SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

    For the fiscal year ended _________________

                                       or

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

    For the transition period from July 1, 2003 to December 31, 2003

                        Commission file number: 000-22855

                        AMERICAN SOIL TECHNOLOGIES, INC.
           (Name of Small Business Issuer as specific in its Charter)

          Nevada                                                 95-4780218
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

215 N. Marengo, Suite 110, Pasadena, California                    91101
  (Address of Principal Executive Offices)                       (Zip Code)

         Issuer's telephone number, including area code: (626) 793 2435

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value
                                (Title of Class)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained herein, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. Yes [X] No [ ]

For the six months ended December 31, 2003, the Company's revenue was $101,924.

As of March 2, 2004, the number of shares of Common Stock outstanding was
9,096,585. The aggregate market value of the Company's Common Stock held by
non-affiliates of the registrant as of March 2, 2004 was approximately
$1,955,515 (based upon 3,784,344 shares at $0.51 per share).

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated herein by reference: (i) Registration
Statement on Form SB-2, filed on July 2, 1997, as amended (Registration No.
333-30583); (ii) Form 10-KSB for the fiscal year ended June 30, 2000, filed on
September 27, 2000 (File No. 000-22855); (iii) Form 10-KSB for the fiscal year
ended June 30, 2001, filed on October 11, 2001 (File No. 000-22855); (iv) Form
10-KSB for the fiscal year ended June 30, 2002, filed on September 30, 2002; (v)
Form 10-QSB for the quarterly period ended September 30, 2002, filed on November
13, 2002; (vi) Form 10-QSB for the quarterly period ended December 31, 2002,
filed on February 19, 2003; and (vii) Form 10-KSB for the fiscal year ended June
30, 2003, filed on September 29, 2003 are incorporated in Part IV, Item 13(a).
<PAGE>
                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

ITEM 1.  DESCRIPTION OF BUSINESS...........................................  1

ITEM 2.  DESCRIPTION OF PROPERTY...........................................  5

ITEM 3.  LEGAL PROCEEDINGS.................................................  5

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............  5

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTTERS.........  6

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.............................................  7

ITEM 7.  FINANCIAL STATEMENTS.............................................. 13

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE.......................................... 13

ITEM 8A. CONTROLS AND PROCEDURES........................................... 13

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT................. 14

ITEM 10. EXECUTIVE COMPENSATION............................................ 16

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         AND RELATED STOCKHOLDER MATTERS................................... 18

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 20

ITEM 13. EXHIBITS AND REPORTS ON FORM 8K................................... 20

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES............................ 21

SIGNATURES................................................................. 23
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

DEVELOPMENT OF BUSINESS

FORM AND YEAR OF ORGANIZATION

American Soil Technologies, Inc., formerly Soil Wash Technologies, Inc., (the
"Company") was incorporated in California on September 22, 1993.

ANY BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING

Not Applicable.

ANY MATERIAL RECLASSIFICATION, MERGER, CONSOLIDATION, OR PURCHASE OR SALE OF A
SIGNIFICANT AMOUNT OF ASSETS NOT IN THE ORDINARY COURSE OF BUSINESS

On November 24, 1999, the Company entered into an exchange agreement for the
reverse acquisition of New Directions Manufacturing, Inc. ("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. Under the agreement, New
Directions would sell to one of its directors the operating subsidiary in
exchange for the cancellation of options and the shareholders of New Directions
would receive one share of the Company for each fifteen shares of New
Directions. The existing officers and directors of New Directions resigned and
officers and directors nominated by the Company were appointed. The Company's
fiscal year end was changed to June 30. In addition, effective as of the close
of business on December 31, 1999, the Company acquired in exchange for 2,360,323
shares of stock all of the assets including licenses, patents, and contracts,
and certain liabilities of Polymers, Plus LLC ("Polymers"), changed its name
from Soil Wash Technologies, Inc. to American Soil Technologies, Inc. and
changed its state of domicile to Nevada.

In June 2001, the Company sold its book of business for soil remediation in San
Diego, California. In May 2002, the Company decided to discontinue its soil
remediation business. In connection with the discontinuance of this segment of
the business in the year ended June 30, 2002 the Company incurred a charge of
$369,601 related to the write-down to estimated net market value of the idle
plant assets. The disposition of the soil remediation operations represents the
disposal of a business segment under SFAS 144 Accounting for Impairment or
Disposal of Long-lived Assets. Accordingly, results of this operation have been
classified as discontinued, and prior periods have been restated, including the
allocation of overhead charges.

BUSINESS OF ISSUER

PRINCIPAL PRODUCTS AND THEIR MARKET

The Company develops, manufactures and markets cutting-edge technology that
decreases the need for water in dry land farming, irrigated farming and other
plant growing environments while increasing crop yield and reducing the
environmental damage caused by common farming practices.

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<PAGE>
The Company manufactures two primary products: Agriblend(R), a patented soil
amendment developed for agriculture, and Nutrimoist(TM), developed for homes,
parks, golf courses and other turf related applications.

DISTRIBUTION

The Company markets primarily in the United States and Mexico.

The Company is adding sales representatives and distributors in both the
agriculture and turf industries.

On September 1, 2000, the Company signed an exclusive Distribution Agreement
with Agriblend(R) of Australia. This agreement has been dormant primarily
because of the rate of exchange.

On August 21, 2001, the Company announced that it reached an agreement with
BioPlusNutrients L.L.C. of Grace, Idaho, to blend the Company's polymer with
their proprietary nutrients. This agreement allows each entity to co-market the
combined product to each other's customers.

On June 27, 2002, the Company entered into a distribution agreement with Ag
Specialties, LLC. Ag Specialties is located in Portland, Oregon with offices in
Harrisburg Oregon, Woodland, Washington, and Orlando, Florida. The focus of Ag
Specialties is the niche agriculture market. It is the exclusive distributor for
many foreign suppliers and represents many domestic products. Their major
product line includes fertilizers, crop protection products, animal feed
ingredients, soil conditioners, seeds and industrial chemicals. Ag Specialties
has launched new products into the agriculture market including their own
private label materials under the Iron Man brand. The term of the agreement is
five years and can be cancelled by either party with 30 days written notice. Ag
Specialties is very aggressively marketing our products and is producing
revenues for our Company.

On August 15, 2002, the Company entered into a Distribution Agreement with Gigot
Agra Services of Garden City, Kansas. Gigot Agra aggressively sells the
Company's products in Kansas, Oklahoma, Nebraska, Colorado and the northern
portions of Texas and New Mexico.

On August 20, 2002, the Company entered into an agreement with Stockhausen, Inc.
This agreement granted to the Company the exclusive rights in the Western United
States to distribute the Stockhausen products, which are of the highest quality
cross-link and linear polymer products available for water and nutrient
retention in the Agricultural industry. The Company has numerous distributors
and sales representatives selling the products throughout the territory.

On August 26, 2002, Bentonite Performance Minerals a Product and Service Line of
Halliburton Energy Services, Inc., a subsidiary of the Halliburton Company,
entered into an agreement with the Company to distribute its proprietary product
known as Baraclear(TM) P80 in the Aquaculture and Agriculture Industries in the
United States, Canada and Mexico. Baraclear(TM) P80 is a first generation
time-release water clarification and contaminant removal product that allows

                                       2
<PAGE>
livestock and fish farmers, golf course superintendents and private pond owners
to remove phosphates as well as suspended organic and inorganic colloidal
material in water bodies up to 50 feet deep. It is a product that complements
our existing products in the agriculture and turf industries.

On September 20, 2002, the Company entered into an exclusive Distributorship
Agreement with JT Water Management LLC allowing the Company to distribute a
liquid linear polymer known as Extend(TM) in the western United States. This is
a new and unique product intended for soil application, which improves
irrigation efficiency, reduces soil sodium levels, and greatly reduces nutrient
leaching and runoff. An additional product is Contain, a new dust control
technology. This product will be sold through our Distributors and Sales
Representatives.

On October 11, 2002 the Company entered into a Turf and Lawn Care Distribution
Agreement with Xtreme Green Landcare of West Hills, California. Xtreme Green is
an experienced landscaping company operating in Southern California. They sell
Nutrimoist(TM) into the turf industry.

On January 14, 2003, the Company entered into a non-exclusive Distributor
Agreement with The Amber Group, LLC to sell a linear polymer product
manufactured by Cytec Industries used in the wash water for produce. The product
met the rigorous standards of testing set by the Food and Drug Administration
resulting in a Generally Recognized As Safe (GRAS) affirmed product.

On June 26, 2003, the Company entered into a Distributorship Agreement with The
Pacific Tree Company of Bakersfield California. Pursuant to the Agreement,
Pacific Tree became the exclusive distributor of the Company's products for the
Paulownia Megafolia Tree in the United States.

STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT

On December 18, 2003, we announced that we received delivery of the prototype of
our new 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. We exhibited the injection machine at the
Golf Course Superintendents Association of America (GCSAA) International Golf
Course Conference and Show in San Diego, California from February 9 through
February 14, 2004.

COMPETITION

There is no direct competition for the Company's Agriblend(R) product, however,
earlier polymer based technology was very expensive and the remembrance of its
cost has a negative effect on marketing Agriblend(R). Accordingly, educating the
end user regarding the benefits of using Agriblend(R) and gaining general
acceptance of the new "micro grain" technology are obstacles to marketing the
product. There is some competition to our straight polymer products by companies
that have been in business for a number of years. However, the Stockhausen
polymers are of consistent quality and performance. There is some competition
for the Baraclear product by the companies selling the older pond clearing

                                       3
<PAGE>
procedure which is more time consuming and accordingly more expensive. There is
some competition for Extend(TM) however the Company has not as yet found a
higher quality liquid linear polymer product. The Company is not aware of any
competition to Nutrimoist(TM) other than from our manufacturer(s) who would have
to use our polymer to manufacture the product pursuant to our agreement.

SOURCES AND AVAILABILITY OF RAW MATERIAL AND PRINCIPAL SUPPLIERS

The Company's products are proprietary blends that include cross-linked micro
grain polymer in the blend. Cross-linked polymer is manufactured by several
chemical companies that include Stockhausen, our exclusive supplier, Ciba
Specialties, and Floerger. All other components of the blends are mineral
products that are readily available commercially throughout the world.
Agriblend(R) products are custom blended in accordance with the Company's
specifications at a blending facility located near Truth or Consequences, New
Mexico. Warehouse facilities are located in Phoenix, Arizona. Nutrimoist(TM) is
blended either by the Company or through contract blenders in liquid form and is
a combination of different formulations, which include our polymer products.

DEPENDENCE ON MAJOR CUSTOMERS

The Company is not dependent on any one customer for a substantial portion of
its sales of any product.

INTELLECTUAL PROPERTY

PATENTS

The Company has filed three new patent applications with the U S Patent office
on a machine designed to install the Company's product Nutrimoist L(R) into
mature turf.

The Company has exclusive worldwide manufacturing/marketing rights to patented
super absorbent cross-linked polymer technology. The underlying patents include
United States Patent number 5,649,495 and 5,868,087, commonly known and
described as "Agricultural Retention Mixture and Application Technique."

TRADEMARKS

The Company owns registered trademarks on the names, Agriblend(R) and
Nutrimoist(R).

GOVERNMENT APPROVAL

Agriblend(R) and our other polymers are subject to regulatory standards
developed by the Environmental Protection Agency ("EPA") that are applicable to
maximum monomer concentrations in polymers. Polymer products cannot exceed
monomer concentrations of 200 mg/kg. All polymers used by the Company are well
below the maximum monomer standard.

                                       4
<PAGE>
EFFECT OF ANY EXISTING OR PROPOSED GOVERNMENT REGULATIONS

Not applicable, see "Government Approval" above.

RESEARCH AND DEVELOPMENT COSTS

The Company spent $41,935on research and development during the six months ended
December 31, 2003 as compared to $74,959 spent on research and development
during the year ended June 30, 2003.

COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS

The Company provides Material Safety Data Sheets on all components of its
product line and complies with labeling requirement for its products. In
addition, the Company complies with EPA regulations applicable to monomer
content in its polymer additives (maximum of 200 mg/kg). The Company believes
that its operations currently comply in all material respects with applicable
federal, state and local laws, rules, regulations and ordinances regarding the
discharge of materials into the environment. The Company does not believe that
such compliance will have a material impact on its capital expenditures, future
earnings and competitive position. No material capital expenditures for
environmental control equipment presently are planned.

EMPLOYEES

As of the date hereof, the Company has eight full-time employees and two
part-time employees. While the Company does anticipate a small increase in its
number of employees, it does not anticipate that it will hire more than five to
ten additional employees during calendar year 2004. The Company hires
independent contractors on an "as needed" basis only. The Company has no
collective bargaining agreements with its employees. The Company believes that
its employee relationships are satisfactory.

ITEM 2. DESCRIPTION OF PROPERTY

The Company leases, with a 90 day cancellation clause, approximately 2,600
square feet located at a facility in Pasadena, California, which includes office
and storage space. All of the Company's operations are conducted from this
facility which requires monthly rental payments of approximately $885.71. The
Company rents storage space in Tucson and Phoenix, Arizona for a minimum amount
of approximately $200 per month. As of March 31, 2004, the Company will be
occupying and new space at 12224 Montague Street, Pacoima, California, 91331.
The new space will be leased from an affiliated entity.

ITEM 3. LEGAL PROCEEDINGS

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

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

None.

                                       5
<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET FOR COMMON EQUITY

The Company's Common Stock is currently quoted on the Over-The-Counter Bulletin
Board under the Symbol "SOYL." Set forth below is the trading history of the
Company's Common Stock without retail mark-up, mark-down or commissions:

                                                High              Low
                                                ----              ---
2001
     First Quarter..........................    2.75              1.13
     Second Quarter.........................    1.19              0.68
     Third Quarter..........................    1.30              0.36
     Fourth Quarter.........................    0.77              0.40

2002
     First Quarter..........................    0.42              0.30
     Second Quarter.........................    0.30              0.12
     Third Quarter..........................    0.63              0.10
     Fourth Quarter.........................    0.20              0.05

2003
     First Quarter..........................    0.18              0.04
     Second Quarter.........................    0.10              0.03
     Third Quarter..........................    0.11              0.07
     Fourth Quarter.........................    0.31              0.13

On March 2, 2004, the closing sale price was $0.51.

The above quotations are inter-dealer quotations from market makers of the
Company's stock. At certain times the actual closing or opening quotations may
not represent actual trades that took place.

HOLDERS

As of March 2, 2004, there were [170] shareholders holding certificated
securities and approximately [339] shareholders currently listed in the
Depository Trust Company as holding shares in brokerage accounts. The Company's
transfer agent is Atlas Stock Transfer, 5899 South State, Murray, Utah 84107.

DIVIDENDS

The Company has paid no dividends on its Common Stock since its inception and
does not anticipate or contemplate paying cash dividends in the foreseeable
future.

                                       6
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the
Company's financial statements, including the notes thereto, appearing elsewhere
in this Report.

ThE following information CONTAINS certain forward-looking statements of
management of the company. 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

American Soil Technologies, Inc. began business as Soil Wash Technologies, Inc.
in September 1993 to develop and provide nonhazardous soil remediation services
to businesses and developers in southern California. On December 31, 1999, the
Company acquired the patents and operating rights to certain polymer based soil
enhancements designed to increase production and reduce costs to the agriculture
industry. During the fiscal year ended June 30, 2001, the Company discontinued
operations of its soil remediation business. During the fiscal year ended June
30, 2002, the Company devoted substantial resources, including executive time
and money, to the development of strategic relationships and contracts for the
marketing and distribution of its polymer products both nationally and
worldwide.

                                       7
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the years indicated, selected financial
information for the Company:

<TABLE>
<CAPTION>
                                    Six Months Ended         Year Ended          Year Ended
                                    December 31, 2003      June 30, 2003       June 30, 2002
                                    -----------------      -------------       -------------
                                        (Audited)            (Audited)           (Audited)
<S>                                   <C>                  <C>                 <C>
Statement of Operations Data:
Revenue                               $    101,924         $   479,338         $   203,450
Loss From Continuing Operations           (661,291)         (1,099,616)         (1,154,267)
Gain/(Loss) From Discontinued
Operations                                       0              63,743            (877,646)
(Net Loss)                              (2,944,291)         (1,035,873)         (2,031,913)
(Continuing Operations) Loss Per
Share                                 $      (0.32)              (0.12)              (0.12)
(Discontinued Operations)
Income/(Loss) Per Share                        n/a                0.01               (0.10)
(Net Loss) Per Share                  $      (0.32)              (0.11)              (0.22)

Balance Sheet Data:
Current Assets                        $    264,161         $   255,791         $   287,919
Total Property & Equipment, Net            485,082             160,524              27,583
Patents, Net                               491,847             539,378             579,332
Deferred Tax Asset                               0           2,283,000           2,306,000
Total Assets                          $  1,315,121         $ 3,242,800         $ 3,214,582
Total Current Liabilities                  362,966             130,333             870,449
Accumulated Deficit                    (10,260,149)         (7,315,858)         (6,279,985)
Stockholders' Equity                      (799,951)          2,144,340             855,133
</TABLE>

SIX MONTHS ENDED DECEMBER 31, 2003

GENERAL

The Company changed its fiscal year end from June 30, to December 31. June 30,
2003 was the last fiscal year to end on June 30, 2003. The discussions below
relate to the six months ended December 31, 2003 without direct comparison to a
prior fiscal period.

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<PAGE>
REVENUES

Revenues for the six months ended December 31, 2003 were $101,924. The Company's
revenues in this period were comprised of sales of Stockopam and Stockosorb
representing approximately 53% and 45% of total revenue respectively.
Approximately 35% of sales were to a single customer. Three other customers
comprised an additional approximately 40% of revenue.

COST OF SALES

Gross margins varied significantly between the Stockopam and Stockosorb
products. The gross margin for the period ended December 31, 2003 was 9%
compared to 28% for the year ended June 30, 2003. The largest single reason for
the decrease in the gross margin was that there were sales of $96,000 of
AgriBlend in the period ended June 30, 2003. These sales had almost a 48% gross
margin. There were no AgriBlend sales in the period ended December 31, 2003. The
gross margins on the Stockopam and Stockosorb have been approximately 30%. There
are certain fixed costs that are allocated to the cost of sales that have a
greater effect on the gross margin in the period ended December 31, 2003 because
of the significantly lower sales volume.

INVENTORY

Inventory balances increased to $180,463 at December 31, 2003 from $18,634 at
June 30, 2003. The Company previously would only purchase raw materials upon
receipt of a customer order. To facilitate quicker order filling processes and
reducing materials' costs by ordering in bulk, the Company began to inventory
larger volumes of raw materials in the period ended December 31, 2003.

OPERATING EXPENSES

Approximately 42% of operating expenses for the period ended December 31, 2003
are comprised of payroll and consulting expenses. This compares to approximately
49% for such expenses for the year ended June 30, 2003. The Company anticipates
that it will require additional personnel in marketing and sales in order to
bring brand and market recognition to its Nutrimoist product and the related
newly developed installation equipment. The Company incurred increases in its
insurance related costs during the period ended December 31, 2003. These
increase appear to be unrelated to the Company but rather part of the insurance
environment in general. The Company also increased in marketing efforts in the
period ended December 31, 2003, resulting in higher costs.

INCOME TAXES

The Company had previously recorded a net deferred income tax asset of
$2,283,000. Management determined that because the Company has 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. The effect of this change in estimate was to increase
the net loss by $2,283,000 for the six month period ended December 31, 2003.

                                       9
<PAGE>
FISCAL YEAR ENDED JUNE 30, 2003 (AUDITED) COMPARED TO FISCAL YEAR ENDED JUNE 30,
2002 (AUDITED)

REVENUES

Revenues for the year ended June 30, 2003 were $479,338 compared to $203,450 for
the same period in 2002. Revenue from the discontinued Soil Wash operations
decreased from $1,500 to $0 as a result of the cessation of operations of that
division due to the non-renewal of its lease. Accordingly, results of this
segment of the business have been classified as discontinued, and prior periods
have been restated, including the allocation of overhead charges.

COST OF SALES

Cost of goods sold increased from $191,013 for the fiscal year ended June 30,
2002 to $348,557 for the fiscal year ended June 30, 2003.

INVENTORY

The Company believes that adequate supplies of raw materials are available to
meet its current and anticipated requirements without disruption of its delivery
chain. The Company intends to add additional storage and distribution facilities
as necessary to accommodate increases in sales, provide for timely delivery and
maintain an efficient supply process.

OPERATING EXPENSES

Operating expenses increased by approximately 18% over the same period in 2002.
These increases are due to increase in material and supplies, sales and
marketing, as well as equipment maintenance and administrative costs. On an
annual basis, the Company expects that costs will increase based on three
quarters of operating under our new distribution agreements but these
relationships as a percentage of sales should decline as the expected sales
volume increases annually. Likewise, on an annual basis the administrative costs
are expected to increase as a full year of operations are experienced in that
the Company has more products and two distinct markets to administer agriculture
and turf. It is also anticipated that costs associated with public companies
will increase. Interest expense is expected to remain the same in the next year
as to the convertible debentures and may increase as to other debt of the
Company.

INCOME TAXES

The Company has recognized an income tax benefit of its current and prior
operating losses based on the Company's expectation that it will realize
sufficient income in the future, the next twenty years, to utilize the benefits
of the net operating loss carry forward and therefore reduced cash outlay for
taxes in future periods. For the current year, the Company recorded a valuation
allowance of $412,000 to fully reduce the tax benefit for this year. With the
disposition of a major segment of the business, the Company believes that
deferral of the recognition of any additional benefit of the net operating loss
carryforward until its remaining revenue sources are determined to be sufficient
to generate income to offset the already recorded benefit.

                                       10
<PAGE>
NET LOSS

For the reasons detailed above, the Company experienced losses in its last two
fiscal years. The Company expects that as a result of its efforts during the
last two years to develop strategic alliances, marketing agreements, and
distribution networks, sales volume in subsequent periods should increase.
Revenue from the sale of agricultural products increased from $201,950 during
the Company's prior fiscal year to $479,336 in its current fiscal year. Since
these arrangements are new and untested, it is uncertain whether these actions
will be sufficient to produce net operating income for the fiscal year 2004.
However, given the gross margins on the Company products, future operating
results should be improved.

SEASONALITY

The efforts of the Company in the United States have focused on the southern
states and therefore generally experience year round growing cycles, with the
sale of the agricultural products preceding the growing cycle of various crops.
International sales have not been sufficient enough or the geographic
distribution of sales concentrated enough to determine if a seasonal trend
exists although the initial indication is that the Company's markets will become
diverse and therefore not indicate significant seasonal variations. As the
Company expands into the residential and commercial markets nationally, it is
expected that the Company will experience some seasonal declines in sales during
the fall and winter quarters in less temperate climates.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $31,720 and $15,606 at December 31, 2003 and
at June 30, 2003, respectively. Net cash used by operations was $536,526 for six
months ended December 31, 2003 as compared to $1,006,914 for the year ended June
30, 2003 compared to net cash used by operations of $679,699 for the comparable
year ended June 30, 2002. The Company has historically relied upon one its
officers and significant shareholders to provide cash to meet short term
operating cash requirements.

In March 2000, the Company 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 common stock of the Company 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
December 31, 2003 and the outstanding balances of the debentures was $805,,056,
and at June 30, 2003 and 2002 the outstanding balances of the debt were $816,127
and $825,000, respectively. During 2001, $250,000 of debentures were converted
into 83,334 shares of stock and during 2002 the Company redeemed $500,000 of
debentures and issued $250,000 of debentures. At December 31, 2003 debentures
consisted of $570,000 of 8% per annum convertible debentures at a rate of $0.50
per share and $235,056 of 10% per annum convertible at a rate of $3.00 per share
and at June 30, 2003 debentures consisted of $566,127 of 8% per annum
convertible debentures at a rate of $0.50 per share and $250,000 of 10% per
annum convertible at a rate of $3.00 per share. If the remaining debt is
converted, the Company would issue an additional 1,215,587 shares. Interest
expense for the six months ended December 31, 2003 was $54,058 and interest
expense for the year ended June 30, 2003 and 2002 was $70,477 and $112,705,
respectively.

                                       11
<PAGE>
During the quarter ended March 31, 2003, the Benz Group agreed to convert the
Company's outstanding debt of $2,381,849 into shares of Series A Preferred Stock
of the Company. This conversion resulted in the issuance of 4,763,699 shares of
Series A Preferred Stock with a stated value of $0.50 per share, a dividend rate
equal to the prime rate for the period and a conversion option into shares of
common stock on a one-for-one basis.

The Company has working capital (deficiency) (current assets less current
liabilities) of $(98,805) as of December 31, 2003 and $125,458 as of June 30,
2003 compared to a deficit in working capital $(582,530) as of June 30, 2002.
The positive change in working capital is because the debentures payable is no
longer current.

As shown in the accompanying financial statements, the Company has incurred an
accumulated deficit of $10,260 and has a working capital deficit of
approximately $99,000 as of December 31, 2003. The ability of the Company to
continue as a going concern is dependent on obtaining additional capital and
financing and operating at a profitable level. The Company intends to seek
additional capital either through debt or equity offerings and to increase sales
volume and operating margins to achieve profitability. The Company's 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 the
Company has created and will continue to grow.

The Company will consider both the public and private sale of securities and or
debt instruments for expansion of its operations if such expansion would benefit
the overall growth and income objectives of the Company. Should sales growth not
materialize, the Company may look to these public and private sources of
financing. There can be no assurance, however, that the Company 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 the
Company's ability to timely meet its business objectives.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States of America 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 of
America, 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. The Company had
previously recorded a net deferred income tax asset of $2,283,000. Management
determined that because the Company has yet to generate taxable income and that
the generation of taxable income in the short term is uncertain, it was

                                       12
<PAGE>
appropriate to provide a valuation allowance for the total deferred income tax
asset. The effect of this change in estimate was to increase the net loss by
$2,283,000 for the six month period ended December 31, 2003.

The Company has capitalized approximately $380,000 associated with the
construction of a demonstration injection machine. The Company intends to place
the machine in service in the fiscal year ended December 31, 2004. Management
beilieves that although the capitalized costs exceed a value at which the unit
could be sold, the Company will derive several years of benefits from the unit
by using it in sales demonstrations and as a loaner unit.

On December 31, 1999 the Company 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 the Company has based its plan of operations. The carrying
value of these licensing rights was $492,000 at December 31, 2003.

The Company has demand notes payable with a total principal balance of $979,000
at December 31, 2003. These notes are held by the Company's controlling
shareholder. The Company has received assurances from the controlling
shareholder that the notes will not be called within the next year. Accordingly,
the Company has not classified the debt as current.

ITEM 7. FINANCIAL STATEMENTS.

The financial statements required to be filed pursuant to this Item 7 begin on
page F-1 of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

Effective February 17, 2004, the Board of Directors of the Company dismissed
James C. Marshall, C.P.A., P.C. ("Marshall") as its independent auditors for the
six months ended December 31, 2003 and approved the engagement of Epstein Weber
& Conover, PLC, Certified Public Accountants ("Epstein") as Marshall's
replacement. Marshall had previously been the Company's independent auditor. The
decision to change auditors was approved by the Company's Board of Directors.

Since the date of their engagement on January 3, 2000, there have been no
disagreements with Marshall on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to the satisfaction of Marshall would have caused Marshall to
make reference to the matter in their report.

ITEM 8A. CONTROLS AND PROCEDURES

Our 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 as of the end of the period covered by this report and believe
that the Company's disclosure controls and procedures are effective based on the
required evaluation. During the period covered by this report, there were no
changes in internal controls that materially affected, or are reasonably likely
to materially affect, the Company's internal control over financial reporting.

                                       13
<PAGE>
                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The directors and executive officers of the Company are as follows:

Name                       Age                   Position
----                       ---                   --------
Carl P. Ranno              64       Director, Chief Executive Officer, President
Ken Lew                    47       Director, Chief Financial Officer
Neil C. Kitchen            57       Director, Vice President
Diana Visco                46       Secretary
Louie Visco                88       Chairman of the Board of Directors
Scott Baker                47       Director
Johnny Dickinson           63       Vice President Marketing

MR. CARL P. RANNO, DIRECTOR, CHIEF EXECUTIVE OFFICER, PRESIDENT, received a
degree in Economics from Xavier University in Cincinnati, Ohio and his Juris
Doctor from the University of Detroit School of Law. Mr. Ranno became a Director
in September 2001 and Chief Executive Officer and President in May 2002. For the
past five years, he has acted as an advisor in strategic planning, mergers and
acquisitions and as a securities attorney to numerous public companies. He has
served as president and CEO of public and private companies. He is also a member
of the board of directors of Central Utilities Production Company.

MR. KEN LEW, DIRECTOR, CHIEF FINANCIAL OFFICER, has served as a Director of the
Company since 2000. He holds an M.B.A. in Business Finance, a B.A. in Cell
Biology, and a B. Sc. in Chemistry from the University of Washington. Mr. Lew
has produced and edited two financial books and has written numerous technical
publications dealing with chemical interactions associated with polymer and
non-polymer substrates. Mr. Lew has been a business consultant since 1997.

MR. NEIL C. KITCHEN, DIRECTOR, VICE PRESIDENT, has over 20 years experience in
business management in the environmental sector including management of
companies involved in general engineering, toxicology, and environmental
cleanup. Prior to joining Soil Wash Technologies, Inc. in 1994, he was Vice
President of a publicly-held environmental cleanup company. He holds a B.S. in
Business Management from San Diego State University and a class "A" General
Engineering license with Hazardous Material Certification from the State of
California.

MS. DIANA VISCO, SECRETARY, Diana Visco, Company Secretary, has worked with Soil
Wash Technologies, Inc. since January 1999. Prior to that she worked for 21
years with the Americana Leadership College, Inc. traveling to all of its
offices and conferences across the USA/Caribbean in addition to Australia, New
Zealand, Canada and Europe. Ms Visco spent several years as a traveling
administrator and spent her final years as International Administrator handling
all aspects of finance, administration as well as marketing and promotion in
addition to being assistant to the President of the company. She is the daughter
of Mr. Louie Visco, a director of the Company.

                                       14
<PAGE>
MR. LOUIE VISCO, DIRECTOR, has served as Chairman of the Board of the Company
since 2000. He is principal owner of the Benz Group, a privately held holding
company founded in 1934. Mr. Visco founded Universal By-Products, Inc., the
first publicly held solid waste company in the United States. Waste Management
Inc., the world's largest waste management company, acquired the company in
1972. Over the past 50 years, Mr. Visco has served as a director on the boards
of privately and publicly held companies.

MR. SCOTT BAKER, DIRECTOR, has practiced law in Arizona for the past 19 years.
He graduated from the University of Arizona with a B.S. in business in 1978 and
obtained his J.D. from the University of Arizona in 1981. As a general
practitioner, he has appeared before the U.S. District Tax Court and the U.S.
District Court.

MR. JOHNNY DICKINSON, VICE PRESIDENT MARKETING, prior to joining the Company,
Mr. Dickinson served for more than 30 years at John Deere, most recently as
Division Manager of Worldwide Marketing for the past ten years. He received his
B.A. degree in Finance and Marketing from Eastern New Mexico University.

Directors serve until the next annual meeting or until their successors are
qualified and elected. Officers serve at the discretion of the Board of
Directors.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and certain officers of the Company, as well as persons who own more
than 10% of a registered class of the Company's equity securities, ("Reporting
Persons") to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission. The Company believes that all
Reporting Persons have complied on a timely basis with all filing requirements
applicable to them.

                                       15
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

Set forth below is a summary of compensation for the Company's officers for the
six months ended December 31, 2003 and for the fiscal years 2003, 2002 and 2001.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Company in the event of retirement at
normal retirement date pursuant to any presently existing plan provided or
contributed to by the Company.

<TABLE>
<CAPTION>
                                        ANNUAL COMPENSATION                LONG TERM COMPENSATION
                                  -----------------------------   -------------------------------------
                                                                           Awards              Payouts
                                                                  -------------------------    -------
                                                       Other
                                                       Annual     Restricted    Securities                 All Other
                                                       Compen-       Stock      Underlying       LTIP       Compen-
                       Year     Salary($)    Bonus($)  sation($)   Awards($)  Options/SARs(#)  Payouts($)  sation($)
                       ----     ---------    --------  ---------   ---------  ---------------  ----------  ---------
<S>                   <C>       <C>           <C>       <C>       <C>          <C>               <C>          <C>
Carl P. Ranno, CEO,
President(1)          2003(2)    $ 60,000      $0        $0        $     0            0           $0           $0
                      2003       $120,000      $0        $0        $     0      150,000           $0           $0
                      2002       $ 58,200      $0        $0        $ 2,050            0           $0           $0

Ken Lew, CFO(3)       2003(2)    $ 26,000      $0        $0        $     0            0           $0           $0
                      2003       $ 23,000      $0        $0        $     0      150,000           $0           $0
                      2002       $      0      $0        $0        $11,400            0           $0           $0
                      2001       $      0      $0        $0        $     0            0           $0           $0
Neil C. Kitchen,
Vice President(4)     2003(2)    $ 39,742      $0        $0        $     0            0           $0           $0
                      2003       $ 79,484      $0        $0        $     0      150,000           $0           $0
                      2002       $ 79,484      $0        $0        $     0            0           $0           $0
                      2001       $ 79,484      $0        $0        $     0            0           $0           $0
Diana Visco,
Secretary(5)          2003(2)    $ 26,000      $0        $0        $     0            0           $0           $0
                      2003       $ 44,858      $0        $0        $     0       60,000           $0           $0
                      2002       $ 39,264      $0        $0        $     0            0           $0           $0
Johnny Dickinson, VP
-Marketing(6)         2003(2)    $ 26,000      $0        $0        $     0            0           $0           $0
                      2003       $ 52,000      $0        $0        $     0       60,000           $0           $0
                      2002       $ 32,600      $0        $0        $     0            0           $0           $0
                      2001       $ 51,800      $0        $0        $     0            0           $0           $0
</TABLE>
----------
1.   Appointed Chief Executive Officer and President on May 2, 2002.
2.   Compensation for the six months ended December 31, 2003.
3.   Secretary from 2000 through May 1, 2002 and appointed Chief Financial
     Officer on May 2, 2002.
4.   President from July 2000 through May 1, 2002 and appointed Vice President
     on May 2, 2002.
5.   Appointed Secretary on May 2, 2002.
6.   Appointed Vice President -Marketing in September 2002.

                                       16
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR - INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
                                              Number of    Percent of total
                                              Securities     options/SARs
                                              Underlying      granted to
                                             Options/SARs    employees in      Exercise or
      Name                     Date           granted(#)     fiscal year     base price($/Sh)    Expiration date
      ----                     ----           ----------     -----------     ----------------    ---------------
<S>                     <C>                  <C>           <C>               <C>                 <C>
Carl P. Ranno, CEO,      Six Months Ended
President                December 31, 2003           0             0%            $0                   N/A
                         Fiscal Year Ended
                         June 30, 2003         150,000          11.5%            $0.50/Sh             06/30/12

Ken Lew, CFO             Six Months Ended
                         December 31, 2003           0             0%            $0                   N/A
                         Fiscal Year Ended
                         June 30, 2003         150,000          11.5%            $0.50/Sh             06/30/12

Neil C. Kitchen, VP      Six Months Ended
                         December 31, 2003           0             0%            $0                   N/A
                         Fiscal Year Ended
                         June 30, 2003         150,000          11.5%            $0.50/Sh             06/30/12

Diana Visco,             Six Months Ended
Secretary                December 31, 2003          0              0%            $0                   N/A
                         Fiscal Year Ended
                         June 30, 2003         60,000            4.6%            $0.50/Sh             06/30/12

Johnny Dickinson, VP-    Six Months Ended
Marketing                December 31, 2003          0              0%            $0                   N/A
                         Fiscal Year Ended
                         June 30, 2003         60,000            4.6%            $0.50/Sh             06/30/12
</TABLE>

EMPLOYMENT AND RELATED AGREEMENTS

The Company has an Employment Agreement with Mr. Ron Salestrom, patent holder of
patents underlying the Agriblend(R) product line. The term of the Agreement is
from January 4, 2003 through January 3, 2004 and is automatically renewed unless
either party wishes to terminate. Mr. Salestrom's salary under the Agreement is
$75,000, based on sales to Gigot Agra, per year and he is entitled to all
benefits established by the Company that are accorded to similarly situated
employees of the Company.

COMPENSATION OF DIRECTORS

Directors of the Company do not receive any cash compensation, but are entitled
to reimbursement of their reasonable expenses incurred in attending directors'
meetings.

                                       17
<PAGE>
STOCK OPTION PLAN

The Company's shareholders adopted a Stock Option Plan on November 8, 2002 (the
"2002 Plan"). Under the 2002 Plan, 2,000,000 shares of common stock have been
authorized 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 our 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 the grant of an Incentive Stock Option to a principal
stockholder, not less that 110% of fair market value of such common stock at the
time such option is granted. The purchase price of the common stock subject to
each Nonstatutory Stock Option shall be determined at the time such option is
granted, but in no case less than 100% of the fair market value of such shares
of common stock at the time such option is granted.

The 2002 Plan shall terminate ten years from the date of its adoption by the
Company's shareholders, and no option shall be granted after termination of the
2002 Plan. Subject to certain restrictions, the 2002 Plan may at any time be
terminated and from time to time be modified or amended by the affirmative vote
of the holders of a majority of the outstanding shares of our capital stock
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the State of Nevada.

As of the date hereof, 1,310,000 options have been issued pursuant to the 2002
Plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding the shares of the
Company's outstanding Common Stock beneficially owned as of the date hereof by
(i) each of the Company's directors and executive officers, (ii) all directors
and executive officers as a group, and (iii) each other person who is known by
the Company to own beneficially more than 5% of the Company's Common Stock based
upon 9,258,782 issued common shares.

                                       18
<PAGE>
                                            Amount and Nature of      Percent
Name and Address of Beneficial Owners(1)    Beneficial Ownership    Ownership(2)
----------------------------------------    --------------------    ------------
Carl P. Ranno                                    362,500 (3)             3.9%
Ken Lew                                          374,700 (4)             4.0%
Neil C. Kitchen                                1,476,855 (5)            16.1%
Diana Visco                                       60,000 (6)               *
Louie Visco                                    9,194,264 (7)            60.6%
Scott Baker                                      479,818 (8)             5.1%
Johnny Dickinson                                 110,000 (9)             1.2%
All executive officers and directors
 as a group (7 persons)                       12,098,137                75.9%
The Benz Group                                 8,044,264 (10)           57.4%
FLD Corporation                                1,000,000 (11)            9.7%
----------
*    Less than 1%.
1.   C/o the Company's address, 215 N Marengo Suite 110, Pasadena, CA 91101,
     unless otherwise noted.
2.   Except as otherwise indicated, we believe that the beneficial owners of
     Common Stock listed above, based on information furnished by such owners,
     have sole investment and voting power with respect to such shares, subject
     to community property laws where applicable. Beneficial ownership is
     determined in accordance with the rules of the SEC and generally includes
     voting or investment power with respect to securities. Shares of Common
     Stock subject to options or warrants currently exercisable, or exercisable
     within 60 days, are deemed outstanding for purposes of computing the
     percentage of the person holding such options or warrants, but are not
     deemed outstanding for purposes of computing the percentage of any other
     person.
3.   Includes options to purchase 150,000 shares of Common Stock at an exercise
     price of $0.50 expiring June 30, 2012.
4.   Includes options to purchase 150,000 shares of Common Stock at an exercise
     price of $0.50 expiring June 30, 2012.
5.   Includes options to purchase 150,000 shares of Common Stock at an exercise
     price of $0.50 expiring June 30, 2012 and a debenture convertible into
     50,000 shares of Common Stock expiring on June 22, 2004.
6.   Consists of options to purchase 60,000 shares of Common Stock at an
     exercise price of $0.50 expiring June 30, 2012.
7.   Consists of 3,280,565 shares of Common Stock, 4,763,699 shares of Preferred
     Stock convertible into 4,763,699 shares of Common Stock held in the name of
     The Benz Group, a company in which Mr. Visco owns a majority interest; a
     debenture convertible into 500,000 shares of Common Stock expiring on
     February 1, 2005 and a debenture convertible into 500,000 shares of Common
     Stock expiring on March 27, 2005 held in the name of FLD Corporation, a
     company in which Mr. Visco owns a majority interest; and options to
     purchase 150,000 shares of Common Stock at an exercise price of $0.50
     expiring June 30, 2012.
8.   Includes options to purchase 150,000 shares of Common Stock at an exercise
     price of $0.50 expiring June 30, 2012.
9.   Includes options to purchase 60,000 shares of Common Stock at an exercise
     price of $0.50 expiring June 30, 2012.
10.  Includes 4,763,699 shares of Preferred Stock convertible into 4,763,699
     shares of Common Stock.
11.  Consists of a debenture convertible into 500,000 shares of Common Stock
     expiring on February 1, 2005 and a debenture convertible into 500,000
     shares of Common Stock expiring on March 27, 2005.

                                       19
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Neil C. Kitchen, a Director and Vice President, has a $25,000 Debenture with the
Company which is convertible at $0.50 per share with interest at 10%, expiring
on June 22, 2004.

Louie Visco, Director, is an owner and director of FLD Corporation, the holder
of two $250,000 Debentures convertible at $0.50 per share with interest at 10%,
expiring on February 1, 2005 and March 27, 2005, respectively.

Louie Visco, Director, is an owner and director of Benz Group, the holder of
3,280,565 shares of Common Stock, 4,763,699 shares of Preferred Stock
convertible into 4,763,699 shares of Common Stock.

The Company leases approximately 2,600 square feet located at a facility in
Pasadena, California, which includes office and storage space, from Benz Group,
a company owned and controlled by Louie Visco, one of our directors and major
shareholders. All of the Company's operations are conducted from this facility.
The lease expired on August 2, 2003 and the Company continued to lease the space
on a month-to-month basis at approximately $3,420 per month. As of March 31,
2004, the Company will be occupying and new space at 12224 Montague Street,
Pacoima, California, 91331. The new space will be leased from an affiliated
entity.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

a. Exhibits

       3.1    Articles of Incorporation of New Directions Manufacturing, Inc., a
              Nevada corporation, dated January 9, 1997(1)
       3.2    Amendment to Articles of Incorporation of New Directions
              Manufacturing, Inc., a Nevada corporation, dated May 29, 1997(1)
       3.3    Amendment to Articles of Incorporation of New Directions
              Manufacturing, Inc., dated January 4, 2001(2)
       3.4    Bylaws of New Directions Manufacturing, Inc., dated May 29,
              1997(1)
       3.5    Amended and Restated Bylaws of New Directions Manufacturing, Inc.,
              dated July 20, 1998(1)
       4.1    Convertible Debenture - Lump Sum Contribution (Form)(1)
       4.2    Convertible Debenture - Incremental (Form)(2)
       10.1   License Agreement between Ron Salestrom, American Soils
              Technologies, Inc., and Polymers Plus, L.L.C., dated January 4,
              2000(2)
       10.2   Employment Agreement with Ronald Salestrom, dated January 4,
              2003(3)
       10.3   Licensing Agreement between Soil Wash Technologies, Inc. and Site
              Remediation Services Limited, dated June 24, 1999(2)
       10.4   Non-Disclosure and Non-Circumvent Agreement with BioPlusNutrients,
              L.L.C, dated July 25, 2001(4)
       10.5   Distributorship Agreement with Agriblend(R)Australia P.T.Y., Ltd.,
              dated September 1, 2000(4)
       10.6   Distributorship Agreement with Ag Specialties, LLC, dated June 27,
              2002(5)
       10.7   Distribution Agreement with Gigot Agra Services effective date
              August 15, 2002(6)
       10.8   Distributorship Agreement with Stockhausen, Inc., dated August 20,
              2002(5)
       10.9   Distributorship Agreement with Bentonite Performance Minerals,
              dated August 26, 2002(5)

                                       20
<PAGE>
       10.10  Distributorship Agreement with J T Water Management, dated
              September 20, 2002(5)
       10.11  Distributor Agreement with The Amber Group, LLC, dated January 14,
              2003(7)
       10.12  Distributorship Agreement with X-Treme Green Landcare, dated
              October 11, 2002(6)
       10.13  Distributorship Agreement with Pacific Tree, dated June 27,
              2003(3)
       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

----------
1.   Incorporated by reference from the Company's Registration Statement on Form
     SB-2, filed on July 2, 1997, as amended (Registration No. 333-30583).
2.   Incorporated by reference from the Company's Form 10-KSB for the fiscal
     year ended June 30, 2000, filed on September 27, 2000 (File No. 000-22855).
3.   Incorporated by reference from the Company's Form 10-KSB for the fiscal
     year ended June 30, 2003, filed on September 29, 2003.
4.   Incorporated by reference from the Company's Form 10-KSB for the fiscal
     year ended June 30, 2001, filed on October 11, 2001.
5.   Incorporated by reference from the Company's Form 10-KSB for the fiscal
     year ended June 30, 2002, filed on September 30, 2002.
6.   Incorporated by reference from the Company's Form 10-QSB for the quarterly
     period ended September 30, 2002 filed on November 13, 2003.
7.   Incorporated by reference from the Company's Form 10-QSB for the quarterly
     period ended December 31, 2002, filed on February 19, 2003.

b. Reports on Form 8-K

On February 18, 2004, the Company filed a Current Report on Form 8-K disclosing
its change in audit firms. On February 27, 2004, the Company filed an Amended
Current Report on Form 8-K, amending the letter from its former audit firm
required to be included as an exhibit to the report.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

MARSHALL

Marshall was the Company's independent auditor and examined the financial
statements of the Company for the fiscal years ending June 30, 2003 and June 30,
2002. Marshall performed the services listed below and was paid the fees listed
below for the fiscal years ended June 30, 2003 and June 30, 2002.

AUDIT FEES

Marshall was paid aggregate fees of approximately $35,100 for the fiscal year
ended June 30, 2002 and approximately $35,200 for the fiscal year ended June 30,
2003 for professional services rendered for the audit of the Company's annual
financial statements and for the reviews of the financial statements included in
the Company's quarterly reports on Form 10-QSB during these fiscal years.

                                       21
<PAGE>
AUDIT RELATED FEES

Marshall was not paid additional fees for either of the fiscal years ended June
30, 2002 or June 30, 2003 for assurance and related services reasonably related
to the performance of the audit or review of the Company's financial statements.

TAX FEES

Marshall was paid fees in the amount of $800 for the fiscal year ended June 30,
2002 and fees of $1,000 for the fiscal year ended June 30, 2003 for professional
services rendered for tax compliance, tax advice and tax planning during these
fiscal years.

ALL OTHER FEES

Marshall was not paid any other fees for professional services during the fiscal
years ended June 30, 2002 and June 30, 2003.

AUDIT COMMITTEE

The Company does not have an audit committee.

                                       22
<PAGE>
                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, duly
authorized.

                                   AMERICAN SOIL TECHNOLOGIES, INC.


DATED: March 29, 2004              By: /s/ Carl P. Ranno
                                       ---------------------------------------
                                       Carl P. Ranno
                                       Director, Chief Executive Officer, and
                                       President (Principal Executive Officer)

DATED: March 29, 2004              By: /s/ Ken Lew
                                       ---------------------------------------
                                       Ken Lew
                                       Director, Chief Financial Officer
                                       (Principal Financial Officer and
                                       Principal Accounting Officer)


DATED: March 29, 2004              By: /s/ Neil C. Kitchen
                                       ---------------------------------------
                                       Neil C. Kitchen
                                       Director, Vice President

                                       23
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors of
American Soil Technologies, Inc.:

We have audited the  accompanying  consolidated  balance  sheet of American Soil
Technologies,  Inc.  as of  December  31,  2003  and  the  related  consolidated
statements of operations, stockholders' deficit and cash flows for the six month
period  ended   December  31,  2003.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of American  Soil
Technologies,  Inc. as of December 31, 2003,  and the results of its  operations
and cash flows for the six month period ended  December 31, 2003,  in conformity
with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
cash flow deficiencies  from operations and has negative working capital.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also discussed
in Note1.  The financial  statements do not include any adjustments  relating to
the  recoverability  and  classification of asset carrying amounts or the amount
and classification of liabilities that might result should the Company be unable
to continue as a going concern.


/s/EPSTEIN, WEBER & CONOVER, P.L.C.

Scottsdale, Arizona
March 19, 2004

                                      F-1
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                             <C>
ASSETS:
CURRENT ASSETS
  Cash and cash equivalents                                                     $     31,720
  Accounts receivable, net of allowance of doubtful accounts of $4,107                28,308
  Employee advances                                                                    4,500
  Inventory                                                                          180,463
  Prepaid expenses and other current assets                                           19,170
                                                                                ------------
      Total current assets                                                           264,161
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $18,175                   485,082
DEPOSITS AND OTHER ASSETS                                                             14,031
INTELLECTUAL PROPERTY, net of accumulated
  amortization of $187,370                                                           491,847
RELATED PARTY NOTES RECEIVABLE                                                        60,000

                                                                                ------------
      TOTAL ASSETS                                                              $  1,315,121
                                                                                ============

LIABILITIES AND STOCKHOLDERS' DEFICIT:
CURRENT LIABILITIES:
  Accounts payable                                                              $    255,531
  Accrued liabilities                                                                  8,933
  Notes payable - current portion                                                      7,470
  Capital lease obligation - current portion                                           8,010
  Debentures payable to related parties - current portion                             83,022
                                                                                ------------
      Total current liabilities                                                      362,966
NOTES PAYABLE - long-term portion                                                     41,072
CAPITAL LEASE OBLIGATION - long-term portion                                          10,000
NOTES PAYABLE TO RELATED PARTIES                                                     979,000
DEBENTURES PAYABLE TO RELATED PARTIES - long term portion                            722,034
                                                                                ------------
      Total liabilities                                                            2,115,072
                                                                                ------------
STOCKHOLDERS' DEFICIT:
  Series A preferred stock, $0.50 par value, 10,000,000 shares
   authorized, 4,763,699 shares issued and outstanding                             2,381,849
  Common stock, $0.001 par value, 100,000,000 shares authorized,
    9,096,585 shares issued and outstanding                                            9,097
  Paid in capital                                                                  7,069,252
  Accumulated deficit                                                            (10,260,149)
                                                                                ------------
      Total stockholders' deficit                                                   (799,951)
                                                                                ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $  1,315,121
                                                                                ============
</TABLE>

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

                                      F-2
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003 AND YEAR ENDED JUNE 30, 2003
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                             Six Months Ended        Twelve Months Ended
                                             December 31, 2003         June 30, 2003
                                             -----------------         -------------
<S>                                             <C>                     <C>
NET REVENUES                                    $   101,924             $   479,339
                                                -----------             -----------

COST OF GOODS SOLD                                   92,359                 344,206
                                                -----------             -----------
GROSS INCOME                                          9,565                 135,133
                                                -----------             -----------
OPERATING EXPENSES
  General and administrative                        490,199                 909,530
  Sales and marketing                                60,341                  50,117
  Research and development                           41,935                  74,959
  Amortization                                       23,421                  39,954
                                                -----------             -----------
      Total operating expenses                      615,896               1,074,560
                                                -----------             -----------
OPERATING LOSS                                     (606,331)               (939,427)
                                                -----------             -----------
OTHER (INCOME)/EXPENSE
  (Gain)/loss on disposition of assets                  912                    (905)
  Interest expense and related costs                 54,048                 138,268
  Interest income                                        --                    (174)
                                                -----------             -----------
      Total other (income)/expense                   54,960                 137,189
                                                -----------             -----------
LOSS BEFORE INCOME TAXES AND
 DISCONTINUED OPERATIONS                           (661,291)             (1,076,616)
                                                -----------             -----------

INCOME TAX  PROVISION                             2,283,000                  23,000
                                                -----------             -----------

LOSS BEFORE DISCONTINUED OPERATIONS              (2,944,291)             (1,099,616)
                                                -----------             -----------

GAIN ON DISCONTINUED OPERATIONS                          --                  63,743
                                                -----------             -----------
NET LOSS                                         (2,944,291)            $(1,035,873)
                                                ===========             ===========
NET INCOME PER SHARE:
BASIC:
  Loss from continuing operations               $     (0.32)            $     (0.12)
  Income from discontinued operations                    --                    0.01
                                                -----------             -----------
                                                $     (0.32)            $     (0.11)
                                                ===========             ===========
DILUTED:
  Loss from continuing operations               $     (0.32)            $     (0.12)
  Income from discontinued operations                    --                    0.01
                                                -----------             -----------
                                                $     (0.32)            $     (0.11)
                                                ===========             ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                           9,096,585               9,208,568
                                                ===========             ===========
  Diluted                                         9,096,585               9,208,568
                                                ===========             ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE
SIX MONTHS ENDED DECEMBER 31, 2003 AND YEAR ENDED JUNE 30, 2003
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                 Common Stock                    Preferred A
                                             Shares         Amount         Shares            Amount
                                             ------         ------         ------            ------
<S>                                       <C>             <C>            <C>            <C>
BALANCE JULY 1, 2002                       9,258,782       $ 9,259               --       $        --

  Debt conversion to preferred stock                                      4,763,699         2,381,849

  Cancellation of common shares             (162,197)         (162)

  Net loss
                                          ----------       -------       ----------       -----------

BALANCE JUNE 30, 2003                      9,096,585         9,097        4,763,699         2,381,849

 Net loss
                                          ----------       -------       ----------       -----------

BALANCE DECEMBER 31, 2003                  9,096,585       $ 9,097        4,763,699       $ 2,381,849
                                          ==========       =======       ==========       ===========

                                            Paid-in       Accumulated
                                            Capital         Deficit              Total
                                            -------         -------              -----
BALANCE JULY 1, 2002                      $7,125,859      $ (6,279,985)      $   855,133

  Debt conversion to preferred stock                                           2,381,849

  Cancellation of common shares              (56,607)                            (56,769)

  Net loss                                                  (1,035,873)       (1,035,873)
                                          ----------      ------------       -----------

BALANCE JUNE 30, 2003                      7,069,252        (7,315,858)        2,144,340

 Net loss                                                   (2,944,291)       (2,944,291)
                                          ----------      ------------       -----------

BALANCE DECEMBER 31, 2003                 $7,069,252      $(10,260,149)      $  (799,951)
                                          ==========      ============       ===========
</TABLE>
    The accompanying notes are an integral part of these financial statements

                                      F-4
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH
PERIOD ENDED DECEMBER 31, 2003 AND YEAR ENDED JUNE 30, 2003
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           Six Months Ended        Twelve Months Ended
                                                           December 31, 2003          June 30, 2003
                                                           -----------------          -------------
<S>                                                           <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                    $(2,944,291)            $(1,035,873)
  Adjustments to reconcile net loss to net cash
   used by operating activities:
    Depreciation and amortization                                  51,902                  56,931
    Gain/(loss) on disposal of assets                                 912                 (64,648)
    Cancellation of common shares                                      --                 (56,769)
    Deferred income taxes                                       2,283,000                  23,000
  Changes in assets and liabilities:
    Accounts receivable                                           103,606                 (55,420)
    Allowance for doubtful accounts                                 4,107                      --
    Receivables from officers and employees                        (3,970)                (60,539)
    Prepaid and other current assets                              (19,170)                 25,000
    Deposits and other assets                                      15,076                   9,641
    Inventory                                                    (161,829)                 66,879
    Accounts payable                                              131,639                  85,805
    Accrued liabilities                                             2,492                    (921)
                                                              -----------             -----------
        Net cash used by operating activities                    (536,526)             (1,006,914)
                                                              -----------             -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases and cash disbursed for equipment                     (249,789)               (149,751)
  Proceeds from sale of assets                                         --                  93,140
                                                              -----------             -----------
        Net cash used for investing activities                   (249,789)                (56,611)
                                                              -----------             -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of debt                                  827,000               1,044,849
  Principal repayments on convertible debentures                  (11,071)                 (8,873)
  Principal repayments on capital lease obligation                (13,500)                     --
                                                              -----------             -----------
        Net cash provided by financing activities                 802,429               1,035,976
                                                              -----------             -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   16,114                 (27,549)

CASH AND CASH EQUIVALENTS, beginning of year                       15,606                  43,155
                                                              -----------             -----------

CASH AND CASH EQUIVALENTS, end of year                        $    31,720             $    15,606
                                                              ===========             ===========
</TABLE>

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

                                      F-5
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

STATEMENT OF CASH FLOWS, (CONTINUED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003 AND YEAR ENDED JUNE 30, 2003
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                  Six Months Ended      Twelve Months Ended
                                                  December 31, 2003        June 30, 2003
                                                  -----------------        -------------
<S>                                                   <C>                   <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest Paid                                       $   44,502            $  135,851
                                                      ==========            ==========


                                                  Six Months Ended      Twelve Months Ended
                                                  December 31, 2003        June 30, 2003
                                                  -----------------        -------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:

Vehicle acquired with note payable                    $   48,452            $        0
                                                      ==========            ==========

Equipment acquired under capital lease                $   31,510            $        0
                                                      ==========            ==========

Conversion of debt to preferred stock                 $        0            $2,381,849
                                                      ==========            ==========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003 AND YEAR ENDED JUNE 30, 2003


1. ORGANIZATION AND BASIS OF PRESENTATION

    American  Soil  Technologies,  Inc.  (the  "Company"),  formally  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 soil amendments
    to the agricultural  community.  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  also  has
    exclusive  license  rights  to  the  use  of  patented  polymer  application
    techniques.

    GOING CONCERN AND MANAGEMENT'S PLANS

    The Company has sustained  significant losses and has an accumulated deficit
    of $10,260,149. Also, at December 31, 2003, the Company has negative working
    capital of  $98,805.  The  ability of the  Company  to  continue  as a going
    concern is dependent upon obtaining  additional  capital and financing,  and
    generating  positive cash flow from operations.  The Company intends to seek
    additional capital either through debt or equity offerings and is attempting
    to increase sales volume and operating margins to achieve profitability. The
    financial  statements  do  not  include  any  adjustments  relating  to  the
    recoverability  and  classification  of asset carrying amounts or the amount
    and  classification  of liabilities  that might result should the Company be
    unable to continue as a going concern.

2. DISCONTINUED OPERATIONS

    In June 2001, the Company sold its book of business for soil  remediation in
    San Diego, California. In connection with the discontinuance of this segment
    of the  business in the year ended June 30,  2002,  the  Company  incurred a
    charge of $369,601  related to the  write-down to estimated net market value
    of the idle  plant  assets.  In the year ended June 30,  2003,  the  Company
    recognized a gain on the sale of the idle plant assets of $63,743. There was
    no further  activity related to this  discontinued  segment in the six month
    period ended December 31, 2003.

3. 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.

                                      F-7
<PAGE>
    ACCOUNTS RECEIVABLE:  The Company utilizes the allowance method to provide a
    reserve for uncollectible 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 7 years.
    Depreciation  expense was $4,371 and $16,977 for the six month  period ended
    December 31, 2003 and the year ended June 30, 2003, respectively.

    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 carrying value of these assets is periodically  evaluated for
    impairment.

    ADVERTISING: The Company expenses advertising costs as incurred. Advertising
    expense was $43,449 and $29,688 for the six month period ended  December 31,
    2003 and the year ended June 30, 2003, respectively.

    REVENUE  RECOGNITION:  Revenue  is  recognized  from  the  soil  enhancement
    products upon sale and shipment, or if the sale includes installation,  upon
    completion of the installation process and acceptance by the customer.

    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.

    FINANCIAL  INSTRUMENTS:  Financial  instruments  consist  primarily of cash,
    accounts  receivable,  notes  receivable,  and  obligations  under  accounts
    payable,  convertible  debentures and notes payable. The carrying amounts of
    cash, accounts receivable and accounts payable,  convertible  debentures and
    notes payable  approximate  fair value because of the short term maturity of
    those instruments. The Company has applied certain assumptions in estimating
    these fair values.  The use of different  assumptions or  methodologies  may
    have a material  effect on the  estimates of fair values.  The fair value of
    the related party notes receivable and payable cannot be determined  because
    of the  Company's  affiliation  with the  parties  with whom the  agreements
    exist.

    USE OF ESTIMATES: The preparation of financial statements in conformity with
    generally  accepted  accounting   principles  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 period. Actual results could differ from those
    estimates.

                                      F-8
<PAGE>
    Significant  estimates  made  in  connection  with  the  preparation  of the
    accompanying financial statements include the carrying value of accounts and
    notes   receivable,   the  carrying  value  of  the  patented  licenses  and
    self-constructed machinery.

    STOCK-BASED  COMPENSATION:  In December 2002, the FASB approved SFAS No. 148
    ACCOUNTING  FOR  STOCK-BASED  COMPENSATION  - TRANSITION AND DISCLOSURE - AN
    AMENDMENT  OF FASB  STATEMENT  NO.  123.  SFAS No. 148  amends  SFAS No. 123
    ACCOUNTING FOR STOCK-BASED  COMPENSATION to provide  alternative  methods of
    transition  for a  voluntary  change  to the  fair  value  based  method  of
    accounting for stock-based employee compensation.  In addition, SFAS No. 148
    amends the  disclosure  requirements  of SFAS No.  123 to require  prominent
    disclosures in both annual and interim financial statements about the method
    of accounting used on reported results. The provisions of these SFAS's allow
    companies  to account  for  stock-based  compensation  either  under the new
    provisions or under the provisions of APB No. 25 ACCOUNTING FOR STOCK ISSUED
    TO  EMPLOYEES,  but requires pro forma  disclosure  in the  footnotes to the
    financial  statements as if the  measurement  provisions of SFAS No. 123 had
    been  adopted.  The  provisions  of SFAS No. 148 are effective for financial
    statements  for the year ended June 30,  2003.  The Company has  implemented
    SFAS  No.  148.  The  Company  will  continue  to  account  for  stock-based
    compensation  using the methods and  provisions  of APB No. 25. As a result,
    there is no effect on the results of the Company for any period presented.

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

    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: In May 2003, the FASB issued SFAS
    No. 150, "ACCOUNTING FOR CERTAIN FINANCIAL  INSTRUMENTS WITH CHARACTERISTICS
    OF BOTH  LIABILITIES  AND EQUITY."  SFAS No. 150 is effective  for financial
    instruments  entered into or modified  after May 31, 2003,  and otherwise is
    effective at the beginning of the first interim period  beginning after June
    15, 2003.  SFAS No. 150 requires  the  classification  as a liability of any
    financial  instruments with a mandatory redemption feature, an obligation to
    repurchase equity shares, or a conditional  obligation based on the issuance
    of a variable  number of its equity  shares.  The Company  does not have any
    financial  instruments  with a  mandatory  redemption  feature.  The Company
    believes the adoption of SFAS No. 150 will not have a material effect on the
    Company's financial statements.

    In November 2002, the FASB issued FASB  Interpretation No. 45,  "GUARANTOR'S
    ACCOUNTING AND DISCLOSURE  REQUIREMENTS FOR GUARANTEES,  INCLUDING  INDIRECT
    GUARANTEES  OF  INDEBTEDNESS  OF  OTHERS"  (FIN 45).  FIN 45  clarifies  the
    requirements  for a  guarantor's  accounting  for and  disclosure of certain
    guarantees  issued and  outstanding.  The  initial  recognition  and initial
    measurement  provisions of FIN 45 are  applicable  to  guarantees  issued or
    modified after December 31, 2002. The disclosure  requirements of FIN 45 are
    effective for financial  statements  for periods  ending after  December 15,
    2002.  The  adoption  of FIN 45 did not  have a  significant  impact  on the
    Company's financial statements.

    In January  2003,  the FASB  issued FIN No. 46,  "CONSOLIDATION  OF VARIABLE
    INTEREST  ENTITIES"  (FIN 46).  FIN No. 46 states that  companies  that have
    exposure to the economic risks and potential  rewards from another  entity's
    assets and activities  have a controlling  financial  interest in a variable
    interest entity and should  consolidate  the entity,  despite the absence of

                                      F-9
<PAGE>
    clear  control  through  a  voting  equity   interest.   The   consolidation
    requirements  apply to all variable  interest entities created after January
    31, 2003. For variable  interest  entities that existed prior to February 1,
    2003,  the  consolidation  requirements  are effective for annual or interim
    periods  beginning after June 15, 2003.  Disclosure of significant  variable
    interest  entities is  required in all  financial  statements  issued  after
    January 31, 2003,  regardless of when the variable interest was created. The
    Company is  presently  reviewing  arrangements  to determine if any variable
    interest  entities exist but does not anticipate the adoption of FIN 46 will
    have a significant impact on the Company's financial statements.

    RECLASSIFICATIONS:  Certain reclassifications have been made to the June 30,
    2003  financial  statements  in order to conform to the  December  31,  2003
    presentation.

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. The carrying value of these assets is periodically  evaluated for
    impairment.  The  amortization  expense  was $23,421 and $39,954 for the six
    month  period  ended  December  31,  2003 and the year ended June 30,  2003,
    respectively.  The following  summarizes the estimated  future  amortization
    expense of the intellectual property:

            Year                     Amount
            ----                     ------
            2004                    $ 46,843
            2005                      46,843
            2006                      46,843
            2007                      46,843
            2008                      46,843
         Thereafter                  257,632
                                    --------
           Total                    $491,847
                                    ========

5. PROPERTY AND EQUIPMENT

    Property and equipment consisted of the following at December 31, 2003:

         Machinery                                             $ 442,994
         Vehicle                                                  44,615
         Office furnishings, fixtures and equipment               15,648
                                                               ---------
           Total                                                 503,257
           Less accumulated depreciation                         (18,175)
                                                               ---------

                  Property and equipment, net                  $ 485,082
                                                               =========

    Included in the machinery category is approximately  $380,000 of capitalized
    costs associated with the construction of a demonstration injection machine.
    The Company intends to place the machine in service in the fiscal year ended
    December 31, 2004 and  therefore,  depreciation  had not yet commenced as of
    December 31, 2003.

                                      F-10
<PAGE>
6. NOTES PAYABLE AND LINE OF CREDIT

    Notes payable at December 31, 2003 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, 2005.        $ 250,000

    Convertible  debenture to related party,  original balance of
    $250,000,   interest  at  8%  per  annum,   interest  payable
    quarterly.  Principal is  convertible  at a rate of $0.50 for
    one share of common stock. Principal due March 27, 2005.            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, 2004.           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, 2004.           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 June 22, 2004.              20,000

    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.                                                              235,056

    Note payable to related party,  original balance of $152,000,
    interest at related  party's City National Bank lending rate,
    4% at December 31, 2003.  The note is callable at any time by
    holder.                                                             152,000

    Note payable to related party,  original balance of $827,000,
    interest at related  party's City National Bank lending rate,
    4% at December 31, 2003.  The note is callable at any time by
    holder.                                                             827,000

    Note  payable to  lending  institution,  original  balance of
    $48,542,   interest  at  2.9%  per  annum.  Requires  monthly
    principal  and  interest   payments  of  $736  through  2009.
    Collateralized by vehicle.                                           48,542
                                                                     ----------
       Total                                                          1,832,598

       Less current portion                                             (90,492)
                                                                     ----------
       Total long-term portion                                       $1,742,106
                                                                     ==========

                                      F-11
<PAGE>
    Subsequent to December 31, 2003, the Company  obtained six month  extensions
    on the  debentures  due in February 2004 under the same terms and conditions
    of the original debentures.

    Future maturities of principal at December 31 are as follows:

         2004                                                $   90,492
         2005                                                   522,067
         2006                                                    23,794
         2007                                                    25,685
         2008                                                    27,756
         Thereafter                                           1,142,804
                                                             ----------

            Total                                            $1,832,598
                                                             ==========

    The notes  payable of $827,000 and  $152,000 are held by entities  that hold
    approximately  67% of the Company's  common stock.  The Company has received
    assurances  from the  holders of these notes that there is no intent to call
    the obligations in the next year. Accordingly, the debt is not classified as
    current.

7. PROVISION FOR INCOME TAXES

    Deferred  income taxes reflect the net tax effects of temporary  differences
    between  the  carrying  amounts  of assets  and  liabilities  for  financial
    reporting purposes and the amounts used for income tax purposes.

    Income  taxes for  periods  ended  December  31,  2003 and June 30,  2003 is
    summarized as follows:

                                            December 31, 2003      June 30, 2003
                                            -----------------      -------------
    Current Benefit                            $  (249,375)         $  (486,243)
    Deferred Provision                           2,532,375              509,243
                                               -----------          -----------

    Net income tax provision                   $ 2,283,000          $    23,000
                                               ===========          ===========

    A  reconciliation  of the  differences  between the  effective and statutory
    income tax rates ended December 31, 2003 and June 30, 2003, is as follows:

<TABLE>
<CAPTION>
                                                     December 31, 2003           June 30, 2003
                                                     -----------------           -------------
<S>                                                <C>              <C>       <C>            <C>
    Federal                                        $  (224,839)     (34)%     $(344,000)     (34)%
    State                                              (39,677)      (6)%       (45,000)      (6)%
    Additional valuation allowance                     257,613       39%        412,000       42%
    Increase valuation allowance for prior year
     recognition of deferred income tax asset        2,283,000      345%
    Other                                                6,904        1%
                                                   -----------     ----       ---------      ---

    Effective rate                                 $ 2,283,000      345%      $  23,000        2%
                                                   ===========     ====       =========      ===
</TABLE>

                                      F-12
<PAGE>
    At December 31, 2003,  deferred  income tax assets  totaling  $3,672,000 was
    comprised of  $3,659,000  related to the tax effect of the federal and state
    net operating  losses and $13,000 related to differences in the book and tax
    bases of accounts  receivable and intangible  assets.  At December 31, 2003,
    there was a deferred income tax liability of $5,000 relating to differences
    in the book and tax bases of property and equipment. The valuation allowance
    was increased by a total of $2,540,613  during the period ended December 31,
    2003.  Of that  increase,  $257,613 was related to the income tax effects of
    matters occurring in the current period and $2,283,000  relating to a change
    in management's  estimate  relative to the probability of the utilization of
    the net  operating  carryforwards.  Management  determined  that because the
    Company  has 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. At December
    31,  2003,  the  Company had federal net  operating  loss  carryforwards  of
    $10,124,000  that  expire  from 2008  through  2023 and state net  operating
    carryforwards of $1,217,000 expiring from 2006 through 2008.

8. LEASES

    The Company leases its office space and certain  equipment  under short term
    or month to month  operating  leases.  Rent  expense  under these leases was
    $11,032 and $60,621 for the six month period ended December 31, 2003 and the
    year ended June 30, 2003, respectively.

    The  Company  also  leases  certain  equipment  under  capital  leases.  The
    following presents future minimum lease payments under the capital leases by
    year and the present  value of minimum  lease  payments  as of December  31,
    2003:

    2004                                                             $12,776
    2005                                                              11,711
                                                                     -------
          Total                                                       24,487
    Less: Amount representing interest                                (6,477)
                                                                     -------
          Total payments, net of interest                             18,010
    Less: Current portion                                             (8,010)
                                                                     -------
          Total long term minimum lease payments                     $10,000
                                                                     =======

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

                                                                   December 31,
                                                                      2003
                                                                   ------------

    Machinery and equipment                                          $ 30,000
    Less: Accumulated amortization                                     (5,584)
                                                                     --------
                                                                     $ 24,416
                                                                     ========

                                      F-13
<PAGE>
9. STOCKHOLDERS' DEFICT

    COMMON STOCK

    The Company has  100,000,000  shares  authorized.  At December 31, 2003, the
    Company had 9,096,585  shares of $0.001 par value common stock  outstanding.
    During the year ended June 30, 2003, the Company cancelled 167,197 shares of
    common stock.

    SERIES A CONVERTIBLE PREFERRED STOCK

    The Company has 10,000,000  shares of Series A Convertible  Preferred  Stock
    authorized.  At December 31, 2003, the Company had 4,763,699 shares of $0.50
    stated value Series A preferred stock issued and  outstanding.  On March 31,
    2003, the Company issued 4,763,699 shares of Series A convertible  preferred
    stock for the conversion of debt in the principal amount of $2,381,849.  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
    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.

10. NET LOSS PER SHARE

    Net loss per share is calculated using the weighted average number of shares
    of common stock outstanding  during the year.  Preferred stock dividends are
    subtracted  from the net income to determine the amount  available to common
    shareholders.  There  were no  preferred  stock  dividends  in the six month
    period  ended  December  31,  2003 and the year  ended  June 30,  2003.  The
    following  securities  have  been  excluded  from  the  calculation  because
    inclusion of such would be anit-dilutive:

                                           December 31, 2003     June 30, 2003
                                           -----------------     -------------
    Convertible preferred stock                4,763,699           4,763,699
    Common stock options                       1,310,000           1,310,000
    Convertible debt                           1,218,352           1,222,042
                                               ---------           ---------
                                               7,292,051           7,295,741
                                               =========           =========

                                      F-14
<PAGE>
    The following  presents the  computation of basic and diluted loss per share
    from continuing operations:

<TABLE>
<CAPTION>
                                               December 31, 2003                        June 30, 2003
                                       ---------------------------------       --------------------------------
                                                                    Per                                    Per
                                       Income       Shares         Share       Income         Shares      Share
                                       ------       ------         -----       ------         ------      -----
<S>                                 <C>             <C>           <C>        <C>             <C>         <C>
    Net  Loss                       $(2,944,291)                             $(1,035,873)

    Gain on discontinued
    operations                                0                                   63,743
    Preferred stock dividends                 0                                       --
                                    -----------                              -----------
    Loss available to common
    Stockholders                    $(2,944,291)                             $(1,099,616)
                                    ===========                              ===========
    BASIC EARNINGS PER SHARE:
    Loss available to common
    stockholders                    $(2,944,291)    9,096,585     $(0.32)    $(1,099,616)    9,208,568   $(0.12)
                                    ===========                   ======     ===========                 ======

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

    DILUTED EARNINGS PER SHARE      $(2,944,291)    9,096,585     $(0.32)    $(1,099,616)    9,208,568   $(0.12)
                                    ===========                   ======     ===========                 ======
</TABLE>

11. RELATED PARTY TRANSACTIONS

    During the six month period ended  December 31, 2003 and the year ended June
    30, 2003, the Company entered into the related party transactions with Board
    members, officers and affiliated entities as described below:

    DIRECTORS & OFFICERS

    Neil C. Kitchen, a Director and Vice President, has a $25,000 Debenture with
    the Company  which is  convertible  at $0.50 per share with interest at 10%,
    maturing in the third calendar  quarter of 2005.  Interest  incurred on this
    debenture was $1,000 during the year ended December 31, 2003.

    The holders of the two (2) $25,000  convertible  debentures and the $235,056
    convertible  debenture  are  personally  related  to Louis  Visco.  Interest
    incurred on this  debenture was $14,000  during the year ended  December 31,
    2003.

    AFFILIATED ENTITIES

    Louis  Visco,  Director,  is an owner and director of FLD  Corporation,  the
    holder of two (2) $250,000  Debentures  convertible  at $0.50 per share with
    interest at 10%, maturing in the third calendar quarter of 2005 and $827,000
    in notes  payable.  Interest  incurred on these  debentures  was $20,000 and
    $7,800 respectively during the year ended December 31, 2003.

    Louis  Visco is also an owner of the  Benz  Disposal  Company,  which is the
    holder  of  notes  payable  totaling  $152,000.  Interest  incurred  on this
    debenture was $3,000 during the year ended December 31, 2003.

    The Company  leases  office space from an entity owned by Louis Visco.  Rent
    paid to this  entity was $5,300  during the six months  ended  December  31,
    2003.

                                      F-15
<PAGE>
12. CONCENTRATIONS

    The Company  maintains  cash balances at banks in  California.  Accounts are
    insured by the Federal  Deposit  Insurance  Corporation  up to $100,000.  At
    December 31, 2003, the Company did not exceed those limits.

    During the six month period ended  December 31, 2003 sales to two  customers
    aggregated to approximately 50% of total sales for the period. Approximately
    78% of the accounts receivable balance at December 31, 2003 was comprised of
    balances due from these two customers.

    The Company has entered  into an agreement  with a supplier  that grants the
    Company  exclusive rights to sell and distribute the supplier's  products in
    the western United States. This supplier's products represent  approximately
    75% of product in inventory and 98% of products sold in the six month period
    ended December 31, 2003.

13. STOCK OPTION PLAN

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

                                      F-16
<PAGE>
    There were no stock options granted, exercised,  forfeited or expired during
    the period ended December 31, 2003. All granted options were fully vested as
    of June 30, 2003. The following summarizes information at December 31, 2003:

<TABLE>
<CAPTION>
                      Options Outstanding                                Options Exercisable
    -----------------------------------------------------     ---------------------------------------
                                         Weighted Average     Weighted                       Weighted
                         Number             Remaining         Average         Number         Average
       Range of      outstanding at      Contractual Life     Exercise    Exercisable at     Exercise
    Exercise Prices  December 31, 2003      (in years)         Price     December 31, 2003    Price
    ---------------  -----------------      ----------         -----     -----------------    -----
<S>   <C>                  <C>                 <C>             <C>            <C>             <C>
      $0.25                300,000             8.75            $0.25          300,000         $0.25
       0.50              1,010,000             8.75             0.50        1,010,000          0.50
      ----------         ---------             ----            -----        ---------         -----
      $0.25-0.50         1,310,000             8.75            $0.44        1,310,000         $0.44
      ==========         =========             ====            =====        =========         =====
</TABLE>

    No  stock-based  employee  compensation  cost is  reflected  in  either  the
    December 31, 2003 or June 30, 2003 income statements, as all options granted
    under these plans had an exercise  price equal to or in excess of the market
    value of the underlying common stock on the date of the grant. The following
    table  illustrates  the effect in net loss and loss per share if the Company
    had applied the fair value recognition provisions of SFAS No. 123:

<TABLE>
<CAPTION>
                                                Six Month Period Ended      Year Ended
                                                  December 31, 2003       June 30, 2003
                                                  -----------------       -------------
<S>                                                  <C>                   <C>
    Net Loss                                         $(2,944,291)          $(1,035,873)


    Deduct: Stock-based employee
    compensation expense determined under
    the fair value based method, net of tax                    0                     0
                                                     -----------           -----------

    Pro forma net loss                               $(2,944,291)          $(1,035,873)
                                                     ===========           ===========

    Basic earnings per share as recorded             $     (0.32)          $     (0.11)
                                                     ===========           ===========

    Basic earnings per share pro forma               $     (0.32)          $     (0.11)
                                                     ===========           ===========
</TABLE>

    The per share weighted  average fair values of stock options  granted during
    the year  ended June 30,  2003 was $0.12 on the date of the grant  using the
    Black-Scholes  option  pricing  model  with the  following  assumptions:  1)
    Dividend  Yield of 0%, 2) Volatility  Factor of 204%, 3) Risk-Free  Interest
    Rate of 3.38% and 4) Average Expected Option Life of 10 years.

                                      F-17