SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                  For the quarterly period ended March 31, 2007

[ ] 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.)

                12224 Montague Street, Pacoima, California 91331
                    (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 is a shell Company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of May 21, 2007, the number of shares of common stock issued and outstanding
was 43,519,574 Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
                                      INDEX

                                                                           Page
                                                                          Number
                                                                          ------

PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements (Unaudited)

     Unaudited Consolidated Balance Sheet - March 31, 2007                   2

     Unaudited Consolidated Statements of Operations -
     For the three months ended March 31, 2007 and 2006                      4

     Unaudited Consolidated Statements of Cash Flow -
     For the three months ended March 31, 2007 and 2006                      6

     Consolidated Notes to Financial Statements (Unaudited)                  7

Item 2. Management's Discussion and Analysis of Financial Conditions
        and Results of Operations                                           14

Item 3. Controls and Procedures

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                  18

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        18

Item 3.  Defaults Upon Senior Securities                                    18

Item 4.  Submission of Matters to a Vote of Security Holders                18

Item 5.  Other Information                                                  18

Item 6.  Exhibits                                                           18

SIGNATURES                                                                  19

                                       1
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                              31-Mar-07
                                                                                             ------------
                                                                                              (Unaudited)
<S>                                                                                          <C>
ASSETS:

CURRENT ASSETS
   Cash and cash equivalents                                                                 $     36,205
   Accounts receivable, net of allowance of doubtful accounts of $37,556                          123,435
   Inventory                                                                                      342,149
   Prepaid expenses and other current assets                                                      113,484
                                                                                             ------------
      Total current assets                                                                        615,273
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $358,614                               378,362
INTELLECTUAL PROPERTY, net of accumulated amortization of $637,977                              4,440,689
DEPOSITS AND OTHER ASSETS                                                                         133,972

                                                                                             ------------
      TOTAL ASSETS                                                                           $  5,568,296
                                                                                             ============

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
   Accounts payable                                                                          $    624,350
   Accrued liabilities                                                                             23,250
   Notes payable to related parties                                                                32,000
   Notes payable to nonrelated parties                                                            290,599
   Capital lease obligation - current portion                                                      22,719
   Debentures payable to related parties, net of unamortized discount of $50,946                2,337,133
   Debentures payable to nonrelated parties, net of unamortized discount of $67,947                52,053
                                                                                             ------------
      Total current liabilities                                                                 3,382,104
NOTES PAYABLE TO RELATED PARTIES, net of current portion                                          460,012
NOTES PAYABLE TO NONRELATED PARTIES, net of current portion                                        48,590
CAPITAL LEASE OBLIGATION, net of current portion                                                   47,279
DEBENTURES PAYABLE TO RELATED PARTIES, net of current portion                                     169,221
      Total liabilities                                                                         4,107,206
                                                                                             ------------
STOCKHOLDERS' EQUITY:
   Series A preferred stock, $0.50 stated value, 10,000,000 shares
    authorized, 2,763,699 shares issued and outstanding                                         1,381,849
   Common stock, $0.001 par value, 100,000,000 shares authorized,
    43,556,850 shares issued and outstanding                                                       43,557
   Paid in capital                                                                             17,003,146
   Accumulated deficit, beginning of quarter as previously reported                           (16,302,356)
   Prior-period adjustment - error in 12/31/06 in debt discount amortization                      (25,540)
                                                                                             ------------
   Accumulated deficit, beginning of quarter as restated                                      (16,327,896)
   Net loss                                                                                      (639,566)
                                                                                             ------------
   Accumulated deficit, end of quarter                                                        (16,967,462)
                                                                                             ------------
                                                                                             ------------
      Total stockholders' equity                                                                1,461,090
                                                                                             ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $  5,568,296
                                                                                             ============
</TABLE>
              The accompanying notes are an integral part of these
                  unaudited consolidated financial statements.

                                       2
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           Three Months           Three Months
                                                              Ended                  Ended
                                                             March 31,              March 31,
                                                               2007                   2006
                                                           ------------           ------------
                                                           (Unaudited)             (Unaudited)
<S>                                                        <C>                    <C>
NET REVENUES                                               $    254,939           $    124,426
                                                           ------------           ------------
COST OF GOODS SOLD
(exclusive of deprecation shown separately below)               137,697                 82,817
                                                           ------------           ------------
GROSS INCOME                                                    117,243                 41,609
                                                           ------------           ------------
OPERATING EXPENSES
  General and administrative                                    478,678                370,333
  Sales and marketing                                            65,033                186,791
  Research and development                                        2,159                 11,297
  Depreciation                                                   31,166                 29,631
  Amortization                                                  113,083                 11,711

                                                           ------------           ------------
      Total operating expenses                                  690,118                609,763
                                                           ------------           ------------

OPERATING LOSS                                                 (572,875)              (568,154)
                                                           ------------           ------------
OTHER (INCOME)/EXPENSE
  Interest expense and related costs                            102,590                 93,821
  Other (income)/expense                                        (35,890)                11,968
  Interest income                                                    (9)                  (675)
                                                           ------------           ------------
      Total other (income)/expense                               66,691                105,114
                                                           ------------           ------------

LOSS BEFORE INCOME TAXES                                       (639,566)              (673,268)
                                                           ------------           ------------

INCOME TAX  PROVISION                                                --                     --
                                                           ------------           ------------

NET LOSS                                                   $   (639,566)          $   (673,268)
                                                           ============           ============

NET LOSS PER SHARE:
  Basic                                                    $      (0.02)          $      (0.03)
                                                           ============           ============
  Diluted                                                  $      (0.02)          $      (0.03)
                                                           ============           ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                                      36,714,919             26,506,805
                                                           ============           ============

  Diluted                                                    36,714,919             26,506,805
                                                           ============           ============
</TABLE>

              The accompanying notes are an integral part of these
                  unaudited consolidated financial statements.

                                       3
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            Three Months        Three Months
                                                               Ended               Ended
                                                              March 31,           March 31,
                                                                2007                2006
                                                             ---------           ---------
                                                            (Unaudited)         (Unaudited)
<S>                                                        <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                   $(639,566)          $(673,268)
  Adjustments to reconcile net loss to net cash
   used by operating activities:
     Depreciation and amortization                             144,248              41,342
     Loss on disposal of fixed assets                               --              11,968
     Amortization of debt discount                              52,634              55,000
     Stock issued for services                                      --               3,713
     All other operating activities                             26,591                  --
  Changes in assets and liabilities:
     Accounts receivable                                       (53,580)              3,989
     Receivables from officers and employees                        --                 104
     Prepaid and other current assets                           (6,672)             36,232
     Inventory                                                  (5,816)           (112,642)
     Deposits and other assets                                 (33,972)                 --
     Accounts payable                                            2,536             153,315
     Accrued liabilities                                       (15,850)            (30,726)
                                                             ---------           ---------
          Net cash  used in operating activities              (556,038)           (510,973)
                                                             ---------           ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of intellectual property                                --              (4,200)
  Purchases of property and equipment                             (666)             (6,858)
                                                             ---------           ---------
          Cash used in investing activities                       (666)            (11,058)
                                                             ---------           ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes payable                                  555,962             450,000
  Proceeds from sales/leaseback transaction                         --              75,000
  Principal repayments on convertible debentures                (4,310)             (3,913)
  Principal repayments on capital lease obligations             (5,123)             (6,843)
  Repayments on notes payable                                  (33,958)           (304,826)
  Proceeds from sale of preferred stock                             --             300,000
                                                             ---------           ---------
          Net cash provided by financing activities            512,571             509,418
                                                             ---------           ---------

DECREASE IN CASH AND CASH EQUIVALENTS                          (44,133)            (12,613)

CASH AND CASH EQUIVALENTS, beginning of period                  80,338             272,648
                                                             ---------           ---------

CASH AND CASH EQUIVALENTS, end of period                     $  36,205           $ 260,035
                                                             =========           =========
</TABLE>
              The accompanying notes are an integral part of these
                  unaudited consolidated financial statements.

                                       4
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS  (CONTINUED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                      Three Months        Three Months
                                                         Ended               Ended
                                                        March 31,           March 31,
                                                          2007                2006
                                                       ---------           ---------
                                                      (Unaudited)         (Unaudited)
<S>                                                   <C>                    <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest                                           $   46,024          $   27,526
                                                       ==========          ==========

SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
  Common stock issued in exchange for
   intellectual property                               $        0          $   33,750
                                                       ==========          ==========
  Series B preferred stock issued in exchange
   for patent                                          $        0          $1,950,000
                                                       ==========          ==========
  Conversion of debt and accrued interest to
   common stock                                        $  500,001          $  301,000
                                                       ==========          ==========
  Conversion of preferred shares to common
   shares                                              $2,250,000          $        0
                                                       ==========          ==========

Issuance of notes in exchange of equipment             $    7,000          $        0
                                                       ==========          ==========
</TABLE>

              The accompanying notes are an integral part of these
                  unaudited consolidated financial statements.

                                       5
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND
MARCH 31, 2006 (UNAUDITED)
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with accounting principles generally accepted in the
     United States of America for interim financial information and the
     instructions for Form 10-QSB and Regulation S-B. Accordingly, they do not
     include all of the information and footnotes required by accounting
     principles generally accepted in the United States of America for complete
     financial statement presentation. All adjustments that, in the opinion of
     management are necessary for a fair presentation of the results of
     operations for the interim periods have been made and are of a recurring
     nature unless otherwise disclosed herein. The results of operations for the
     three months ended March 31, 2007 are not necessarily indicative of the
     results that will be realized for the entire fiscal year. These unaudited
     consolidated financial statements should be read in conjunction with the
     Company's Annual Report on Form 10-KSB for the period ended December 31,
     2006.

     ORGANIZATION

     American Soil Technologies, Inc. (the "Company"), formerly Soil Wash
     Technologies, Inc., was incorporated in California on September 22, 1993.
     On November 24, 1999, the Company entered into an exchange agreement for
     the reverse acquisition of New Directions Manufacturing, Inc., a publicly
     traded Nevada corporation incorporated on January 9, 1997 ("New
     Directions"), wherein New Directions would acquire the assets of the
     Company and change its name to American Soil Technologies, Inc. This
     exchange agreement was effective as of the close of business on December
     31, 1999.

     The Company is primarily engaged in the marketing 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. The Company recently acquired the patent to a slow release
     fertilizer to be used primarily in the turf segment of its business. 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 through the acquisition of Smart World Organics, Inc. on
     December 20, 2006 as well as an Intellectual Property Purchase Agreement
     with the founder, Ray Nielsen, that includes formulas and intellectual
     properties used in the business of Smart World Organics, Inc. on December
     20, 2006. The product line includes homogenized fertilizers, non-toxic
     insect controls, plant protectants, seed, soil and silage inoculants. Smart
     World also provides advanced, custom-formulated products built to suit
     unusual growing conditions and environments.

     GOING CONCERN AND MANAGEMENT'S PLANS

     The Company has sustained significant losses and has a working capital
     deficit of $2,766,831 and accumulated deficit of $16,967,462. The ability
     of the Company to continue as a going concern is dependent upon obtaining
     additional capital and financing, and generating positive cash flow from

                                       6
<PAGE>
     operations. The Company intends to seek additional capital either through
     debt or equity offerings and is attempting to increase sales volume and
     operating margins to achieve profitability.

     The financial statements do not include any adjustments relating to the
     recoverability and classification of asset carrying amounts or the amount
     and classification of liabilities that might result should the Company be
     unable to continue as a going concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CASH AND CASH EQUIVALENTS: This includes all short-term highly liquid
     investments that are readily convertible to known amounts of cash and have
     original maturities of three months or less. At times cash deposits may
     exceed government insured limits.

     ACCOUNTS AND NOTES RECEIVABLE: The Company utilizes the allowance method to
     provide a reserve for uncollectible accounts. The Company determines any
     required allowance by considering a number of factors including length of
     time trade accounts receivable are past due and the Company's previous loss
     history. The Company records a reserve account for accounts receivable when
     they become uncollectible, and payments subsequently received on such
     receivables are credited to the allowance for doubtful accounts.

     INVENTORIES: consist primarily of purchased polymer soil amendments.
     Inventories are stated at the lower of cost (on a first-in, first-out
     basis) or market.

     PROPERTY AND EQUIPMENT: Property and equipment is stated at cost less
     accumulated depreciation. Depreciation is recorded on a straight-line basis
     over the estimated useful lives of the assets ranging from 3 to 15 years.
     Depreciation expense was $31,166 and $29,631 for the three-month periods
     ended March 31, 2007 and 2006, respectively.

     Betterments, renewals and extraordinary repairs that extend the lives of
     the assets are capitalized: other repairs and maintenance charges are
     expensed as incurred. The cost and related accumulated depreciation
     applicable to assets retired are removed from the accounts, and the gain or
     loss on disposition is recognized in current operations.

     INTELLECTUAL PROPERTY: The exclusive licenses to the patented polymer
     application techniques purchased December 31, 1999, are being amortized
     using the straight-line method over the life of the licenses, which is 14
     1/2 years. The patent acquired on March 15, 2006 is being amortized using
     the straight-line method, over the eight years left to expiration. The
     Intellectual Property purchased on December 20, 2006 is being amortized at
     15 years. The carrying value of these assets is periodically evaluated for
     impairment. The formulas purchased on December 20, 2006 are valued
     $2,411,499.

     ADVERTISING: The Company expenses advertising costs as incurred.
     Advertising expense was $65,033 and $186,788 for the three-month periods
     ended March 31, 2007 and 2006, respectively.

     REVENUE RECOGNITION: Revenue is recognized in accordance with Staff
     Accounting Bulleting ("SAB No.101), Revenue Recognition in Financial
     Statements, as revised by SAB 104. The Company recognizes revenue when
     products are shipped to a customer or if the sale includes installation,
     upon completion of the installation process and the risks and rewards of
     ownership have passed based on the terms of the sale.

     INCOME TAXES: The Company provides for income taxes based on the provisions
     of Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR
     INCOME TAXES, which, among other things, requires that recognition of

                                       7
<PAGE>
     deferred income taxes be measured by the provisions of enacted tax laws in
     effect at the date of financial statements.

     NET LOSS PER SHARE: Net loss per share is calculated using the weighted
     average number of shares of common stock outstanding during the year. The
     Company has adopted the provisions of SFAS No. 128, EARNINGS PER SHARE.

     FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company's financial instruments
     consist of cash and cash equivalents, accounts receivable, accounts
     payable, accrued expenses, debentures and notes payable. Pursuant to SFAS
     No. 107, "Disclosures about the Fair Value of Financial Instruments, " the
     Company is required to estimate the fair value of all financial instruments
     at the balance sheet date. The Company cannot determine the estimated fair
     value of related-party notes payable and selected debentures as the
     transactions originated with related parties.

     Other than these items, the Company considers the carrying values of its
     financial instruments in the consolidated financial statements to
     approximate their fair values.

     RESEARCH AND DEVELOPMENT EXPENSES

     The Company expenses internal research and development costs as incurred.
     Third party research and development costs are expensed when the contracted
     work has been performed.

     USE OF ESTIMATES: The preparation of consolidated financial statements in
     conformity with accounting principals generally accepted in the United
     States of America, requires management to make estimates and assumptions
     that affect the reported amounts of assets and liabilities and disclosure
     of contingent assets and liabilities at the date of the financial
     statements and the reported amounts of revenues and expenses during the
     reporting periods. Actual results could differ from those estimates.

     Significant estimates made in connection with the preparation of the
     accompanying financial statements include the carrying value of accounts
     receivable and inventories, the carrying value of the patented licenses and
     self-constructed machinery.

     PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
     the accounts of the Company and its wholly owned subsidiaries. All
     significant inter company accounts and transactions have been eliminated.

     CONCENTRATION OF CREDIT RISK

     CASH

     The Company maintains its cash and cash equivalent account in financial
     institutions. Accounts at these institutions are insured by the Federal
     Deposit Insurance Corporation ("FDIC") up to $100,000. At March 31, 2007,
     the Company had no cash balances which were in excess of the FDIC insurance
     limit. The Company performs ongoing evaluations of these institutions to
     limit its concentration risk exposure.

     CUSTOMERS

     The Company grants credit to those customers within the United States of
     America and to a limited number of international customers and do no
     require collateral. Sales to other international customers are secured by

                                       8
<PAGE>
     advance payments, letters of credit or cash against documents. The
     Company's ability to collect receivables is affected by economic
     fluctuations in the geographic areas and industries served by the Company.
     Reserves for uncollectible amounts, totaling approximately $38,000 as of
     March 31, 2007 are provided based on past experience and a specific
     analysis of the accounts which management believes are sufficient. Although
     the Company expects to collect amounts due, actual collections may differ
     from the estimated amounts.

     The Company has foreign sales primarily in Canada, Korea, Israel and United
     Arab Emirates. Foreign sales are primarily under non-exclusive distribution
     agreements with international distributors. During the three month periods
     ended March 31, 2007 and 2006 the Company had foreign sales of
     approximately $ -0- and $5,837, respectively, which constituted
     approximately 0% and 5%, respectively, of net sales.

     STOCK-BASED COMPENSATION: Effective January 1, 2006, the Company adopted
     the provisions of SFAS No. 123R using the modified prospective application
     transition method. Under this method, compensation cost for the portion of
     awards for which the requisite service has not yet been rendered that are
     outstanding as of the adoption date is recognized over the remaining
     service period. The compensation cost for that portion of awards is based
     on the grant-date fair value of those awards as calculated for pro forma
     disclosures under SFAS No. 123, as originally issued. All new awards that
     are modified, repurchased, or cancelled after the adoption date are
     accounted for under provisions of SFAS No. 123R. Prior periods have not
     been restated under this transition method. The Company recognizes
     share-based compensation ratably using the straight-line attribution method
     over the requisite service period. In addition, pursuant to SFAS No. 123R,
     the Company is required to estimate the amount of expected forfeitures when
     calculating share-based compensation, instead of accounting for forfeitures
     as they occur, which was the Company's practice prior to the adoption of
     SFAS No. 123R. As of January 1, 2006 the cumulative effect of adopting the
     estimated forfeiture method was not material.

     Prior to January 1, 2006, the Company accounted for share-based
     compensation using the intrinsic value method prescribed by Accounting
     Principles Board Opinion No. 25, "Accounting for Stock Issued to
     Employees," and related interpretations and elected the disclosure option
     of SFAS no. 123 as amended by SFAS No. 148, "Accounting for Stock-Based
     Compensation - Compensation and Disclosure." SFAS No. 123 requires that
     companies either recognize compensation expense for grants of stock, stock
     options and other equity instruments based on fair value, or provide pro
     forma disclosure of net income and earnings per share in the notes to the
     financial statements. Accordingly, the Company measured compensation
     expense for stock options as the excess, if any, of the estimated fair
     market value of the Company's stock at the date of grant over the exercise
     price.

     There were no stock options granted in the three months ended March 31,
     2007 and 2006. No options expired or were exercised during the three-month
     period ended March 31, 2007. All options outstanding at January 1, 2006
     were fully vested. Therefore, no compensation expense was recognized in the
     period ended March 31, 2007 as a result of the implementation of SFAS No.
     123R.

     The Company initiated a stock option plan during the three months ended
     June 30, 2001 under which the Company could grant up to one million
     options. Under the plan, all employees and directors, subject to employment
     terms, have been granted options to purchase 219,998 and 225,002 shares,
     respectively. The options are exercisable at $3.75 and $4.13 per share,
     respectively. At the time of the grants the market price of the stock was
     $3.75. Therefore, 219,998 options were granted at the market price and
     225,002 options were granted at 10% in excess of the market price. The
     options are vested when granted and are exercisable for ten years from the
     date of grant subject to cancellation upon termination of employment.
     During the three months ended June 30, 2003, all outstanding options under
     the 2001 Plan were surrendered by the holders and cancelled by the Company.

                                       9
<PAGE>
     In November 2002, the Company enacted a stock option plan (the "2002 Plan")
     to provide additional incentives to selected employees, directors and
     consultants. Two million shares were authorized by a majority of the
     shareholders for issuance as Incentive Stock Options or Nonstatutory Stock
     Options. The 2002 Plan anticipates qualifying under Section 423 of the
     Internal Revenue Code of 1986, as an "employee stock purchase plan". Under
     the 2002 Plan, options may be granted to key employees, officers, directors
     or consultants. The purchase price of the common stock subject to each
     Incentive Stock Option shall not be less than the fair market value (as
     determined in the 2002 Plan) or in the case of a grant of an Incentive
     Stock Option to a principal shareholder, not less than 110% of the fair
     market value of such common stock at the time each option is granted. The
     2002 Plan shall terminate 10 years from the date of adoption by the
     Company. The options are vested when granted and exercisable for 10 years
     from the date of grant and are subject to cancellation upon termination of
     employment. Under the Plan, the Company has granted options to purchase
     1,010,000 shares and 300,000 shares at $0.50 and $0.25, respectively. The
     market price at the date of grant was $0.12.

     A 2005 Stock Option/Stock Issuance Plan (the "2005 Plan") was authorized by
     the majority shareholders during the three months ended June 30, 2005. The
     2005 Plan provides for the issuance of up to 10,000,000 shares of common
     stock to our directors, officers, employees and consultants in the form of
     stock options and shares of common stock.

     The 2005 Plan has two separate components: the option grant program and the
     stock issuance program. To date, no shares of common stock or stock options
     have been issued pursuant to the 2005 Plan.

     Grants under the option grant program may be structured as installment
     options which become exercisable for vested shares over the optionee's
     period of service or as immediately exercisable options for unvested shares
     which will be subject to repurchase by the Company, at the option exercise
     price paid per share, upon the optionee's termination of service prior to
     vesting in those shares. All option grants must have an exercise price not
     less than 100% of the fair market value of the option shares on the grant
     date.

     The stock issuance program allows eligible persons to purchase shares of
     common stock at fair market value or at a discount of up to 15% of fair
     market value. The shares may be fully vested when issued or may vest over
     time as the recipient provides services or as specified performance
     objectives are attained. In addition, shares of common t stock may be
     issued as bonus awards in e recognition of services rendered, without any
     cash outlay required of the recipient.

     The Board of Directors will initially administer the 2005 Plan, except that
     the Board may, at its discretion, establish a committee comprised of two or
     more members of the Board or two or more other persons to administer the
     2005 Plan (the "Plan Administrator").

     The following summarizes information at March 31, 2007:

<TABLE>
<CAPTION>
                      Options Outstanding                               Options Exercisable
    ----------------------------------------------------     ----------------------------------------

                          Number        Weighted Average      Weighted        Number         Weighted
                      outstanding at       Remaining          Average     Exercisable at     Average
        Range of         March 31,       Contractual Life     Exercise       March 31,      Exercise
     Exercise Prices       2007            (in years)          Price           2007           Price
     ---------------       ----            ----------          -----           ----           -----
<S>      <C>             <C>                  <C>              <C>           <C>              <C>
         $0.50           680,000              5.75             $0.50         680,000          $0.50
</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>
                      Warrants Outstanding                               Warrants Exercisable
    ----------------------------------------------------     ----------------------------------------

                          Number        Weighted Average      Weighted        Number         Weighted
                      outstanding at       Remaining          Average     Exercisable at     Average
        Range of         March 31,       Contractual Life     Exercise       March 31,      Exercise
     Exercise Prices       2007            (in years)          Price           2007           Price
     ---------------       ----            ----------          -----           ----           -----
<S>      <C>             <C>                  <C>              <C>           <C>              <C>
         $0.23           300,000              1.75             $0.23         300,000          $0.23
         $0.30           100,000               .70             $0.30         100,000          $0.30
         $0.30           634,000              2.70             $0.30         734,000          $0.30
</TABLE>

     During the three month period ended March 31, 2007, there were no options
     and warrants granted.

     IMPAIRMENT OF LONG-LIVED ASSETS: The Company assesses long-lived assets for
     impairment in accordance with the provisions of SFAS 144, ACCOUNTING FOR
     THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. SFAS 144 requires that the
     Company report discontinued operations separately from continuing
     operations and long-lived assets to be disposed of at their fair value net
     of the cost of disposal.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

     In September 2006, the FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS
     (SFAS 157). SFAS 157 defines fair value establishes a framework for
     measuring fair value in generally accepted accounting principles, and
     expand disclosures about fair value measurements. This state is effective
     for financial statements issued for fiscal years beginning Nov. 15, 2007.
     We are currently evaluating the impact of adopting SFAS 157 on the
     consolidated financial statements.

     In September 2006, the Securities and Exchange Commission issued Staff
     Accounting Bulletin No. 108, (SAB 108). SAB 108 considers the effects of
     prior years misstatements when quantifying misstatements in current year
     financial statements. It is effective for fiscal years ending after Nov.
     15, 2006. We do not believe the adoption of SAB 108 will have a material
     impact on the consolidated financial statements.

     In June 2006, the FASB issued FIN No. 48, ACCOUNTING FOR UNCERTAINTY IN
     INCOME TAXES - AN INTERPRETATION OF FASB STATEMENT NO. 109 (FIN 48), which
     clarifies the accounting for uncertainty in tax positions. This
     Interpretation requires financial statement recognition of the impact of a
     tax position, if that position is more likely than not to be sustained on
     examination, based on the technical merits of the position. The provisions
     of FIN 48 will be effective for fiscal years beginning after Dec. 15, 2006,
     with the cumulative effect of the change in accounting principle recorded
     as an adjustment to opening retained earnings. The adoption of FIN 48 did
     not have an impact on the consolidated financial statements.

     In March 2006, the FASB issued SFAS no. 156, ACCOUNTING FOR SERVICING OF
     FINANCIAL ASSETS - AN AMENDMENT OF FASB STATEMENT NO. 140 (SFAS 156). SFAS
     156 required recognition of servicing asset or liability at fair value each
     time an obligation is undertaken to service a financial asset by entering
     into a servicing contract. SFAS 156 also provides guidance on subsequent
     measurement methods for each class of servicing assets and liabilities and
     specifies financial statement presentation and disclosure requirements.
     This statement is effective for fiscal years beginning after Sept. 15,
     2006. We are currently evaluating the impact of SFAS 156 on the
     consolidated financial statements.

                                       11
<PAGE>
3. INVENTORY

     Inventory consists of the following at March 31, 2007:

          Raw materials        $ 30,406
          Finished goods        311,743
                               --------

          Total                $342,149
                               ========

4. INTELLECTUAL PROPERTY

     On December 31, 1999, the Company purchased exclusive license rights to
     patented polymer application techniques. The licenses are being amortized
     using the straight-line method over the life of the licenses, which is
     141/2 years.

     On March 15, 2006, the Company acquired a patent and $300,000 cash for
     4,500,000 shares of Series B preferred stock having a value of $2,250,000.
     The value was determined based on the equivalent value of common stock at
     the stated conversion price of $2,250,000. The acquired Company had no
     operations and owned the patent on a slow release fertilizer used primarily
     in the turf segment of its business. The Company will collect royalty
     revenues from two existing licenses and will sell products derived from the
     patents directly to its customers including qualified distributors. The
     patent has approximately 8 years left to expiration. The acquired Company
     also had cash deposits of $300,000 effectively resulting in the sale of
     preferred stock for $300,000 and the patent rights.

     On December 20, 2006, the Company purchased exclusive soil additive
     formulas, proprietary software trademarks and patents. The intellectual
     property was valued at $2,411,499, which was purchased with issuance of a
     $1,500,000 convertible 8% debentures and $911,499 of the Smart World
     acquisition was added. The intellectual property is being amortized using
     the straight-line method over 8-15 years. The weighted average remaining
     life of these assets is 10.81 years.

     The following table summarizes the components of intangible assets:

                                                 As of March 31, 2007
                                       Gross
                                     Carrying       Accumulated
                                      Amount       Amortization         Net
                                    ----------     ------------     ----------
     Patent                         $  679,217      $  337,661      $  341,556
     Turf Trade secrets                 37,950           2,197          35,753
     Soil Medic Patent               1,950,000         249,594       1,700,406
     Formulas, Rights, Patents,      2,411,499          48,525       2,362,974
                                    ----------      ----------      ----------

     Total                          $5,078,666      $  637,977      $4,440,689
                                    ==========      ==========      ==========

     The carrying value of these assets is periodically evaluated for
     impairment. The amortization expense was $113,083 and $11,711 for the
     three-month periods ended March 31, 2007 and 2006, respectively.

                                       12
<PAGE>
     The following summarizes the estimated future amortization expense of the
     intellectual property:

           Year                      Amount
           ----                      ------
     2007 (remaining)               $339,245
           2008                      452,328
           2009                      452,328
           2010                      452,328
           2011                      452,328
        Thereafter                 2,292,132
                                  ----------

          Total                   $4,440,689
                                  ==========

5. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following at March 31, 2007:

     Machinery                                           $ 634,770
     Vehicles                                               57,615
     Office furnishings, fixtures and equipment             44,591
                                                         ---------
       Total                                               736,976
       Less accumulated depreciation                      (358,614)
                                                         ---------

       Property and equipment, net                       $ 378,362
                                                         =========

6. NOTES PAYABLE

     Notes payable at March 31, 2007 are comprised of the following:

     Convertible debenture to related party, original balance of
     $250,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.50 for
     one share of common stock. Principal due February 1, 2008.      $  250,000

     Convertible debenture to related party, original balance of
     $250,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.50 for
     one share of common stock. Principal due March 27, 2008.           250,000

     Convertible debenture to related party, original balance of
     $25,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.50 for
     one share of common stock. Principal due February 1, 2007.          25,000

     Convertible debenture to related party, original balance of
     $25,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.50 for
     one share of common stock. Principal due February 1, 2007.          25,000

     Convertible debenture to related party, original balance of
     $25,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.50 for
     one share of common stock. Principal due August 15, 2007.           20,000

     Note payable to a related party, original balance of
     $32,000, Interest at prime rate payable monthly. Note is
     unsecured and due upon demand.                                      32,000

     Convertible debenture to related party, original balance of
     $250,000, interest at 10% per annum. Monthly principal and
     interest payments of $3,000 are due through 2014. Principal
     is convertible at a rate of $3.00 for one share of common stock.   187,300

     Convertible debenture to related party, original balance of
     $200,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.50 for
     one share of common stock. Principal due February 1, 2008.         200,000

     Convertible debenture to related party, original balance of
     $100,00, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.28 for
     one share of common stock. Note is unsecured. Principal due
     October 17, 2007                                                   100,000

     Convertible debenture to related party, original balance of
     $1,500,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at the proceeding day's
     rate for one share of common stock. Note is secured with
     Intellectual Property purchased 12/20/06 from note holder.
     Principal is due January 19, 2008.                               1,500,000

     Convertible debenture to an unrelated party, original
     balance of $30,000, interest at 8% per annum, interest
     payable quarterly. Principal is convertible at a rate of
     $0.25 for one share of common stock. Note is unsecured.
     Principal due October 1, 2007.                                      30,000

     Convertible debenture to an unrelated party, original
     balance of $30,000, interest at 8% per annum, interest
     payable quarterly. Principal is convertible at a rate of .30
     for one share of common stock. Note is unsecured. Principal
     due on October, 1, 2007.                                            30,000

     Convertible debenture to an unrelated party, original
     balance of $30,000, interest at 8% per annum, interest
     payable quarterly. Principal is convertible at a rate of
     $0.25 for one share of common stock. Note is unsecured.
     Principal due October 1, 2007.                                      30,000

                               13
<PAGE>
     Convertible debenture to unrelated party, original balance
     of $30,000, interest at 8% per annum, interest payable
     quarterly. Principal is convertible at a rate of $0.28 for
     one share of common stock. Note is unsecured. Principal due
     October 1, 2007.                                                    30,000

     Note payable to lending institution, original balance of
     $48,542, and interest at 2.9% per annum. Requires monthly
     principal and interest payments of $736 through 2009.
     Collateralized by vehicle.                                          23,323

     Note payable to finance Company, original balance of
     $75,000, and interest at 17.7% per annum. Requires monthly
     principal and interest payments of $1,814 through 2009.
     Collateralized by polymer injection machine.                        43,707

     Note payable to lending institution, original balance of
     $28,985, and interest at 6.99% per annum. Requires monthly
     principal and interest payments for $576 through 2008.
     Collateralized by vehicle.                                          11,395

     Notes payable by various individuals at rates from 6% to
     20%, all due prior to acquisition of Smart World Organics,
     Inc.                                                               260,764

     Note payable to related party, original balance of $516,422,
     Interest at 8.25% per annum and payable monthly. Principal
     is due December 31, 2009                                           460,012
                                                                     ----------

            Total                                                     3,508,501
            Less debt discount                                          118,893
                                                                     ----------
            Total                                                     3,389,608

            Less current portion                                      2,711,785
                                                                     ----------

            Total long-term portion                                  $  677,823
                                                                     ==========

     Future maturities of principal at March 31 are as follows:

     2007 (remaining)                                                $2,830,679
     2008                                                                39,477
     2009                                                               505,423
     2010                                                                23,783
     2011                                                                26,273
     Thereafter                                                          82,866
                                                                     ----------

              Total                                                  $3,508,501
                                                                     ==========

     The note payable of $461,012 and four convertible debentures totaling
     $800,000 are held by an entity that holds approximately 33% of the
     Company's common stock. Notes are payable in two years, providing payment
     is not detrimental to the Company.

     During the three months ended March 31, 2007, $466,410 in related party
     notes payable and $33,590 in related accrued interest and payables were
     converted into 2,380,952 shares of common stock based on the closing price
     of the stock on February 16, 2007, which was $0.21 a share.

                                       14
<PAGE>
     During the year ended December 31, 2005, the Company entered into a
     $300,000 note agreement that included 300,000 warrants as an additional
     incentive. The imputed value of the warrants was calculated to be $66,000
     using the Black-Scholes valuation model. The note was discounted by this
     amount and at December 31, 2005, $11,000 in expense was recognized on the
     discount. The effective interest rate of this instrument was determined to
     be 125%.

     On December 20, 2006, the Company purchased intellectual property through
     the issuance of a convertible 8% debenture.

     Approximately $ 270,000 of notes payable acquired in connection with the
     purchase of Smart World, Inc. are past due and classified as currently due
     in the balance sheet. These loans were generally acquired in connection
     with the acquisition of Smart World, Inc. Management has represented that
     none of the lenders has commenced actions to collect these notes payable.

7. NET LOSS PER SHARE

     Net loss per share is calculated using the weighted average number of
     shares of common stock outstanding during the year. Preferred stock
     dividends are subtracted from the net income to determine the amount
     available to common shareholders. There were no preferred stock dividends
     in the three-month period ended March 31, 2007. The following securities
     have been excluded from the calculation because inclusion of such would be
     anti-dilutive:

                                                Three months ended
                                                  March 31, 2007
                                                  --------------
     Convertible preferred stock  Series A          2,763,699
     Common stock options                             680,000
     Warrants                                       1,055,000
     Convertible debt                               1,609,193
                                                    ---------
                                                    6,107,892
                                                    =========

     The following presents the computation of basic and diluted loss per share
     from continuing operations:

<TABLE>
<CAPTION>
                                                Three Months Ended                    Three Months Ended
                                                  March 31, 2007                        March 31, 2006
                                    -----------------------------------       -----------------------------------
                                     Amount         Shares                      Amount         Shares
                                     ------         ------                      ------         ------
<S>                                 <C>           <C>           <C>            <C>           <C>            <C>
     Net  Loss                      $(639,566)                                 $(673,268)

     Preferred stock dividends             --                                         --
                                    ---------                                  ---------
     Loss available to common
     Stockholders                   $(639,566)                                 $(673,268)
                                    =========                                  =========
    BASIC EARNINGS PER SHARE:
      Loss available to common
       stockholders                 $(639,566)    36,714,919    $(0.02)        $(673,268)    26,506,805     $(0.03)
                                    =========                   ======         =========                    ======

      Effect of dilutive securities     N/A          N/A                          N/A            N/A

    DILUTED EARNINGS PER SHARE      $(639,566)    36,714,919    $(0.02)        $(673,268)    26,506,805     $(0.03)
                                    =========                   ======         =========                    ======
</TABLE>

                                       15
<PAGE>
 8. RELATED PARTY TRANSACTIONS

     During the three month periods ended March 31, 2007 and March 31, 2006, the
     Company conducted related party transactions with Board members, officers
     and affiliated entities as described below:

     DIRECTORS & Officers

     Diana Visco, Company Secretary, has a $20,000 Debenture with the Company,
     which is convertible at $0.50 per share with interest at 8%, maturing in
     the third calendar quarter of 2007 as well as a $29,000 note payable at
     prime rate and a short-term $3,000 note at no interest. Interest incurred
     on this debenture and notes was $992 and $1,574 during the three-month
     period ended March 31, 2007 and 2006, respectively.

     The holders of the two $25,000 convertible debentures and the $187,300
     convertible debenture are personally related to Louis Visco. Interest
     incurred on these debentures during the three-month period ended March 31,
     2007 and 2006 were $5,676 and $6,073 respectively.

     Louie Visco, Director, is an owner and director of the FLD Corporation, the
     holder of two $250,000, one $200,000 debentures convertible at $0.50 per
     share with interest at 8%, maturing in the first calendar quarter of 2008.
     In addition, there is one $100,000 debenture convertible at $0.50 per share
     with interest at 8% that matures in the third quarter of 2007 and a
     $460,012 note payable at 8.25% which matures December 2009. During the
     three months ended March 2007, notes payable and accrued interest and
     payables due to this entity totaling $500,000 were converted at a rate of
     $0.21 per share for a total of 2,380,952 shares of common stock. Interest
     incurred on these debentures and notes during the three-month period ended
     March 31, 2007 and 2006 was $25,131 and $19,163 respectively.

     Employee advances of $6,681 as of March 31, 2007 are included in prepaid
     expenses and other current assets.

     AFFILIATED ENTITIES

     The Company also entered into an operating lease in 2004 for its office
     space and in 2006 additionally rented warehouse space, with Customized Box
     Company, an entity beneficially owned by Louie Visco. Rents charged by this
     entity for the three months ended March 31, 2007 and 2006 were $7,962 and
     $1,662, respectively.

9. COMMITMENTS

     OPERATING LEASES

     The Company leases real property located in Pacoima California from an
     entity owned by a Director and majority shareholder under a long-term
     operating lease (see Note 10). The lease began April 2004 and expires
     December 2008. The Company also leases warehouse as of October of 2006.
     Rent expense under these leases for the 3 months ended March 31, 2007 and
     2006 was $7,962 and $1,662 respectively.

     On November 3, 2006, the Company entered into an agreement to lease
     approximately 100 acres of land in San Mateo, CA. Per the terms of the
     agreement, the Company is required to pay rent of $100,000 per year for a
     total of seven years or $700,000. The annual rent is due in advance each

                                       16
<PAGE>
     year of the agreement. In addition, the Company is required to pay a
     $100,000 security deposit. Lease expires November 2013.

     On December 19, 2006, the Company closed its acquisition of Smart World
     Organics, Inc, which had current operating leases for warehouse and office
     space for $2,440 per month. Leases expire on June 30, 2007 and November 30,
     2007.

     Future minimum lease payments under operating leases at March 31 are as
     follows:

      2007 (remaining)                 $139,213
      2008                              131,849
      2009                              131,849
      2010                              100,000
      Thereafter                        200,000
                                       --------
                                       $702,911
                                       ========

     CAPITAL LEASES

     The Company leases certain equipment under capital leases that expire
     through 2010. Minimum required lease payments under the lease agreements at
     March 31 are as follows:

        2007 (remaining)                                       $ 24,427
        2008                                                     25,256
        2009                                                     21,600
        2010                                                     19,800
        2011                                                          0
        Thereafter                                                    0
                                                               --------
              Total                                              91,083
     Less: Amount representing interest                         (21,085)
                                                               --------
              Total payments, net of interest                    69,998
     Less: Current portion                                      (22,719)
                                                               --------

              Total long term minimum lease payments           $ 47,279
                                                               ========

     Equipment under capital leases is included in machinery and equipment as
     follows:

                                                             March 31, 2007
                                                             --------------

     Machinery and equipment                                   $ 107,000
     Less: Accumulated depreciation                              (48,285)
                                                               ---------
                                                               $  58,715
                                                               =========

10. ACQUISITION

     SMART WORLD ORGANICS, INC.

     On December 19, 2006, the Company acquired 100% of the outstanding shares
     of Smart World Organics, Inc., a privately held company located in Hudson,
     Florida, for $150,000 in cash and 2,300,000 shares of the Company's common

                                       17
<PAGE>
     stock. The Company also assumed trade payables and notes payable in the
     amount of $495,781. This acquisition is consistent with the Company's
     continuing efforts to make selective acquisitions of dealers and partners
     that will enhance the Company's product line and distribution.

     In accordance with SFAS No. 141, "Business Combinations," the acquisition
     has been accounted for under the purchase method of accounting. The
     purchase price was allocated to Smart World Organics' tangible and
     intangible assets acquired and liabilities assumed based on their estimated
     fair values as of December 19, 2006. Management is responsible for
     determining the fair value of these assets. The fair value of the assets
     acquired and liabilities assumed represent management's estimate of fair
     value. The following table summarizes the components of the purchase price:

     The pro forma impact of this acquisition was not significant to the
     Company's historical results of operations.

     The table below outlines the details of the transaction and the purchase
     price allocation:

     Assets acquired (at Fair Market Value):
         Cash                                                  $  15,899
         A/R                                                       9,060
         Inventory                                                32,853
         Prepaids                                                  1,375
         Property, Plant and Equipment                            89,095
         Intangible Assets                                       911,499
         Assumed obligations                                    (495,781)
                                                               ---------

     Total net assets acquired (at fair market value)          $ 564,000
                                                               =========

     PRO FORMA INFORMATION

     Actual results of operations of the companies acquired in 2006 are included
     in the unaudited consolidated financial statements from the dates of
     acquisition. The unaudited pro forma statement of operations data of the
     Company set forth below gives effect to the acquisition by the Company of
     Smart World, Inc. using the purchase method as if it occurred on January 1,
     2006. This pro forma information is presented for illustrative purposes
     only and is not necessarily indicative of the combined financial position
     or results of operations for future periods or the financial position or
     result of operations that actually would have been realized had the
     acquisition occurred at the time. There is no significant effect on per
     share data to disclose.

                                                           Three Months Ended
                                                             March 31, 2006
                                                             --------------
                                                              (Unaudited)
     Total revenues                                            $ 252,548
                                                               ---------
     Net loss                                                  $(690,657)
                                                               =========


11. PRIOR PERIOD ADJUSTMENT

     Accumulated deficit at the beginning of 2007 has been adjusted to correct
     an error in 2006 for debt discount expense not previously reported of
     $25,540. Had the error not been made, net loss would have increased by
     $25,540 with no significant effect on net loss per share.


                                  * * * * * * *

                                       18
<PAGE>
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 own patents and operating rights to certain polymer based soil enhancements
designed to increase production and reduce costs to the agriculture industry.
During the last three years, we have devoted substantial resources, including
executive time and money, to the development of strategic relationships and
contracts for the marketing and distribution of our polymer products.
Additionally, we developed the M-216 Polymer Injector, an injection machine
designed to install our products accurately and quickly on all types and sizes
of turf including golf courses, sport fields, as well as commercial and private
lawns. On March 21, 2006, we acquired the US Patent on a slow release liquid
fertilizer through our acquisition of Advanced Fertilizer Technologies, Inc.

On July 7, 2006, we signed an agreement to acquire Smart World Organics, Inc.,
located in Hudson, Florida, as a wholly owned subsidiary. The acquisition closed
on December 19, 2006.

Smart World's founder, Ray Nielsen, with degrees in animal and soil science, has
35 years' experience developing organic solutions. Their organic and sustainable
products have been developed through a unique research approach that appears to
have separated Smart World from much of the competition in the market place.
Smart World manufactures almost all of its products based on formulas developed
by the founder, Mr. Nielsen, over a 30-year period. The products are sold
directly to the end user and through distributors on a worldwide basis.

Smart World provides next-generation organic and sustainable fertilizers to
commercial and residential customers worldwide. Smart World also provides
advanced, custom-formulated products built to suit unusual growing conditions
and environments.

The product line includes homogenized fertilizers, non-toxic insect controls,
plant protectants, seed, soil and silage inoculants.

                                       19
<PAGE>
Smart World distributes products to many countries including China, Japan,
Taiwan, the United Arab Emirates, Turkey, Greece, Spain and Costa Rica. They
have also made major ties with cotton growers throughout the United States and
Argentina.

We issued 2,300,000 shares of common stock to the shareholders of Smart World in
exchange for 100% of the shares of common stock of Smart World and assumed
approximately $400,000 in notes and trade payables.

On December 20, 2006, we entered into an Intellectual Property Purchase
Agreement with Ray Nielsen whereby we purchased from Mr. Nielsen any and all
intellectual property of Mr. Nielsen, including all formulas developed by Mr.
Nielsen over the past 30 years, including but not limited to all formulas and
intellectual property used in the business of Smart World Organics, Inc.,
including all graphics and logos; all domain names and URL's; any proprietary
software and its source code; all existing content and HTML files; all branding
and trademarks; all trade names; all services marks; all copywritten material;
all patents; and all products and proceeds of the foregoing, in any form
whatsoever and wheresoever located (collectively the "Intellectual Property"),
in exchange for a convertible debenture in the amount of $1,500,000 and bearing
an interest rate of 8% per annum (the "Convertible Debenture").

The Convertible Debenture is secured by the Intellectual Property. The principal
of the Convertible Debenture and any unpaid accrued interest thereon is due and
payable on January 19, 2008. We will make quarterly interest payments until the
Maturity Date. The Convertible Debenture is convertible at the option of Mr.
Nielsen at any time prior to the Maturity Date into shares of our common stock
at a conversion price equal to the closing price of the Company's common stock
for the day immediately proceeding the date of conversion.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, our selected
financial information:

                                     Three Months Ended     Three Months Ended
                                       March 31, 2007         March 31, 2006
                                       --------------         --------------
                                        (Unaudited)            (Unaudited)
STATEMENT OF OPERATIONS DATA:
  Revenue                              $    254,939           $    124,426
  (Loss)                               $   (639,566)          $   (673,268)
  (Net Loss) Per Share                 $      (0.02)          $      (0.03)

BALANCE SHEET DATA:
  Current Assets                       $    615,273           $    772,930
  Total Property & Equipment, Net      $    378,362           $    350,913
  Patents, Net                         $  4,440,689           $  2,374,396
  Net Deferred Tax Asset               $          0           $          0
  Total Assets                         $  5,568,296           $  3,561,105
  Total Current Liabilities            $  3,382,104           $    555,251
  Accumulated Deficit                  $(16,967,462)          $(14,663,677)

                                       20
<PAGE>
THREE MONTHS ENDED MARCH 31, 2007 (UNAUDITED) COMPARED TO THREE MONTHS ENDED
MARCH 31, 2006 (UNAUDITED)

REVENUES

Revenues for the three months ended March 31, 2007 were $254,939 compared to
$124,426 for the same period in 2006, an increase of approximately 204%. This
increase in revenue was the result of the revenues of our wholly owned
subsidiary, Smart World Organics, in the amount of $107,635 and our revenue
increase of $22,879.

COST OF SALES

Cost of goods sold for the three months ended March 31, 2007 were $137,697
compared to $82,817 for the three months ended March 31, 2006, an increase of
40%. The increase in the cost of sales is the result of the increase revenues
during this period.

INVENTORY

Inventory balances were $342,149 as of March 31, 2007 compared to $325,602 as of
March 31, 2006.

OPERATING EXPENSES

Operating expenses increased by approximately 11.7% from $609,763 for the three
months ended March 31, 2006 compared to $690,118 for the three months ended
March 31, 2007. This increase in operating expenses is a result of many factors.
General and administrative expenses increased approximately 22% for the period
ended December 31, 2006 due to the additional cost of operations for our
wholly-owned subsidiary Smart World Organics. Sales and marketing expenses
decreased approximately 65% do to cost reductions in advertising and trade show
appearances as exhibitors. We increased our intellectual property holdings to
$4,440,689 for the period ended March 31, 2007 from $2,374,396 for the period
ended March 31, 2006 resulting in an increase in amortization expense to
$113,083 for the period ended March 31, 2007 from $11,711 for the period ended
March 31, 2006.

INCOME TAXES

We did not provide for income tax expense or provision for the period ended
March 31, 2007 because any income tax benefit generated from taxable losses
incurred is equally offset by an increase in the valuation allowance for the
deferred income tax asset.

NET LOSS

We experienced a net loss from operations of $(639,566) for the three months
ended March 31, 2007 as compared to a net loss of $(673,268) for the three
months ended March 31, 2006. The decrease in the net loss is directly related to
our decrease in sales and marketing expenses from $186,791 in the three months
ended March 31, 2006 to $65,033 for the three months ended March 31, 2007. Our
general and administrative expenses increased by $108,345. We also decreased our
expenses for research and development by $9,138. We continue to focus our

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efforts on developing strategic alliances, marketing agreements, and
distribution networks. Revenue from the sale of products increased from $124,426
for the three months ended March 31, 2006 to $254,939 for the three months ended
March 31, 2007. This increase in revenue was the result of the additional
revenue from our wholly-owned subsidiary, Smart World Organics, Inc.

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 $36,205 and $260,035 at March 31, 2007 and
2006, respectively. Net cash used by operations was $(530,498) for the period
ended March 31, 2007 compared to net cash used by operations of $(510,973) for
the comparable period ended March 31, 2006. We have historically relied upon one
of our officers and significant shareholders to provide cash to meet short term
operating cash requirements.

In March 2000, we authorized the issuance of an aggregate of $1,325,000 of
convertible debentures with interest payable quarterly at 10% per annum. The
convertible debentures are convertible to our common stock at a rate of one
share for each three dollars converted. The debentures matured in the first
calendar quarter of 2002. All of the debentures were subscribed and at March 31,
2007, the outstanding balance of the debentures was $2,558,406 and at March 31,
2006, the outstanding balance of the debentures was $973,666. At March 31, 2007,
convertible debentures consisted of one $1,500,000 of 8% debenture convertible
at the closing price on the day immediately preceding the day of conversion,
convertible debentures consisted of $770,000 of 8% per annum debentures at a
rate of $0.50 per share, $100,000 of 8% debenture convertible at $0.28 per
share, $120,000 of 8% per annum debentures at a rate of $0.30 per share, and
$187,300 of 10% per annum convertible at a rate of $3.00 per share. If the
remaining debt is converted today, we would issue an additional 7,603,870
shares. Interest expense for the three months ended March 31, 2007 was $46,024
and interest expense for the three months ended March 31, 2006 was $93,821.

We have a working capital deficit (current assets less current liabilities) of
$(2,869,372) as of March 31, 2007 compared to working capital of $217,679 as of
March 31, 2006. Our increase in current liabilities is directly related to the
current liabilities of Smart World Organics, Inc and the current portion of
debentures payable to related parties.

As shown in the accompanying financial statements, we have incurred an
accumulated deficit of $(16,967,462) and a working capital deficit of
approximately $(2,869,372) as of March 31, 2007. Our ability to continue as a
going concern is dependent on obtaining additional capital and financing and

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<PAGE>
operating at a profitable level. We intend to seek additional capital either
through debt or equity offerings and to increase sales volume and operating
margins to achieve profitability. Our working capital and other capital
requirements during the next fiscal year and thereafter will vary based on the
sales revenue generated by the recent accumulation of additional products and
the distribution and sales network we have created and will continue to grow.

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.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States requires our management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. As such, in accordance with the use of
accounting principles generally accepted in the United States, our actual
realized results may differ from management's initial estimates as reported. A
summary of our significant accounting policies are detailed in the notes to the
financial statements which are an integral component of this filing.

Management evaluates the probability of the utilization of the deferred income
tax asset related to the net operating loss carryforwards. We have recorded a
net deferred income tax asset of $5,535,000. Management determined that because
we had yet to generate taxable income and that the generation of taxable income
in the short term is uncertain, it was appropriate to provide a valuation
allowance for the total deferred income tax asset.

We have capitalized approximately $380,199 less accumulated depreciation of
$260,760 associated with the construction of a demonstration injection machine.
We placed the machine in service in the fiscal year ended December 31, 2004.
Management believes that although the capitalized costs exceed a value at which
the unit could be sold, we will derive several years of benefits from the unit
by using it in sales demonstrations and as a loaner unit.

On December 31, 1999, we purchased exclusive license rights to patented polymer
application techniques. The acquisition price of these rights was approximately
$679,000. Management periodically evaluates the carrying value of these assets
for impairment. The application techniques are critical to the process by which
we based our plan of operations. The carrying value of these licensing rights
was $341,556 at March 31, 2007.

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<PAGE>
ITEM 3. CONTROLS AND PROCEDURES

Our Chief Executive Officer, President, and Chief Financial Officer (the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for the Company. The Certifying Officers have
designed such disclosure controls and procedures to ensure that material
information is made known to them, particularly during the period in which this
report was prepared. The Certifying Officers have evaluated the effectiveness of
the Company's disclosure controls and procedures within 90 days of the date of
this report and believe that the Company's disclosure controls and procedures
are effective based on the required evaluation. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

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<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On or about September 21, 2006, we, along with Richard Roos and Dick Hansen
(collectively, "Plaintiffs"), filed a Complaint in the United States District
Court, District of Arizona against Earth Chem, Inc. ("Defendant") seeking
declaratory relief that Plaintiffs are not infringing on a patent allegedly
owned by Defendant, for declaratory relief that a patent purportedly owned by
Defendant is unenforceable, and enjoining Defendant from threatening the
Plaintiffs' customers, suppliers, dealers and users of Sircle Saver Sacks with
statements or representations that they are infringing upon a patent owned by
Defendant, as well as attorneys fees and costs. This matter has been dismissed
and the parties have resolved their differences.

To the best knowledge of our management, there are no legal proceedings pending
or threatened against us.

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.

ITEM 5. OTHER INFORMATION

Effective May 1, 2007, the Board of Directors of American Soil Technologies,
Inc. (the "Company") dismissed Epstein Weber & Conover, PLC, Certified Public
Accountants ("Epstein") as its independent auditors for the fiscal year ended
December 31, 2007 and approved the engagement of KMJ/Corbin and Company, LLP
("KMJ") as Epstein's replacement. The decision to change auditors was approved
by the Company's Board of Directors.

For the last two fiscal years, Epstein's reports on the financial statements of
the Company did not contain an adverse opinion or a disclaimer of opinion, nor
were the reports qualified or modified as to uncertainty, audit scope, or
accounting principles. For the last two fiscal years and any subsequent interim
period preceding the dismissal, there were no disagreements with Epstein on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of
Epstein would have caused Epstein to make reference to the matter in their
reports.

The Company has provided a copy of this disclosure to Epstein and requested
Epstein to furnish the Company with a letter addressed to the Securities and
Exchange Commission stating whether Epstein agrees with the statements made by

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the Company in this report, and, if not, stating the respects in which they do
not agree. A copy of Epstein's response is included as an exhibit to this
report.

On April 30, 2007, we entered into a Dealer Agreement with Innovative Growing
Solutions of San Diego, California.

On May 9, 2007, we entered into a Placement Agent and Advisory Services
Agreement with Monarch Bay Associates, LLC of Irvine, California.

ITEM 6. EXHIBITS

The following Exhibits are filed herein:

      No.                                 Title
      ---                                 -----
     10.1     Dealer Agreement, dated April 30, 2007 with Innovative Growing
              Solutions

     10.2     Placement Agent and Advisory Services Agreement, dated May 8, 2007
              with Monarch Bay Associates, LLC

     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

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<PAGE>
                                   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 21, 2007                 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)

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