 warrants to the holders of the Convertible Subordinated Debentures.

    We can give you no assurances that the Company will obtain additional
extensions and waivers from FNB, the holders of the Convertible Subordinated
Debentures or its other debt holders. We currently do not have any arrangements
to obtain other sources of financing. There can be no assurance that Eco Soil
will be successful in obtaining additional financing on acceptable terms or at
all, which would result in a material adverse effect on our ability to meet our
business objectives and continue as a going concern. The report of independent
accountants on our December 31, 2000 financial statements included herein
includes an explanatory paragraph to this effect. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" and Note 1 of our Consolidated Financial
Statements.

    We have a history of operating losses and an accumulated deficit, and we may
not achieve or maintain profitability in the future. At March 31, 2001, we had
an accumulated deficit of $50.2 million. We have historically experienced losses
due to significant expenditures for product development, sales, marketing and
administrative costs, as well as amortization costs associated with our
acquisitions of turf and agricultural products dealers.

    If we are unable to successfully enter new markets, our business will be
adversely affected. Sales of our proprietary products remain in the early stages
of market introduction and are subject to the risks inherent in the
commercialization of new product concepts, particularly with respect to
agricultural applications. There can be no assurance that our efforts to
increase sales of proprietary products to turf and agricultural crop and
ornamental markets will prove successful, that marketing partnerships will be
established and will become successful, or that our intended customers will
purchase our systems and products instead of competing products. In addition,
there


                                       13
<PAGE>   14

can be no assurance that we will be able to obtain significant customer
satisfaction or market share with our proprietary products. Furthermore, the
Company has begun selling Biojects to the end user, this is a new strategy and
there can be no assurance that the Company will be successful with this new
strategy.

    The market price of our common stock has fallen below the level required for
continued listing on The Nasdaq Stock Market, and we may be delisted. As of
March 28, 2001 our stock price had been less than $1 for 30 consecutive trading
days, putting the Company in violation of Nasdaq qualification standards for
continued listing. The Company has been notified by Nasdaq that it has until
July 2, 2001 to raise its stock price above $1 for 10 consecutive trading days
or be subject to de-listing following a de-listing hearing. We cannot give you
any assurances that the Company's stock price will increase above $1 or, if not,
that the Company will prevail in its de-listing hearing and thereby be able to
avoid de-listing from the Nasdaq National Market.

    If Nasdaq were to delist our common stock, it would reduce the level of
liquidity currently available to our stockholders. If our common stock were
delisted, the price of the common stock would, in all likelihood, decline. In
addition, it would be an event of default under our Convertible Subordinated
Debentures if our shares were delisted from Nasdaq. If our common stock is
delisted from the Nasdaq National Market, we could apply to have the common
stock quoted on the Nasdaq SmallCap Market. The Nasdaq SmallCap Market has a
similar set of criteria for initial and continued quotation. We may not,
however, meet the requirements for initial or continued quotation on the Nasdaq
SmallCap Market. If we were not able to meet the requirements of the Nasdaq
SmallCap Market, trading of our common stock could be conducted on an electronic
bulletin board established for securities that do not meet the Nasdaq SmallCap
Market listing requirements, in what is commonly referred to as the "pink
sheets."

    We are dependent on sales to J.R. Simplot Company. On July 28, 2000, we
completed the sale of substantially all of the assets of our Turf Partners
subsidiary to the J.R.Simplot Company (the "Asset Sale"). In connection with the
Asset Sale, we entered into two distribution agreements with Simplot. In the
first agreement, a Distribution and License Agreement, Simplot agreed to
purchase and distribute a minimum of $5 million of the Company's proprietary
FreshPack products during the first two years of the five-year agreement. In the
second agreement, Simplot agreed to distribute our proprietary products in
Simplot's Soilbuilders stores. We and Simplot also entered into a field trials
agreement pursuant to which Simplot will pay us to perform Field Trials of the
Company's BioJect system and microbials on selected Simplot crops in 2001. Since
the Asset Sale, our revenues have been concentrated on sales to Simplot. Simplot
distributes our products in the upper Midwest, Northeast and Southwest. For the
fiscal year 2000, sales to Simplot accounted for 11% of revenues, and we expect
sales to Simplot to comprise a significantly greater percentage of our sales
during 2001. As a result, any reduction in purchases by Simplot for any reason
or delay in payment of amounts owed to us by Simplot for product would have a
material adverse effect on our business and results of operations.

    If we fail to manage growth effectively, our business may suffer. Our
ability to manage future growth, should it occur, will require us to implement
and continually expand operational and financial systems, recruit additional
employees and train and manage both current and new employees. In particular,
our success depends in large part on our ability to attract and retain qualified
technical, sales, financial and management personnel. We face competition for
these persons from other companies, academic institutions, government entities
and other organizations. We can give you no assurance that we will be successful
in recruiting or retaining personnel of the requisite caliber or in adequate
numbers to enable us to conduct our business as we propose to conduct it.

    We may need to raise additional capital that may not be available when
needed. The continuing commercialization of our products requires the commitment
of significant capital expenditures. We anticipate that we will require
additional funds to support the rigorous testing of our products, other costs of
obtaining government approval and for marketing of our products for agricultural
applications. We anticipate that we will seek to obtain additional funds in the
future through public or private equity or debt financing, collaborative or
other arrangements with corporate partners or from other sources. We can give
you no assurance that we will be able to obtain this additional financing on
desirable terms, or at all. If additional funds are not available, we may be
required to curtail our operations and marketing efforts in certain geographic
areas or for one or more of our product lines.

    Patents and other proprietary rights provide uncertain protection of our
proprietary information and our inability to protect a patent or other
proprietary right may impact our business and operating results. Our success
will depend in large measure upon our ability to obtain and enforce patent
protection for our proprietary products, maintain confidentiality of our trade
secrets and know-how and operate without infringing upon the proprietary rights
of third parties. We have been granted three U.S. patents for the technology
relating to the BioJect system. We do not have foreign patent protection with
respect to the claims covered by the two U.S. patents issued in 1993, and we are
precluded from obtaining these foreign rights due to the expiration of the
period for filing such claims. However, in


                                       14
<PAGE>   15

connection with a U.S. patent granted in 1995, we applied for foreign patent
protection with respect to the BioJect system in selected countries. To date, we
have successfully patented the technology relating to the BioJect system in
several of these foreign countries. In addition, we have registered a number of
trademarks we use in our business, including "BioJect" and "Fresh Pack" and have
applied for registration of a number of additional trademarks. We also rely on
trade secrets and proprietary know-how. We generally enter into confidentiality
and nondisclosure agreements with our employees and consultants and attempt to
control access to and distribution of our confidential documentation and other
proprietary information.

    Despite the precautions described above, it may be possible for a third
party to copy or otherwise use our products or technology without authorization,
or to develop similar products or technology independently. We can give you no
assurance that our patent or trademark applications will be granted, that the
way we protect our proprietary rights will be adequate or that our competitors
will not independently develop similar or competing products. Furthermore, there
can be no assurance that we are not infringing other parties' rights. If any of
our patents are infringed upon or if a third party alleges that we are violating
their proprietary rights, we may not have sufficient resources to prosecute a
lawsuit to defend our rights. In addition, an adverse determination in any
litigation could subject us to significant liabilities to third parties, require
us to seek licenses from or pay royalties to third parties or prevent us from
manufacturing, selling or using our products, any of which could have a material
adverse effect on our business, financial condition and results of operations.
Even if we prevailed in litigation to protect our intellectual property rights,
this litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on our business, financial condition and
results of operations.

    We depend on third party contract manufacturers and suppliers. We currently
do not have any manufacturing capability and rely on third parties to
manufacture our products and components. We have more than one supplier for the
manufacture of most of our products and components; however, we obtain some
products or components from only one source. Although we believe that we will be
able to contract production with alternate suppliers, we can give you no
assurance that this will be the case or that the need to contract with
additional suppliers will not delay our ability to have our products and
components manufactured. We can give you no assurance that existing or future
manufacturers will meet our requirements for quality, quantity and timeliness,
and any such failure could have a material adverse effect on our business,
financial condition and results of operations.

    We may be unable to acquire rights to additional microbial products. We plan
to obtain the rights to additional microbial products. We currently do not
engage in our own research and development with respect to the discovery of
microbial products. As a result, we seek to license or acquire rights to
microbial products discovered by others. We can give you no assurance that we
will be successful in obtaining licenses for, or otherwise acquiring rights to,
additional microbial products on terms acceptable to us, or at all. If we fail
to acquire rights to additional products our business, financial condition and
results of operations could be materially adversely affected.

    Potential product liability or environmental claims could adversely affect
our financial condition and results of operations. We may be exposed to product
liability or environmental liability resulting from the commercial use of our
products. We currently carry liability insurance, which covers, among other
things, product liability and environmental liability. A product liability,
environmental or other claim with respect to uninsured liabilities or in excess
of insured liabilities could have a material adverse effect on our business,
financial condition and results of operations.

    We have obtained insurance of such types and in such amounts as we believe
is necessary, including casualty insurance and workers' compensation insurance.
However, we are exposed to certain risks that are not covered by our insurance
policies and our policies are subject to limits, exceptions and qualifications.
Consequently, we can give you no assurance that any losses will be covered by
insurance, that any covered losses will be fully insured against or that any
claim we make will be approved for payment by the insurer.

    We are subject to environmental liability. The federal government and some
states have laws imposing liability for the release of fertilizers and other
agents into the environment in certain manners or concentrations. Such liability
could include, among other things, responsibility for cleaning up the damage
resulting from such a release. In addition, the federal Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), commonly known
as the "Superfund" law, and other applicable laws impose liability on certain
parties for the release into the environment of hazardous substances, which
might include fertilizers and water treatment chemicals. We also are subject to
certain other federal environmental laws, including the National Environmental
Policy Act, the Toxic Substance Control Act, the Resource Conservation and
Recovery Act, the Clean Air Act and the Clean Water Act and their state
equivalents and may be subject to other present and potential future federal,
state or local regulations. As noted above, we maintain insurance for
environmental claims which might result from the release of


                                       15
<PAGE>   16

our products into the environment, but there can be no assurance that any losses
covered by insurance will be adequately covered. Thus, a claim for environmental
liability could have a material adverse effect on the Company's business,
financial condition and results of operations.

    Our products are subject to governmental regulations and approvals. We are
subject to laws and regulations administered by federal, state and foreign
governments, including those requiring registration or approval of fertilizers,
pesticides, water treatment products and product labeling. Some of our current
products are subject to regulation by the EPA, the USDA and by certain state
environmental and agricultural departments. Prior to 1998, we had only one
registered pesticide with the EPA, Bacillus thuringiensis, and had marketed it
as well as other microbial products only as soil inoculants. In 1998, we
received two EPA approvals. First, we registered Pseudomonas aureofaciens TX-1
(Spot-less) with the EPA as a biofungicide for use in turf across the United
States and received EPA approval of the BioJect as a means of application of the
microbe. Second, we received EPA approval to use Xanthomonas campestris pv
poaannua (Xpo) as a bioherbicide in experimental use permit trials for use in
turf across the United States. We are in the final process of receiving EPA
approval on Pseudomonas Hororaphis, Strain 63-28 (AtEze) for use as a
biofungicide on greenhouse and agricultural plants. We can give you no assurance
that we will obtain EPA approval for sales of additional microbial products as
biopesticides. In order to market a microbe as a pesticide, we must obtain EPA
approval of a particular product containing that microbe, including EPA approval
of the claims made in the product label and the method of application.
Registration of our microbial products as pesticides likely will be a lengthy
and expensive process that may or may not result in EPA approval. Without the
desired EPA approvals, we will not be able to market such unregistered microbes
as pesticides, and our sales efforts will be limited to discussions of the soil
inoculant features of the microbe. If the EPA determines that a microbial
product has no significant commercially valuable use other than use as a
pesticide, however, we will be precluded from selling the product entirely
unless it is approved by the EPA.

    In addition, if we intend to sell a microbe as a pesticide for use on crops,
we must also seek to have a tolerance level set by the EPA which would define
the acceptable limit on the amount of microbes that could be present on a given
raw agricultural commodity (food crop) at the time of harvest. We also may
petition the EPA for tolerance exemptions that would not limit the residues of
the microbial products on crops. If the EPA does not issue a tolerance
exemption, we would be required to obtain a separate tolerance for each food
product on which we intend to make our microbial pesticides available for use.
As a result, we would incur costly application fees for each tolerance. We can
give you no assurance that we will be successful in seeking such tolerances or
tolerance exemptions, and any failure to obtain such tolerances or exemptions
would prevent us from selling microbes as pesticides for use on crops.

    We may be subject to regulation in foreign countries. Compliance with such
requirements likely would result in additional cost to us and delays in
introducing our products in such foreign countries.

    Compliance with EPA and state environmental regulations as well as other
laws and regulations will increase our costs and time necessary to allow us to
operate successfully and may affect us in other ways not currently foreseeable.
In addition, more stringent requirements for regulation or environmental
controls may be imposed, which could have a material adverse effect on our
business, financial condition and results of operations.

    The industry in which we compete is extremely competitive and if we are not
able to compete effectively our business may suffer. The BioJect system and our
Fresh Pack products compete against traditional chemical insecticides and
fungicides, chemical soil penetrants, acid injection systems and the direct,
manual application of cultured microbial products. Many of our competitors have
substantially greater financial, technical and personnel resources than we do.
Our competitors include such well-established companies as Novartis Corporation,
Rhone-Poulenc AG Company, the Dow Chemical Company, O.M. Scotts & Sons, Inc.,
Lesco, Inc., and The Toro Company, as well as a number of smaller local and
regional competitors. We compete against traditional technologies on the basis
of our delivery mechanism and bioaugmentation expertise. We believe that the
long-term competitiveness of the BioJect system may be affected by the timing
and extent of our penetration into golf and agricultural markets compared to the
market penetration achieved by companies offering competing products for
microbial distribution. This timing, in turn, will be based on the effectiveness
with which we or the competition can complete product testing and approval
processes and supply products to the marketplace. Competition among microbial
distribution products is expected to be based on, among other things, product
effectiveness, safety, reliability, cost, market capability and patent
protection.

    In markets for traditional chemical products, we compete against
well-established distributors of such products. Many of these competitors have
substantially greater financial, technical and personnel resources than us and
include such companies as Lesco, Inc., Terra Companies, Inc., Con-Agra, Inc. and
Wilbur-Ellis Company. We compete with


                                       16
<PAGE>   17

distributors of traditional chemical products on the basis of price, name
recognition, convenience and customer service.

    Our business is dependent in large part upon the growth and continued
popularity of golf. Although we believe that golf markets will continue to grow,
a decrease in the number of golfers, reduced participation rates or reduced
consumer spending on golf could have a material adverse effect on our golf
course customers and, in turn, on us. Specifically, the success of efforts to
attract and retain members at private country clubs and the number of rounds
played at public golf courses historically have been dependent upon
discretionary spending by consumers, which may be adversely affected by general
and regional economic conditions. In addition, the construction of additional
golf courses is dependent upon growth in the number of golfers. If customer
tastes or economic conditions cause golf courses to reduce their budgets or slow
the development of additional golf courses, we may see a correlative decrease in
sales of the BioJect system and our other products.

    Our efforts to sell our proprietary products for use in micro irrigation and
greenhouse applications might not prove successful. We recently have begun
selling our proprietary products to growers who will apply them to crops using
micro irrigation methods. Our proprietary products have not been widely applied
using micro irrigation methods or in greenhouses and we may not achieve
significant market share in these markets. We cannot provide any assurances that
our revenues from sales of our proprietary products for application using micro
irrigation methods or in greenhouses will exceed the sales, marketing and
development costs we have incurred in an effort to penetrate these markets.

    Our efforts to sell our products outside the United States have had limited
success to date and may not be successful in the future. We have devoted
substantial resources to developing markets for our products outside the United
States, particularly in Mexico where the Company has significant receivables,
inventory and fixed assets held in the name of its subsidiary Agricultural
Supply de Mexico. In addition, our strategic relationship with The Cargill
Corporation calls for us to sell our proprietary products to the Canadian
market. To date, our operations outside the United States have generated limited
revenues, which have not been sufficient to cover our costs in seeking to
penetrate foreign markets. While we are continuing to explore opportunities to
sell our products outside the United States, we can give you no assurance that
we will be successful. Our international sales efforts are subject to risks
associated with operations in foreign countries that may increase our costs,
lengthen our sales cycle and require significant management attention. These
risks include:

o   fluctuations in currency exchange rates, which may make our products more
    expensive;

o   general economic conditions in international markets;

o   political risks;

o   additional costs of compliance with local regulations, including costs
    associated with unexpected changes in regulatory requirements resulting
    in unanticipated costs and delays;

o   tariffs, export controls and other trade barriers; and

o   longer accounts receivable payment cycles and difficulties in collecting
    accounts receivable.

The costs related to our international operations could adversely affect our
operations and financial results in the future.

    Our stock price has been and will continue to be volatile. Our common stock
currently is quoted on the Nasdaq National Market. The market price of our
common stock could be subject to significant fluctuations in response to
operating results and other factors. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that often have been
unrelated or disproportionate to the operating performance of companies. These
fluctuations, as well as general economic and market conditions, may adversely
affect the market price of our common stock. In addition, in the event the
listing of the common stock were discontinued for any reason, the liquidity and
price of our common stock would be adversely affected.

    Our operating results may fluctuate significantly, and any failure to meet
financial expectations may disappoint securities analysts or investors and
result in a decline in our stock price. Our operating results vary from quarter
to quarter as a result of seasonality and various factors. Virtually all of our
customers are located in the Northern Hemisphere and purchase greater quantities
of microbes and distributed products during the spring, summer and fall


                                       17
<PAGE>   18

months. As a result of low customer activity during the winter, we typically
market the BioJect system during the fourth and first quarters. As a result of
these marketing efforts, we typically receive orders during the first and second
quarters and install BioJect systems during the second and third quarters.
BioJect revenues generally occur in the second and third quarters of the year.
Because of this sales cycle, we expect to recognize a significant portion of our
revenues during our second and third quarters. Operating expenses have tended to
be independent of the quarterly sales cycle. As a result, operating expenses
generally represent a higher percentage of sales in the first and fourth
quarters as compared to the second or third quarters, and we may experience
losses in the first and fourth quarters. Accordingly, results for any quarter
are not necessarily indicative of results for any future period. The sales cycle
for the BioJect system also makes it difficult to predict the number of BioJect
systems that will be employed and the quantity of microbial products that we
will sell until we receive orders during the first half of the year. Sales of
our products also depend to some extent on the severity of weather patterns in
the geographic areas we serve. Given these factors, it is difficult for us to
accurately predict the level of demand for our products.

    It is likely that in one or more future quarters our financial results will
fall below the expectations of analysts and investors. If this happens, the
trading price of our common stock would likely decrease. Many of the factors
that cause our quarter to quarter financial results to be unpredictable are
largely beyond our control.

    Loss of key personnel could hurt our business. We are dependent upon the
active participation of William B. Adams, the chairman of our board of directors
and our chief executive officer. The loss of the services of Mr. Adams could
have a material adverse effect upon our business, financial condition and
results of operations. We do not have an employment agreement with Mr. Adams. We
can give you no assurance that Mr. Adams will continue to be employed by the
Company.

    A small number of shareholders may be able to exercise effective control
over us. As of March 31, 2001, our current principal shareholders and management
owned more than 14% of the outstanding shares of our common stock, assuming the
exercise of all outstanding options and warrants held by them and no exercise of
options or warrants held by others. Accordingly, even though we currently have
cumulative voting, the current principal shareholders and management, if voting
in concert, may have the ability to effectively control the election of a
majority of our directors or any other major decisions involving our assets or
us.

    Anti-takeover provisions of our charter and Nebraska law could limit the
ability of another party to acquire us, which could cause our stock price to
decline. Certain provisions of our articles of incorporation, including
provisions creating a staggered board of directors, and certain provisions of
Nebraska law, including the Nebraska Shareholders Protection Act, could have the
effect of deterring or delaying a takeover or other change in control of Eco
Soil, could deny shareholders the receipt of a premium on their common stock and
could result in a decline in the market price of our common stock. In addition,
our board of directors is authorized, without any action by our shareholders, to
issue up to 5,000,000 shares of authorized but undesignated preferred stock and
to fix the powers, preferences, rights and limitations of this preferred stock
or any class or series thereof. Persons acquiring preferred stock could have
preferential rights with respect to voting, liquidation, dissolution or
dividends over existing shareholders.





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<PAGE>   19

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

Exhibits:

<TABLE>
    <S>        <C>
     3.1(3)    Amended and Restated Articles of Incorporation
     3.2(4)    Articles of Correction to Amended and Restated Articles of Incorporation
     3.3(5)    Articles of Amendment to Amended and Restated Articles of Incorporation
     3.4(3)    Bylaws, as amended
     4.1(2)    Form of the Common Stock Certificate
    10.1(6)    Amendment No. 2 to the Convertible Debentures and Warrant Purchase Agreement,
               dated as of March 7, 2001, among Eco Soil Systems, Inc., Agricultural Supply,
               Inc., Sistemas Y Equipos Agricolas, S.A. de C.V. and Agricultural Supply de
               Mexico, S.A. de C.V. (including Form of Amended and Restated 7% Senior Secured
               Convertible Debenture).
    10.2(6)    Stock Purchase Warrant (with schedule of warrant holders)
    10.3(1)    Change in Terms Agreement, dated March 21, 2001, among Agricultural Supply, Inc.,
               a Delaware corporation, Eco Soil Systems, Inc., Agricultural Supply de Mexico,
               S.A. de C.V., Sistemas Y Equipos Agricolas, S.A. de C.V. and First National Bank.
</TABLE>


----------

(1)  Filed herewith

(2)  Incorporated by reference to the Company's Registration Statement on Form
     SB-2 (File No. 333-15883) filed with the Commission on November 8, 1996.

(3)  Incorporated by reference to Amendment No. 4 to the Company's Registration
     Statement on Form SB-2 (File No. 333-15883) filed with the Commission on
     January 16, 1997.

(4)  Incorporated by reference to the Company's Registration Statement on Form
     SB-2 (File No. 333-39399) filed with the Commission on November 4, 1997.

(5)  Incorporated by reference to Amendment No. 1 to the Company's Registration
     Statement on Form SB-2 (File No. 333-39399) filed with the Commission on
     November 21, 1997.

(6)  Incorporated by reference to the Company's Annual Report on Form 10-K (File
     No. 001-21975) filed with the Commission on April 18, 2001.


 (b) REPORTS ON FORM 8-K

       None.





                                       19
<PAGE>   20

SIGNATURES

    In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            Eco Soil Systems, Inc.


Date: May 15, 2001                          By:  /s/ WILLIAM B. ADAMS
                                                 -------------------------------
                                                  William B. Adams
                                                  Chairman and Chief Executive
                                                  Officer


Date: May 15, 2001                          By:  /s/ JOHN LOMORO
                                                 -------------------------------
                                                  John Lomoro
                                                  Chief Accounting Officer







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