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 June 30, 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 August 15, 2007, the number of shares of common stock, $0.001 par value
issued and outstanding was 47,365,590.

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 - June 30, 2007                2

         Unaudited Consolidated Statements of Operations -
         For the three and six months ended June 30, 2007 and 2006           3

         Unaudited Consolidated Statements of Cash Flow -
         For the six months ended June 30, 2007 and 2006                     4

         Notes to Consolidated Financial Statements (Unaudited)              6

Item 2.  Management's Discussion and Analysis or Plan of Operation          22

Item 3.  Controls and Procedures                                            26

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                  27
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        27
Item 3.  Defaults Upon Senior Securities                                    27
Item 4.  Submission of Matters to a Vote of Security Holders                27
Item 5.  Other Information                                                  27
Item 6.  Exhibits                                                           27

SIGNATURES                                                                  28

                                       1
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                               June 30,
                                                                                                 2007
                                                                                             ------------
                                                                                             (Unaudited)
<S>                                                                                          <C>
ASSETS:

CURRENT ASSETS
   Cash and cash equivalents                                                                 $     20,574
   Accounts receivable, net of allowance of doubtful accounts of $37,556                           85,100
   Inventories                                                                                    347,534
   Prepaid expenses and other current assets                                                       73,200
                                                                                             ------------
      Total current assets                                                                        526,408
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $389,788                               347,189
INTELLECTUAL PROPERTY, net of accumulated amortization of $751,058                              4,327,608
DEPOSITS AND OTHER ASSETS                                                                         133,972
                                                                                             ------------
    TOTAL ASSETS                                                                             $  5,335,177
                                                                                             ============

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
   Accounts payable                                                                          $    722,531
   Accrued liabilities                                                                             82,090
   Notes payable to unrelated parties                                                             289,812
   Current portion of capital lease obligations                                                    21,825
   Current portion of debentures payable to related parties                                     1,568,534
   Debentures payable to nonrelated parties, net of unamortized discount of $38,827                81,173
                                                                                             ------------
      Total current liabilities                                                                 2,765,965
NOTES PAYABLE TO RELATED PARTIES                                                                  139,000
NOTES PAYABLE TO UNRELATED PARTIES, net of current portion                                         42,244
CAPITAL LEASE OBLIGATIONS, net of current portion                                                  42,836
DEBENTURES PAYABLE TO RELATED PARTIES, net of current portion, net of unamortized
 discount of $27,432                                                                              956,967
                                                                                             ------------
      Total liabilities                                                                         3,947,012

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Series A preferred stock, $0.50 stated value, 25,000,000 shares
    authorized, 2,763,699 shares issued and outstanding                                         1,381,849
   Common stock, $0.001 par value, 100,000,000 shares authorized,
    47,265,590 shares issued and outstanding                                                       47,265
   Paid in capital                                                                             17,652,175
   Accumulated deficit                                                                        (17,693,124)
                                                                                             ------------
      Total stockholders' equity                                                                1,388,165
                                                                                             ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $  5,335,177
                                                                                             ============
</TABLE>

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

                                       2
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND
SIX MONTHS ENDED JUNE 30, 2007 AND 2006 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                               Three Months      Three Months       Six Months       Six Months
                                                  Ended             Ended             Ended            Ended
                                                 June 30,          June 30,          June 30,         June 30,
                                                   2007              2006              2007             2006
                                               -----------       -----------       -----------      -----------
<S>                                            <C>               <C>               <C>              <C>
NET REVENUES                                   $   325,077       $   236,438       $   580,016      $   360,863
                                               -----------       -----------       -----------      -----------

COST OF GOODS SOLD                                 164,107           153,003           301,804          235,820
                                               -----------       -----------       -----------      -----------
GROSS PROFIT                                       160,970            83,435           278,212          125,043
                                               -----------       -----------       -----------      -----------
OPERATING EXPENSES:
  General and administrative                       525,032           348,165         1,003,708          718,452
  Sales and marketing                               57,000           152,349           122,033          339,138
  Research and development                           4,135             5,168             6,294           16,465
  Depreciation                                      31,174            29,264            62,340           58,895
  Amortization                                     113,081            78,492           226,164           90,203
                                               -----------       -----------       -----------      -----------
      Total operating expenses                     730,422           613,438         1,420,539        1,223,153
                                               -----------       -----------       -----------      -----------

OPERATING LOSS                                    (569,452)         (530,003)       (1,142,327)      (1,098,110)
                                               -----------       -----------       -----------      -----------
OTHER (INCOME)/EXPENSE:
  Interest expense and related costs               162,042            51,312           264,632          145,133
  Other expense                                         --               244                --              289
  Other income                                      (5,985)               --           (41,875)              --
  Loss on sale                                          --                --                --           11,968
  Interest income                                       (2)             (684)              (11)          (1,359)
                                               -----------       -----------       -----------      -----------
      Total other (income)/expense                 156,055            50,872           222,746          156,031
                                               -----------       -----------       -----------      -----------

LOSS BEFORE INCOME TAXES                          (725,507)         (580,875)       (1,365,073)      (1,254,141)
                                               -----------       -----------       -----------      -----------

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

NET LOSS                                       $  (725,507)      $  (580,875)      $(1,365,073)     $(1,254,141)
                                               ===========       ===========       ===========      ===========
NET LOSS PER SHARE:
  Basic:                                       $     (0.02)      $     (0.02)      $     (0.03)     $     (0.05)
                                               ===========       ===========       ===========      ===========
  Diluted:                                     $     (0.02)      $     (0.02)      $     (0.03)     $     (0.05)
                                               ===========       ===========       ===========      ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                         44,887,159        27,063,772        40,137,461       26,784,929
                                               ===========       ===========       ===========      ===========
  Diluted                                       44,887,159        27,063,772        40,137,461       26,784,929
                                               ===========       ===========       ===========      ===========
</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 FOR THE SIX MONTHS
ENDED JUNE 30, 2007 AND 2006 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Six Months            Six Months
                                                                Ended                 Ended
                                                               June 30,              June 30,
                                                                 2007                  2006
                                                             -----------           -----------
<S>                                                          <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                   $(1,365,073)          $(1,254,141)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation and amortization                                288,504               149,098
    Loss on disposal of fixed assets                                  --                11,968
    Amortization of debt discount                                105,268                55,000
    Stock issued for services                                         --                34,000
  Changes in assets and liabilities:
    Accounts receivable                                          (15,245)               53,273
    Prepaid expenses and other current assets                     33,608                52,580
    Deposits and other assets                                    (33,972)                   --
    Inventories                                                  (11,198)             (177,311)
    Accounts payable                                             100,717               292,926
    Accrued liabilities                                          100,100               (13,778)
                                                             -----------           -----------
          Net cash used in operating activities                 (797,291)             (796,385)
                                                             -----------           -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of intellectual property                                  --                (4,200)
  Purchases of property and equipment                               (666)              (13,643)
                                                             -----------           -----------
          Net cash used for investing activities                    (666)              (17,843)
                                                             -----------           -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from related party notes payable                      801,422               472,000
  Proceeds from sales/leaseback transaction                           --                75,000
  Principal repayments on convertible debentures                  (8,677)               (7,869)
  Principal repayments on capital lease obligations              (10,460)              (11,377)
  Repayments on notes payable                                    (44,092)             (310,349)
  Proceeds from sale of preferred stock                               --               300,000
  Proceeds from stock issuances                                       --                50,000
                                                             -----------           -----------
          Net cash provided by financing activities              738,193               567,405
                                                             -----------           -----------

DECREASE IN CASH AND CASH EQUIVALENTS                            (59,764)             (246,823)

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

CASH AND CASH EQUIVALENTS, end of period                     $    20,574           $    25,825
                                                             ===========           ===========
</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)
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006 (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         Six Months          Six Months
                                                           Ended               Ended
                                                          June 30,            June 30,
                                                            2007                2006
                                                         ----------          ----------
<S>                                                      <C>                 <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest Paid                                          $   59,960          $   41,494
                                                         ==========          ==========

SUPPLEMENTAL SCHEDULE 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                                          $1,152,738          $  338,673
                                                         ==========          ==========
  Conversion of preferred shares to common
   shares                                                $2,250,000          $        0
                                                         ==========          ==========
  Common stock issued in exchange for equipment
   and inventory                                         $        0          $   16,128
                                                         ==========          ==========
  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 SIX MONTHS ENDED JUNE  30, 2007 AND JUNE 30, 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
     six months ended June 30, 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 year 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, ("Smart
     World") 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 $2,212,125 and an accumulated deficit of $17,693,124. The
     ability of the Company to continue as a going concern is dependent upon
     obtaining additional capital and financing, and generating positive cash

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

     These matters, among others, raise substantial doubt about the Company's
     ability to continue as a going concern. The unaudited consolidated
     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 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 $31,174 and $62,340, and $29,264 and $58,895 for
     the three and six month periods ended June 30, 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 (8) 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 at
     $2,411,499.

     ADVERTISING: The Company expenses advertising costs as incurred.
     Advertising expense was $57,000 and $122,033, and $132,782 and $301,888 for
     the three and six month periods ended June 30, 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.

                                       7
<PAGE>
     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
     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 liabilities, related party notes payable, 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 unaudited 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 unaudited consolidated financial
     statements in conformity with accounting principles generally accepted in
     the United States of America, requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting periods. Actual results could differ from those
     estimates.

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

     PRINCIPLES OF CONSOLIDATION: The unaudited consolidated financial
     statements include the accounts of the Company and its wholly owned
     subsidiaries. All significant intercompany 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 June 30, 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.

                                       8
<PAGE>
     CUSTOMERS

     The Company grants credit to customers within the United States of America
     and to a limited number of international customers and does not require
     collateral. Sales to other international customers are secured by 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 June 30, 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 and six month
     periods ended June 30, 2007 and 2006, the Company had foreign sales of
     approximately $0, $0, $0 and $5,837, respectively, which constituted
     approximately $0, $0, $0 and 2%, 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 six months ended June 30, 2007
     and 2006. No options expired or were exercised during the six-month period
     ended June 30, 2007. All options outstanding at January 1, 2006 were fully
     vested. Therefore, no compensation expense was recognized in the periods
     ended June 30, 2007 and 2006 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

                                       9
<PAGE>
     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.

     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 stock may be issued
     as bonus awards in 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 June 30, 2007:

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

                          Number        Weighted Average      Weighted            Number         Weighted
                      outstanding at       Remaining          Average         Exercisable at     Average
        Range of         June 30,       Contractual Life      Exercise            June 30,       Exercise
     Exercise Prices       2007            (in years)          Price               2007           Price
     ---------------       ----            ----------          -----               ----           -----
<S>      <C>             <C>                  <C>              <C>               <C>              <C>
         $ 0.50          680,000              5.50            $ 0.50              680,000        $ 0.50

                      Warrants Outstanding                                       Warrants Exercisable
    --------------------------------------------------------------------    -----------------------------

                          Number        Weighted Average      Weighted            Number         Weighted
                      outstanding at       Remaining          Average         Exercisable at     Average
        Range of         June 30,       Contractual Life      Exercise           June 30,        Exercise
     Exercise Prices       2007            (in years)          Price               2007           Price
     ---------------       ----            ----------          -----               ----           -----

         $ 0.23          300,000              1.50            $ 0.23              300,000        $ 0.23
         $ 0.30          100,000              0.45            $ 0.30              100,000        $ 0.30
         $ 0.30          634,000              2.45            $ 0.30              634,000        $ 0.30
</TABLE>

     During the six month period ended June 30, 2007, there were no options and
     warrants granted.

     IMPAIRMENT OF LONG-LIVED ASSETS:

     The Company's management assesses the recoverability of its long-lived
     assets upon the occurrence of a triggering event by determining whether the
     depreciation and amortization of long-lived assets over their remaining
     lives can be recovered through projected undiscounted future cash flows.
     The amount of long-lived asset impairment, if any, is measured based on
     fair value and is charged to operations in the period in which long-lived
     asset impairment is determined by management. At June 30, 2007 the
     Company's management believes there is no impairment of its long-lived
     assets. There can be no assurance, however, that market conditions will not
     change or demand for the Company's products and services will continue,
     which could result in impairment of long-lived assets in the future.

     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 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.

                                       11
<PAGE>
     In February 2007, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 159, "THE FAIR VALUE OPTION FOR
     FINANCIAL ASSETS AND FINANCIAL LIABILITIES - INCLUDING AN AMENDMENT OF FASB
     STATEMENT NO. 115" ("FAS 159"). FAS 159 would create a fair value option of
     accounting for qualifying financial assets and liabilities under which an
     irrevocable election could be made at inception to measure such assets and
     liabilities initially and subsequently at fair value, with all changes in
     fair value reported in earnings. FAS 159 is effective as of the beginning
     of the first fiscal year beginning after November 15, 2007. The Company is
     currently evaluating the impact that the adoption of FAS 159 will have on
     its consolidated financial position, results of operations and cashflow.

3. INVENTORIES

     Inventories consist of the following at June 30, 2007:


     Raw materials                                   $ 48,352
     Finished goods                                   299,182
                                                     --------
     Total                                           $347,534
                                                     ========

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 14
     1/2 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 10.3 years.

                                       12
<PAGE>
     The following table summarizes the components of intangible assets:

                                           As of June 30, 2007 (Unaudited)
                                       Gross
                                     Carrying      Accumulated
                                      Amount       Amortization         Net
                                    ----------     ------------     ----------
     Patent                         $  679,217      $ (348,982)    $  330,235
     Turf Trade Secrets                 37,950          (2,829)        35,121
     Soil Medic Patent               1,950,000        (310,531)     1,639,469
     Formulas, Rights and Patents    2,411,499         (88,716)     2,322,783
                                    ----------      ----------     ----------
     Total                          $5,078,666      $ (751,058)    $4,327,608
                                    ==========      ==========     ==========

     The carrying value of these assets is periodically evaluated for
     impairment. The amortization expense was $113,081 and $226,164 and $78,492
     and $90,203 for the three and six month periods ended June 30, 2007 and
     2006, respectively.

     The following summarizes the estimated future amortization expense of the
     intellectual property:

        Year                                          Amount
        ----                                          ------
     2007 (remaining)                               $  226,164
     2008                                              452,328
     2009                                              452,328
     2010                                              452,328
     2011                                              452,328
     Thereafter                                      2,292,132
                                                    ----------
          Total                                     $4,327,608
                                                    ==========

5. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following at June 30, 2007:

     Machinery                                      $ 634,770
     Vehicles                                          57,615
     Office furnishings, fixtures and equipment        44,591
                                                    ---------
     Total                                            736,976
     Less accumulated depreciation                   (389,787)
                                                    ---------
     Property and equipment, net                    $ 347,189
                                                    =========

6. NOTES PAYABLE

     Notes payable at June 30, 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, 2009.      $  250,000

                                       13
<PAGE>
     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, 2009.           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, 2008.          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, 2008.          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, 2009.           20,000

     Note payable to a related party, original balance of
     $32,000, interest at prime rate payable monthly. Note is
     unsecured and due January 2009.                                     29,000

     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.                                                             182,933

     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, 2009.         200,000

     Convertible debenture to related party, original balance of
     $100,000, 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 17, 2009.                                                  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 by
     Intellectual Property purchased 12/20/06 from note holder.
     Principal is due January 19, 2008.                               1,500,000

                                       14
<PAGE>
     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
     $0.30 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

     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.                                          21,279

     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.                        40,150

     Note payable to lending institution, original balance of
     $28,985, and interest at 6.99% per annum. Requires monthly
     principal and interest payments of $576 through 2008.
     Collateralized by vehicle.                                           9,863

     Notes payable to 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.                                110,000
                                                                     ----------
Total                                                                 3,143,989

Less debt discount                                                      (66,259)
                                                                     ----------

Total                                                                 3,077,730

Less current portion                                                  1,939,519
                                                                     ----------

Total long-term portion                                              $1,138,211
                                                                     ==========

                                       15
<PAGE>
     Future maturities of principal at June 30 are as follows:

        Year                                          Amount
        ----                                          ------
     2007 (remaining)                               $1,939,519
     2008                                                  849
     2009                                            1,004,410
     2010                                               23,783
     2011                                               26,273
     Thereafter                                         82,896
                                                    ----------
           Total                                    $3,077,730
                                                    ==========

     The note payable of $110,000 and four convertible debentures totaling
     $800,000 are held by an entity that holds approximately 33% of the
     Company's common stock. These notes payable are due in two years providing
     the Company is in a financial position to make payments, which includes,
     among other things, adequate cash flows.

     During the three months ended March 31, 2007, $466,410 in related party
     notes payable and $33,950 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 per share.

     During the six months ended June 30, 2007, $628,012 in related party notes
     payable and $24,726 in related accrued interest and payables were converted
     into 3,708,740 shares of common stock based on the closing price of the
     stock on May 29, 2007, which was $0.176 per share.

     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. Management has represented that none of the lenders
     has commenced actions to collect these notes payable.

7. STOCKHOLDERS' EQUITY

     COMMON STOCK

     The Company has 100,000,000 shares authorized. At June 30, 2007, the
     Company had 47,265,590 shares of $0.001 par value common stock outstanding.

     SERIES A CONVERTIBLE PREFERRED STOCK

     The Company has 25,000,000 shares of Series A Convertible Preferred Stock
     authorized. At June 30, 2007, the Company had 2,763,699 shares of $0.50
     stated value Series A preferred stock issued and outstanding. The holders
     of the preferred stock have the option to convert to common stock at a rate
     of one share of common stock for each share of preferred stock tendered.
     Except as otherwise required by law or pursuant to any other provision, the
     holders of Series A Preferred stock have no voting rights.

     DIVIDENDS: Preferred shareholders are entitled to receive preferential
     quarterly dividends equal to the prime rate per share, when and if declared
     by the Board of Directors, out of any assets that are legally available. If
     the Board of Directors declares that such dividends may only be payable in
     shares of common stock for any quarter, holders of Series A preferred stock
     have the option of accepting the dividend paid in shares of common stock of

                                       16
<PAGE>
     the Company, or letting the dividend accrue for a cash payment. No
     dividends have been declared, accrued or paid.

     LIQUIDATION RIGHTS: The holders of Series A preferred stock are entitled to
     be paid the stated value of their holdings out of the assets of the
     Company, prior and in preference to any payment or distribution out of the
     assets of the Company to the holders of common stock or any other class or
     series of capital stock.

     SERIES B CONVERTIBLE PREFERRED STOCK

     The Company has 4,500,000 shares of Series B Convertible Preferred Stock
     authorized. On March 16, 2006, the Company issued 4,500,000 shares of
     Series B convertible preferred stock for conversion of debt in the
     principal amount of $2,250,000. On March 14, 2007, the closing price of the
     Company's common stock was $0.32 and 4,500,000 shares of the Company's
     Series B Preferred Stock valued at $2,250,000 automatically converted into
     7,031,250 shares of common stock. There are no shares of Series B
     Convertible Preferred Stock outstanding at June 30, 2007.

8. NET LOSS PER SHARE

     Net loss per share is calculated using the weighted average number of
     shares of common stock outstanding during the period. Preferred stock
     dividends are subtracted from the net income to determine the amount
     available to common shareholders. There was no preferred stock dividend in
     the six-month period ended June 30, 2007. The following securities have
     been excluded from the calculation because inclusion of such would be
     anti-dilutive:

                                           Six months           Six months
                                             ended                ended
                                            June 30,             June 30,
                                              2007                 2006
                                           -----------          -----------
                                           (Unaudited)          (Unaudited)
      Convertible preferred stock            2,763,699            7,263,699
      Common stock options                     680,000              680,000
      Warrants                               1,034,000              321,000
      Convertible debt                       9,905,264            1,606,570
                                           -----------          -----------
                                            14,382,963            9,871,269
                                           ===========          ===========

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

                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                                       Unaudited
                                    --------------------------------------------------------------------------------
                                             Six Months Ended                          Six Months Ended
                                              June 30, 2007                              June 30, 2006
                                   ------------------------------------       --------------------------------------
                                     Amount         Shares                      Amount         Shares
                                     ------         ------                      ------         ------
<S>                                 <C>           <C>           <C>          <C>             <C>             <C>
     Net Loss                      $(1,365,073)                               $(1,254,141)

     Preferred stock dividends              --                                         --
                                   -----------                                -----------

     Loss available to common
     Stockholders                  $(1,365,073)                               $(1,254,141)
                                   ===========                                ===========

     BASIC EARNINGS PER SHARE:
       Loss available to common
       stockholders                $(1,365,073)   40,137,461    $(0.03)       $(1,254,141)    26,784,929     $(0.05)
                                   ===========                  ======        ===========                    ======

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

     DILUTED EARNINGS PER SHARE    $(1,365,073)   40,137,461    $(0.03)       $(1,254,141)    26,784,929     $(0.05)
                                   ===========                  ======        ===========                    ======
</TABLE>

9. RELATED PARTY TRANSACTIONS

     During the three and six month periods ended June 30, 2007 and June 30,
     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 2009 as well as a $29,000 note payable at
     prime rate due January 1, 2009. Interest incurred on this debenture and
     notes was $995 and $1,987 and $394 and $1,574 during the three and six
     month periods ended June 30, 2007 and 2006, respectively.

     The holders of the two (2) $25,000 convertible debentures and the $187,300
     convertible debenture are personally related to Louie Visco, Director.
     Interest incurred on these debentures during the three and six-month
     periods ended June 30, 2007 and 2006 were $5,631 and $11,307, $6,073 and
     $12,115, respectively.

     Louie Visco, Director, is an owner and director of the FLD Corporation, the
     holder of two (2) $250,000, one (1) $200,000 debentures convertible at
     $0.50 per share with interest at 8%, maturing in the first calendar quarter
     of 2009. In addition, there is one (1) $100,000 debenture convertible at
     $0.50 per share with interest at 8% that matures in the third quarter of
     2009 and a $110,000 note payable at 8.25% which matures December 2009.
     During the three months ended June 30 2007, notes payable and accrued
     interest and payables due to this entity totaling $652,738 were converted

                                       18
<PAGE>
     at a rate of $0.176 per share for a total of 3,708,740 shares of common
     stock. Interest incurred on these debentures and notes during the three and
     six month periods ended June 30, 2007 and 2006 was $23,863 and $52,876 and
     $48,102 and $73,612, respectively.

     Employee advances of $4,346 as of June 30, 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 and six months ended June 30, 2007 and 2006 were
     $8,127 and $16,089 and $5,862 and $7,525, respectively.

10. 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 9). The lease began April 2004 and expires
     December 2008. The Company also leases warehouse as of October 2006. Rent
     expense under these leases for the three and six months ended June 30, 2007
     and 2006 was $8,127 and $16,089 and $5,862 and $7525, 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
     year of the agreement. In addition, the Company is required to pay a
     $100,000 security deposit. Lease expires November 2013.

     On December 20, 2006, the Company acquired Smart World Organics, Inc, which
     had current operating leases for warehouse and office space for $3,697 per
     month. Leases expire on April 30, 2008 and November 30, 2007.

     Future minimum lease payments under operating leases at June 30 are as
     follows:

     2007 (remaining)                                              $ 67,699
     2008                                                           112,090
     2009                                                           100,000
     2010                                                           100,000
     Thereafter                                                     191,667
                                                                   --------
                                                                   $571,456
                                                                   ========

                                       19
<PAGE>
     CAPITAL LEASES

     The Company leases certain equipment under capital leases that expire
     through 2010. Minimum required lease payments under the lease agreements at
     June 30 are as follows:

     2007 (remaining)                                             $ 19,090
     2008                                                           25,256
     2009                                                           21,600
     2010                                                           19,800
     2011                                                                0
     Thereafter                                                          0
                                                                  --------
           Total                                                    85,746
     Less: Amount representing interest                            (21,085)
                                                                  --------
           Total payments, net of interest                          64,661
     Less: Current portion                                         (21,825)
                                                                  --------
           Total long term minimum lease payments                 $ 42,836
                                                                  ========

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

                                                                June 30, 2007
                                                                -------------
     Machinery and equipment                                      $ 107,000
     Less: Accumulated depreciation                                 (38,500)
                                                                  ---------
                                                                  $  68,500
                                                                  =========

11. ACQUISITION

     SMART WORLD ORGANICS, INC.

     On December 20, 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
     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 preliminary
     estimate of fair value. The following table summarizes the components of
     the purchase price:

                                       20
<PAGE>
     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.

                                                              Six Months Ended
                                                               June 30, 2006
                                                               -------------
                                                                (Unaudited)

     Total revenues                                             $   638,461
     Net loss                                                    (1,260,576)

12. 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.

13. SUBSEQUENT EVENTS

     On July 14, 2007, we issued 100,000 shares of common stock at $0.20 per
     share to Grosvenor Financial Partners for services rendered. We relied on
     the exemption from registration relating to offerings that do not involve
     any public offering pursuant to Section 4(2) under the Act and/or Rule
     506 of Regulation D promulgated pursuant thereto. We believe that Grosvenor
     Financial Partners is an "accredited investor" under Rule 501 under
     Regulation D of the Act and had adequate access to information about us
     through its relationship with us.

     On July 19, 2007 we issued a Convertible Debenture in the total amount of
     $75,000 payable in one year with an interest rate of 10% and a warrant
     exercisable in three years for 100,000 shares of stock at $0.30 per share.
     The Company relied on the exemption from registration relating to offerings
     that do not involve any public offering pursuant to Section 4(2) under the
     Act and/or Rule 506 of Regulation D promulgated pursuant thereto. We
     believe that the investors are "accredited investors" under Rule 501 under
     Regulation D of the Act and had adequate access to information about us.

                                  * * * * * * *

                                       21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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 six 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 December 20, 2006, we acquired Smart World Organics, Inc., located in Hudson,
Florida, as a wholly owned subsidiary. We acquired 100% of the outstanding
shares of Smart World in exchange for $150,000 in cash and 2,300,000 shares of
common stock issued to the shareholders of Smart World and assumed approximately
$400,000 in notes and trade payables. 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, and
soil and silage inoculants.

On December 20, 2006, we purchased from Ray 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

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<PAGE>
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:

                                      Six Months Ended       Six Months Ended
                                        June 30, 2007          June 30, 2006
                                        -------------          -------------
                                         (Unaudited)            (Unaudited)
Statement of Operations Data:
  Revenue                               $    580,016           $    360,863
  (Loss)                                $ (1,365,073)          $ (1,254,141)
  (Net Loss) Per Share                  $      (0.03)          $      (0.05)

Balance Sheet Data:
  Current Assets                        $    526,408           $    538,018
  Total Property & Equipment, Net       $    347,189           $    344,562
  Intellectual Property, Net            $  4,327,608           $  2,295,904
  Net Deferred Tax Asset                $          0           $          0
  Total Assets                          $  5,335,177           $  3,241,193
  Total Current Liabilities             $  2,738,533           $    698,688
  Accumulated Deficit                   $(17,693,124)          $(15,244,552)

SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED) COMPARED TO SIX MONTHS ENDED JUNE 30,
2006 (UNAUDITED)

REVENUES

Revenues for the six months ended June 30, 2007 were $580,016 compared to
$360,863 for the same period in 2006, an increase of approximately 38%, this
increase in revenue was the result of the revenues of our wholly owned
subsidiary, Smart World Organics, in the amount of $310,386 and our revenue
decrease of $74,931 which was a result of our customers returning defective
product we received from our supplier.

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<PAGE>
COST OF GOODS SOLD

Cost of goods sold for the six months ended June 30, 2007 were $301,804 compared
to $235,820 for the six months ended June 30, 2006, an increase of 22%. The
increase in the cost of sales is the result of the increase revenues during this
period.

INVENTORIES

Inventories were $347,534 as of June 30, 2007 compared to $390,271 as of June
30, 2006.

OPERATING EXPENSES

Operating expenses increased by approximately 16% from $1,223,153 for the six
months ended June 30, 2006 compared to $1,420,539 for the six months ended June
30, 2007. This increase in operating expenses is a result of many factors.
General and administrative expenses increased approximately 40% 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 178% due to cost reductions in advertising and trade
show appearances as exhibitors. We increased our intellectual property holdings
to $4,327,608 for the period ended June 30, 2007 from $2,295,904 for the period
ended June 30, 2006 resulting in an increase in amortization expense to $226,164
for the period ended June 30, 2007 from $90,203 for the period ended June 30,
2006.

INCOME TAXES

We did not provide for income tax expense or provision for the period ended June
30, 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 $(1,365,073) for the six months
ended June 30, 2007 as compared to a net loss of $(1,254,141) for the six months
ended June 30, 2006. Our sales and marketing expenses decreased from $339,138 in
the six months ended June 30, 2006 to $171,411 for the six months ended June 30,
2007. The increase in the net loss is directly related to an increase in our
general and administrative expenses by $285,286. We continue to focus our
efforts on developing strategic alliances, marketing agreements, and
distribution networks. Revenue from the sale of products increased from $360,863
for the six months ended June 30, 2006 to $580,016 for the six months ended June
30, 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.

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<PAGE>
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 $20,574 and $25,825 at June 30, 2007 and 2006,
respectively. Net cash used in operations was $(854,557) for the period ended
June 30, 2007 compared to net cash used by operations of $(796,385) for the
comparable period ended June 30, 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 June 30,
2007, the outstanding balance of the debentures was $2,606,673 and at June 30,
2006, the outstanding balance of the debentures was $969,710. At June 30, 2007,
convertible debentures consisted of: (a) $1,500,000 worth of 8% per annum
debentures convertible at the closing price on the day immediately preceding the
day of conversion, (b) $770,000 worth of 8% per annum debentures convertible at
a rate of $0.50 per share; (c) $100,000 worth of 8% debentures convertible at
$0.28 per share; (d) $60,000 worth of 8% per annum debentures convertible at a
rate of $0.25 per share; and (e) $182,933 worth of 10% per annum debentures
convertible at a rate of $3.00 per share; (f) $30,000 worth at $0.30 per share .
If the remaining debt is converted today, we would issue an additional 9,905,264
shares. Interest expense for the six months ended June 30, 2007 was $264,632 and
interest expense for the six months ended June 30, 2006 was $145,133.

We have a working capital deficit (current assets less current liabilities) of
$(2,212,125) as of June 30, 2007 compared to working capital deficit of
$(160,670) as of June 30, 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 $(17,693,124) and a working capital deficit of
approximately $(2,212,125) as of June 30, 2007. Our ability to continue as a
going concern is dependent on obtaining additional capital and financing and
operating at a profitable level. We intend to seek additional capital either
through debt or equity offerings and to increase sales volume and operating
margins to achieve profitability. Our working capital and other capital
requirements during the next fiscal year and thereafter will vary based on the
sales revenue generated by the recent accumulation of additional products and
the distribution and sales network we have created and will continue to grow.

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<PAGE>
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 unaudited consolidated 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
$298,372. 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 $330,235 at June 30, 2007.

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.

                                       26
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

On May 29, 2007, FLD Corporation elected to convert a total of $652,738.23 of
debt owed to it from American Soil Technologies, Inc. (the "Company") into
3,708,740 shares of common stock of the Company valued at $0.176 per share. The
Company relied on the exemption from registration relating to offerings that do
not involve any public offering pursuant to Section 4(2) under the Securities
Act of 1933 (the "Act") and/or Rule 506 of Regulation D promulgated pursuant
thereto. The Company believes that FLD Corporation is an "accredited investor"
under Rule 501 under Regulation D of the Act and had adequate access to
information about the Company through its relationship with the Company.

On July 14, 2007, we issued 100,000 shares of common stock at $0.20 per share to
Grosvenor Financial Partners for services rendered. We relied on the exemption
from registration relating to offerings that do not involve any public offering
pursuant to Section 4(2) under the the"Act and/or Rule 506 of Regulation D
promulgated pursuant thereto. We believe that Grosvenor Financial Partners is an
"accredited investor" under Rule 501 under Regulation D of the Act and had
adequate access to information about us through its relationship with us.

On July 19, 2007 we issued a Convertible Debenture in the total amount of
$75,000 payable in one year with an interest rate of 10% and a Warrant
exercisable in three years for 100,000 shares of stock at $0.30 per share. The
Company relied on the exemption from registration relating to offerings that do
not involve any public offering pursuant to Section 4(2) under the Act and/or
Rule 506 of Regulation D promulgated pursuant thereto. We believe that the
investors are "accredited investors" under Rule 501 under Regulation D of the
Act and had adequate access to information about us.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following Exhibits are filed herein:

      No.                                    Title
      ---                                    -----
     10.1      Convertible Debentured issued July 19, 2007 with attached warrant
               agreement
     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

                                       27
<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: August 15, 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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