SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

    For the fiscal year ended December 31, 2005

                                       or

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

    For the transition period from _______________ to _________________

                        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.)

12224 Montague Street, Pacoima, California                         91331
 (Address of Principal Executive Offices)                       (Zip Code)

         Issuer's telephone number, including area code: (818) 899 4686

        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 [ ]

Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

For the year ended December 31, 2005, our revenue was $643,688.

As of March 27, 2006, the number of shares of Common Stock outstanding was
26,640,174. The aggregate market value of our Common Stock held by
non-affiliates of the registrant as of March 27, 2006 was approximately
$1,135,303 (based upon 3,784,344 shares at $0.30 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, 1998, filed on
September 16, 1998; (iii) Form 10-QSB for the quarterly period ended March 31,
2000, filed on May 15, 2000; (iv) Form 10-KSB for the fiscal year ended June 30,
2000, filed on September 27, 2000 (File No. 000-22855); (v) Form 10-KSB for the
fiscal year ended June 30, 2002, filed on September 30, 2002; (vi) Form 10-QSB
for the quarterly period ended September 30, 2002, filed on November 13, 2002;
(vii) Form 10-QSB for the quarterly period ended March 31, 2004, filed on May 5,
2004; (viii) Form 10-QSB for the quarterly period ended September 30, 2004,
filed on November 15, 2004; (ix) Form 10-KSB for the fiscal year ended December
31, 2004, filed on March 31, 2005; (x) Form 10-QSB for the quarterly period
ended March 31, 2005, filed on May 20, 2005; (xi) Form 10-QSB for the quarterly
period ended June 30, 2005, filed on August 15, 2005; and (xii) Form 10-QSB for
the quarterly period ended September 30, 2005, filed on November 14, 2005 are
incorporated in Part III, Item 13.
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

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

ITEM 2   DESCRIPTION OF PROPERTY.............................................. 6

ITEM 3   LEGAL PROCEEDINGS.................................................... 7

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................. 7

ITEM 5   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTTERS............ 7

ITEM 6   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS........................................... 8

ITEM 7   FINANCIAL STATEMENTS.................................................12

ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE............................................12

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

ITEM 8B  OTHER INFORMATION....................................................13

ITEM 9   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT...................13

ITEM 10  EXECUTIVE COMPENSATION...............................................15

ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          AND RELATED STOCKHOLDER MATTERS.....................................19

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

ITEM 13  EXHIBITS.............................................................21

ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES...............................23

SIGNATURES ...................................................................24
<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. 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

In June 2001, we sold our book of business for soil remediation in San Diego,
California. In May 2002, we decided to discontinue the soil remediation
business. In connection with the discontinuance of this segment of the business
in the year ended June 30, 2002, we 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

We develop, manufacture and market cutting-edge technology that decreases the
need for water and improves the soil in the "Green Industry" consisting of
agriculture, turf and horticulture. Our products enhance growing environments
and reduce the environmental damage caused by common growing practices.

We manufacture three primary products: Agriblend(R), a patented soil amendment
developed for agriculture; Soil Medic(TM), a patented slow release liquid
fertilizer; and Nutrimoist(R), developed for homes, parks, golf courses and
other turf related applications.

DISTRIBUTION

We market our products primarily in the United States.

We are adding sales representatives and distributors in both the agriculture and
turf industries.

                                       1
<PAGE>
On June 27, 2002, we 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 us.

On August 15, 2002, we entered into a Distribution Agreement with Gigot Agra
Services of Garden City, Kansas. Gigot Agra aggressively sells our products in
Kansas, Oklahoma, Nebraska, Colorado and the northern portions of Texas and New
Mexico. This distributor has recently changed its name to Gigot Aqua Services.

On August 20, 2002, we entered into an agreement with Stockhausen, Inc. This
agreement granted us 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. We have 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 us 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 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, we entered into an exclusive Distributorship Agreement
with JT Water Management LLC allowing us 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, we 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 June 26, 2003, we entered into a Distributorship Agreement with The Pacific
Tree Company of Bakersfield California. Pursuant to the Agreement, Pacific Tree
became the exclusive distributor of our products for the Paulownia Megafolia
Tree in the United States.

                                       2
<PAGE>
On July 31, 2004, we entered into a Dealer Agreement with Dick Hansen
Distributing of Pasco, Washington to primarily sell our cross-linked polymer in
the agriculture and specialty industries in the Northwestern United States.

On August 31, 2004, we entered into a Dealer Agreement with HRE of Benton City,
Washington to sell our linear polymers in the agriculture and irrigation
industries located in the Northwestern United States.

On October 15, 2004, we entered into a Sales and Marketing Agreement with
Spectrum Advisors, LLC of La Palma, California. Spectrum will primarily serve
the states of California, Washington and Oregon and will concentrate on the
retail horticulture industry.

On November 19, 2004, we entered into a Dealer Agreement with Donald Weishuhn of
Eola, Texas. Mr. Weishuhn will primarily serve the state of Texas in an area
from south of Lubbock to the Dallas area.

On December 2, 2004, we entered into a marketing agreement with West Coast
Fairways, located in Woodland Hills, California. West Coast Fairways will
concentrate on the sale of American Soil Technology's Nutrimoist(R) system in
turf applications throughout California utilizing the M-216 Polymer Injector.

On January 10, 2005, we entered into a Dealer Agreement with Ag Pro Tech, Inc. a
Minnesota Corporation, with its principal location in Grand Forks, Minnesota. Ag
Pro will primarily distribute the Company's products to Eastern North Dakota and
Western Minnesota.

On February 18, 2005, we entered into an Exclusive Worldwide Marketing Agreement
with the inventors of a unique and revolutionary new product to be used in the
agriculture, irrigation and water clarifying industries. The inventors of this
new product are Richard Hansen and Richard Roos, two of our distributors who
developed the Sircle Saver Sack(TM) used to economically enhance the function of
center pivots. We also has the same rights to a sister product known as the Soil
Saver Sack(TM) that is still in development.

On March 2, 2005, we entered into a Dealer Agreement with Midwest Industrial
Supply, Inc. to distribute its unique and environmentally certified dust and
erosion control products known as Soil-Sement(R) and Envirokleen(R). The U S
Environmental Protection Agency Environmental Technology Verification Program
(USEPA ETV) has verified both products. In addition, the California Air
Resources Board (CARB) and the Canadian ETV have also certified Soil-Sement. The
two products protect the environmental ecosystem whereby, Soil-Sement is a
polymer based dust and erosion control product and Envirokleen is a
patent-pending formulated synthetic organic dust suppressant.

On May 6, 2005, we entered into a Dealer Agreement with Reinke Pasco, Inc. to
act as a non-exclusive dealer of our products in the State of Washington for
three years.

On June 28, 2005, we entered into a Dealer Agreement with The Kern Company to
act as a non-exclusive dealer of our products in the State of Washington for
three years.

                                       3
<PAGE>
On July 13, 2005, we entered into an exclusive Representation Agreement with
Pure Chemicals based in Israel, a nation where all of our patents have been
filed.

On October 4, 2005, we entered into a strategic alliance agreement with UTEK
Corporation (AMEX:UTK; LSE-AIM:UTKA), an innovative technology transfer company.
UTEK will deliver leading edge technologies in agriculture and horticulture to
us.

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 (the "M-216") 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. The M-216 has been successfully
demonstrated and additional machines are being built.

On December 7, 2005, we took delivery of our second M-216 Injector machine. The
new machine has all the improvements as determined through the testing of the
prototype.

On March 21, 2006, we acquired Advanced Fertilizer Technologies, Inc., a
subsidiary of UTEK Corporation, in a stock transaction. Advanced Fertilizer
Technologies, Inc. contains US Patent, 5,443,613. The technology provides a
cost-effective method for producing a slow release fertilizer from plant
nutrients containing organic material and waste.

COMPETITION

There is no direct competition for our 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 procedure which is more time consuming and accordingly more
expensive.

There is some competition for Extend(TM) however we have not as yet found a
higher quality liquid linear polymer product.

We are not aware of any competition to Nutrimoist(R) other than from our
manufacturer(s) who would have to use our polymer to manufacture the product
pursuant to our agreement.

                                       4
<PAGE>
The newly acquired slow release fertilizer does not seem to have competition at
this time.

SOURCES AND AVAILABILITY OF RAW MATERIAL AND PRINCIPAL SUPPLIERS

Our 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 our products are readily available
commercially throughout the world. Agriblend(R) products are custom blended in
accordance with our specifications at a blending facility located near Truth or
Consequences, New Mexico. Our warehouse facilities are located in Phoenix,
Arizona and Pacoima, California. Nutrimoist(R)L is blended by us through
contract blenders and is a combination of different formulations, which include
our polymer products. Two licensees under our patent manufacture our liquid slow
release fertilizer. Custom blending of Soil Medic, as needed, is performed by us
at our facility in Valley Springs, California

DEPENDENCE ON MAJOR CUSTOMERS

We are not dependent on any one customer for a substantial portion of our sales
of any product.

INTELLECTUAL PROPERTY

PATENTS

We have four patents on the M-216 machine designed to install our product
Nutrimoist L(R) into mature turf.

On March 21, 2006 we acquired the US Patent on a slow release liquid fertilizer
through our acquisition of Advanced Fertilizer Technologies, Inc.

We have 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."

We have exclusive worldwide marketing rights to the patent pending linear
polymer product known as the Sircle Saver Sack(TM).

TRADEMARKS

We own registered trademarks on the names, Agriblend(R) and Nutrimoist(R).
Trademark applications are pending with the United States Patent and Trademark
Office on Soil Medic(TM) and Soil Therapy(TM) which are being assigned to us by
their owner.

                                       5
<PAGE>
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 of the polymers we use are well below
the maximum monomer standard.

EFFECT OF ANY EXISTING OR PROPOSED GOVERNMENT REGULATIONS

Not applicable, see "Government Approval" above.

RESEARCH AND DEVELOPMENT COSTS

We spent $149,757 on research and development during the year ended December 31,
2005 as compared to $154,599 spent on research and development during the year
ended December 31, 2004.

COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS

We provide Material Safety Data Sheets on all components of our product line and
comply with labeling requirement for our products. In addition, we comply with
EPA regulations applicable to monomer content in its polymer additives (no
greater than five-hundredths percent (0.05%)). We believe that our 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. We do not believe that such compliance will have
a material impact on our capital expenditures, future earnings and competitive
position. No material capital expenditures for environmental control equipment
presently are planned.

EMPLOYEES

As of the date hereof, we have ten full-time employees and two part-time
employees. We hire independent contractors on an "as needed" basis only. We have
no collective bargaining agreements with our employees. We believe that our
employee relationships are satisfactory.

ITEM 2. DESCRIPTION OF PROPERTY

On April 1, 2004, we entered into a Sublease Agreement to sublet 923.50 square
feet located at a facility in Pacoima, California. The majority shareholder of
the sublessor is a related party to us. All of our operations are conducted from
this facility which requires monthly rental payments of approximately $554. The
Sublease Agreement terminates on December 31, 2008. We also rent storage space
in Tucson and Phoenix, Arizona for a minimum amount of approximately $200 per
month. On February 20, 2006 we assumed a commercial lease on 2,000 square feet
of industrial property in Valley Springs, California. This facility is used to
store equipment and special blend Soil Medic.

                                       6
<PAGE>
ITEM 3. LEGAL PROCEEDINGS

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

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

None.

                                     PART II

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

MARKET FOR COMMON EQUITY

Our common stock is currently quoted on the Over-The-Counter Bulletin Board
under the Symbol "SOYL." Set forth below is the trading history of our common
stock without retail mark-up, mark-down or commissions:

                                                  High          Low
                                                  ----          ---
2004
     First Quarter.....................           0.52         0.23
     Second Quarter....................           0.51         0.37
     Third Quarter.....................           0.43         0.23
     Fourth Quarter....................           1.05         0.23

2005
     First Quarter.....................           0.85         0.36
     Second Quarter....................           0.55         0.35
     Third Quarter.....................           0.63         0.30
     Fourth Quarter....................           0.40         0.21

On March 27, 2006, the closing sale price was $0.30.

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

HOLDERS

As of March 27, 2006, there were 301 shareholders holding certificated
securities and approximately 414 shareholders currently listed in the Depository
Trust Company as holding shares in brokerage accounts. Our transfer agent is
Atlas Stock Transfer, 5899 South State, Murray, Utah 84107.

DIVIDENDS

We have paid no dividends on our common stock since inception and do not
anticipate or contemplate paying cash dividends in the foreseeable future.

                                       7
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES

On July 7, 2005, Diana Visco, the secretary of the Company, exercised her stock
options and purchased 60,000 shares of common stock at the exercise price of
$0.50 per share. The consideration was $30,000. The Company relied on the
exemption from registration relating to offerings that do not involve any public
offering pursuant to Section 4(2) under the Act and/or Rule 506 of Regulation D
promulgated pursuant thereto. The Company believes that the investor is an
"accredited investor" under Rule 501 under Regulation D of the Act and had
adequate access to information about the Company through the investor's
relationship with the Company.

On January 16, 2006, FLD Corporation elected to convert its loan to the Company,
which consisted of principal in the amount of $250,000 and interest in the
amount of $51,000 for a total of $301,000, into shares of common stock of the
Company at $0.25 per shares for a total of 1,204,000 shares. The Company relied
on the exemption from registration relating to offerings that do not involve any
public offering pursuant to Section 4(2) under the Act and/or Rule 506 of
Regulation D promulgated pursuant thereto. The Company believes that the
investor is an "accredited investor" under Rule 501 under Regulation D of the
Act and had adequate access to information about the Company through the
investor's relationship with the Company.

On March 1, 2006, the Company issued 75,000 shares of common stock to two new
employees for a total of 150,000 shares in exchange for their trademarks,
proprietary information and customer lists. The property was valued at $36,000,
which was paid by the issuance of the shares. The Company relied on the
exemption from registration relating to offerings that do not involve any public
offering pursuant to Section 4(2) under the Act and/or Rule 504 of Regulation D
of the Act. The Company believes that the investors had adequate access to
information about the Company through the investors' relationship with the
Company.

PURCHASES OF EQUITY SECURITIES

None.

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 our
financial statements, including the notes thereto, appearing elsewhere in this
Report.

THE FOLLOWING INFORMATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS OF OUR
MANAGEMENT. 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

                                       8
<PAGE>
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, we
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, we discontinued operations
of the soil remediation business. Since discontinuing the soil remediation
business, we have devoted substantial resources to the development of strategic
relationships and contracts for the marketing and distribution of our polymer
products and other soil amendment products both nationally and worldwide.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                      Year Ended             Year Ended
                                                   December 31, 2005      December 31, 2004
                                                   -----------------      -----------------
                                                       (Audited)              (Audited)
<S>                                                  <C>                    <C>
Statement of Operations Data:
   Revenue                                           $    643,688           $    597,588
   Loss From Continuing Operations                     (2,075,422)            (1,654,838)
   Gain/(Loss) From Discontinued Operations                     0                      0
   (Net Loss)                                          (2,075,422)            (1,654,838)
   (Continuing Operations) Loss Per Share                   (0.10)                 (0.16)
   (Net Loss) Per Share                                     (0.10)                 (0.16)

Balance Sheet Data:
   Current Assets                                    $    713,877           $    485,435
   Total Property & Equipment, Net                        385,654                414,177
   Patents, Net                                           398,157                445,001
   Deferred Tax Asset                                           0                      0
   Total Assets                                      $  1,559,903           $  1,414,537
   Total Current Liabilities                              667,437                522,474
   Accumulated Deficit                                (13,990,409)           (11,914,987)
   Stockholders' Equity                                  (582,713)            (1,731,605)
</TABLE>

                                       9
<PAGE>
FISCAL YEAR ENDED DECEMBER 31, 2005 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2004 (AUDITED)

REVENUES

Revenues for the fiscal year-ended December 31, 2005 were $643,688 compared to
$597,588 for the fiscal year ended December 31, 2004, a increase of 7%. This
increase is indicative of sales activity from greater number of Company dealers
and based upon customer awareness through advertising.

COST OF SALES

Cost of goods sold increased to $405,426 for the fiscal year ended December 31,
2005 from $376,776 for the fiscal year ended December 31, 2004. The increase in
cost of goods was caused by price increase for certain raw material that had not
been passed on to our customers by year-end and increased freight charges.

INVENTORY

Inventory balances decreased to $212,960 at December 31, 2005 from $327,581 at
December 31, 2004. The M-216 liquid injection machine as work in process was a
portion of the inventory. The Company has decided to retain this machine to
service the turf segment of our market and as such, the value of the machine has
been transferred to fixed assets.

OPERATING EXPENSES

Operating expenses increased by approximately 26% for the period ended December
31, 2005. This increase in operating expenses was a result of the increased
costs of investor relations and stock compensation.

NET LOSS

For the reasons detailed above, we experienced losses in our last two fiscal
years. We expect that as a result of our 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 $597,588 during our prior fiscal year to
$643,688 in our 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 2006. However, given the gross margins
of our products, future operating results should be improved.

SEASONALITY

Our efforts in the United States have focused on the southern states and
therefore generally experience year round growing cycles, with the sale of the
agricultural products preceding the growing cycle of various crops.
International sales have not been sufficient enough or the geographic
distribution of sales concentrated enough to determine if a seasonal trend
exists although the initial indication is that our markets will become diverse

                                       10
<PAGE>
and therefore not indicate significant seasonal variations. As we expand into
the residential and commercial segments nationally, we will experience some
seasonal declines in sales during the fall and winter quarters in less temperate
climates.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $272,648 and $52,467 at December 31, 2005 and
at December 31, 2004 respectively. Net cash used by operations was $1,320,819
for the year ended December 31, 2005 as compared to $1,613,945 for the year
ended December 31, 2004. We have historically relied upon one of our officers
and significant shareholders to provide cash to meet short term operating cash
requirements.

In March 2000, we authorized the issuance of an aggregate of $1,325,000 of
convertible debentures with interest payable quarterly at 10% per annum. The
convertible debentures are convertible to our common stock at a rate of one
share for each three dollars converted. The debentures matured in the first
calendar quarter of 2002. All of the debentures were subscribed and at December
31, 2005, the outstanding balance of the debentures was $977,579 and at December
31, 2004, the outstanding balance of the debentures was $792,034. At December
31, 2005, convertible debentures consisted of $770,000 of 8% per annum
debentures at a rate of $0.50 per share and $207,579 of 10% per annum
convertible at a rate of $3.00 per share. If the remaining debt is converted, we
would issue an additional 1,609,193 shares. Interest expense for the year ended
December 31, 2005 was $150,864 and interest expense for the year ended December
31, 2004 was $165,114.

We have working capital (current assets less current liabilities) of $46,440 as
of December 31, 2005 compared to a deficit of $(37,039) as of December 31, 2004.

As shown in the accompanying financial statements, we have incurred an
accumulated deficit of $13,990,409 and working capital of approximately $46,440
as of December 31, 2005. Our ability to continue as a going concern is dependent
on obtaining additional capital and financing and operating at a profitable
level. We intend to seek additional capital either through debt or equity
offerings and to increase sales volume and operating margins to achieve
profitability. Our working capital and other capital requirements during the
next fiscal year and thereafter will vary based on the sales revenue generated
by the recent accumulation of additional products and the distribution and sales
network we have created and will continue to grow.

We will consider both the public and private sale of securities and or debt
instruments for expansion of our operations if such expansion would benefit our
overall growth and income objectives. Should sales growth not materialize, we
may look to these public and private sources of financing. There can be no
assurance, however, that we can obtain sufficient capital on acceptable terms,
if at all. Under such conditions, failure to obtain such capital likely would at
a minimum negatively impact our ability to timely meet our business objectives.

Our Board of Directors approved a resolution to negotiate and structure a
Regulation S offering of $3,500,000. As of the date of this Report, we have sold
8,061,494 shares of our common stock to 148 non-United States residents for

                                       11
<PAGE>
gross proceeds of $2,710,921. These transactions are exempt from registration
under Regulation S of the Securities Act of 1933 as no sales efforts were made
in the United States. All proceeds were used for operating capital.

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. We have recorded a
net deferred income tax asset of $5,024,000. Management determined that because
we had yet to generate taxable income and that the generation of taxable income
in the short term is uncertain, it was appropriate to provide a valuation
allowance for the total deferred income tax asset.

We have capitalized approximately $380,199 less accumulated depreciation of
$152,087 associated with the construction of a demonstration injection machine.
We placed the machine in service in the fiscal year ended December 31, 2004.
Management believes that although the capitalized costs exceed a value at which
the unit could be sold, we will derive several years of benefits from the unit
by using it in sales demonstrations and as a loaner unit.

On December 31, 1999 we purchased exclusive license rights to patented polymer
application techniques. The acquisition price of these rights was approximately
$679,000. Management periodically evaluates the carrying value of these assets
for impairment. The application techniques are critical to the process by which
we based our plan of operations. The carrying value of these licensing rights
was $398,157 at December 31, 2005.

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.

None.

                                       12
<PAGE>
ITEM 8A. CONTROLS AND PROCEDURES

Our President and Chief Financial Officer (the "Certifying Officers") are
responsible for establishing and maintaining our disclosure controls and
procedures. 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 our disclosure controls and
procedures as of the end of the period covered by this report and believe that
our 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, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

None.

                                    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

Our directors and executive officers are as follows:

Name                      Age                   Position
----                      ---                   --------
Carl P. Ranno              66      Director, Chief Executive Officer, President.
                                   Chief Financial Officer
Neil C. Kitchen            59      Director, Vice President
Diana Visco                48      Secretary
Louie Visco                90      Chairman of the Board of Directors
Scott Baker                49      Director
Johnny Dickinson  65               Vice President Marketing
Donette Lamson             42      Vice President Turf and Horticulture

MR. CARL P. RANNO, DIRECTOR, CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF FINANCIAL
OFFICER, 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. 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 us 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.

                                       13
<PAGE>
MS. DIANA VISCO, SECRETARY, Diana Visco, Secretary, has worked with us 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 and Caribbean in addition to Australia, New Zealand, Canada and Europe.
Ms Visco spent several years as a traveling administrator and as International
Administrator handling all aspects of finance, administration as well as
marketing and promotion in addition to being assistant to the President of that
company. She is the daughter of Mr. Louie Visco, one of our directors.

MR. LOUIE VISCO, DIRECTOR, has served as our Chairman of the Board 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 many
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 us, 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.

Ms. DONETTE LAMSON, VICE PRESIDENT TURF and HORTICULTURE obtained her Bachelor
of Science Degree in Horticulture with a Business Management Concentration from
Colorado State University (C.S.U.). She has been a Horticulture Extension Agent
and served as a manger of one of the nations largest Certified Master Gardener
Programs. Additionally, Ms. Lamson has over 20 years of regional, national and
international turf, horticulture and landscape products manufacturing,
distribution and sales experience with Lesco, Helena, SAJ Turf Products
(currently United Horticultural Supply) and Golf Enviro Systems.
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 our
directors and certain officers, as well as persons who own more than 10% of a
registered class of our 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. We believe that all Reporting Persons have complied on
a timely basis with all filing requirements applicable to them.

                                       14
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

Set forth below is a summary of compensation for our officers for the fiscal
years ended December 31, 2005, and December 31, 2004, the six months ended
December 31, 2003 and the fiscal year ended 2003. There are no annuity, pension
or retirement benefits proposed to be paid to our officers, directors or
employees in the event of retirement at normal retirement date pursuant to any
presently existing plan provided or contributed to by us.

<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,   2005       $120,000        $0        $0        $50,750              0           $0           $0
President (1)                                                        145,000
                      2004       $120,000        $0        $0        $     0              0           $0           $0
                      2003 (2)   $ 60,000        $0        $0        $     0              0           $0           $0
                      2003       $120,000        $0        $0        $     0        150,000           $0           $0

Ken Lew, CFO (3)      2005       $ 30,600        $0        $0        $     0              0           $0           $0
                      2004       $ 52,000        $0        $0        $     0              0           $0           $0
                      2003 (2)   $ 26,000        $0        $0        $     0              0           $0           $0
                      2003       $ 23,000        $0        $0        $     0        150,000           $0           $0

Neil C. Kitchen,      2005       $ 79,484        $0        $0        $35,000              0           $0           $0
Vice President (4)                                                   100,000
                      2004       $ 79,484        $0        $0        $     0              0           $0           $0
                      2003 (2)   $ 39,742        $0        $0        $     0              0           $0           $0
                      2003       $ 79,484        $0        $0        $     0        150,000           $0           $0

Diana Visco,          2005       $ 52,000        $0        $0        $18,200              0           $0           $0
Secretary (5)                                                         52,000
                      2004       $ 52,000        $0        $0        $     0              0           $0           $0
                      2003 (2)   $ 26,000        $0        $0        $     0              0           $0           $0
                      2003       $ 44,858        $0        $0        $     0         60,000           $0           $0

Johnny Dickinson, VP  2005       $ 64,000        $0        $0        $22,400              0           $0           $0
-Marketing (6)                                                        64,000
                      2004       $ 63,385        $0        $0        $     0              0           $0           $0
                      2003 (2)   $ 26,000        $0        $0        $     0              0           $0           $0
                      2003       $ 52,000        $0        $0        $     0         60,000           $0           $0
</TABLE>
----------
1.   Appointed Chief Executive Officer and President on May 2, 2002. Appointed
     Chief Financial Officer on July 5, 2005.
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. Resigned as Chief Financial Officer on July 5,
     2005.
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.

                                       15
<PAGE>
COMPENSATION OF DIRECTORS

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

2002 STOCK OPTION PLAN

Our 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. 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 our
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.

2005 STOCK OPTION/STOCK ISSUANCE PLAN

GENERAL

On January 31, 2005, our Board of Directors adopted our 2005 Stock Option/Stock
Issuance Plan (the "2005 Plan") and directed that it be presented to the
stockholders for their approval and adoption.

The 2005 Plan provides for the issuance of up to 10,000,000 shares of common
stock to our directors, officers, employees and consultants in the form of stock
options and shares of common stock.

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

                                       16
<PAGE>
The 2005 Plan has two separate components: the option grant program and the
stock issuance program. To date, 498,240 shares of common stock or stock options
have been issued pursuant to the 2005 Plan.

OPTION GRANT PROGRAM

Incentive stock options (those stock options that qualify under Section 422 of
the Internal Revenue Code of 1986 ("the "Code")) may be granted to any
individual who is, at the time of the grant, our employee. Non-qualified stock
options (those options that do not qualify under Section 422 of the Code) may be
granted to employees and other people, including our directors and officers.

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

Each option is to have a maximum term of ten years, subject to earlier
termination in the event the optionee leaves our service. The optionee will have
up to a three month period following termination of service (for reasons other
than death or disability) in which to exercise the option. This period will be
extended to 12 months if the optionee's service terminates by reason of
disability, and in the event of the optionee's death, the personal
representative of the optionee's estate (or the person inheriting the option)
will have up to a 12 month period following the optionee's death in which to
exercise the option.

To exercise the option, the optionee must execute a stock purchase agreement and
pay the exercise price for the purchased shares. Payment is to be made in cash;
however, the Plan Administrator may also permit the optionee to deliver a
full-recourse interest-bearing promissory note for the purchased shares payable
in one or more installments. Provided that our shares remain publicly traded,
the exercise price may be paid in shares of common stock or, alternatively,
through the optionee's participation in a same-day sale program. Under such
program, the option shares are sold immediately following the exercise of the
option, and a portion of the sale proceeds is applied to the payment of the
exercise price and all applicable withholding taxes.

In the event we are acquired by merger or asset sale, the option shares will
immediately vest, and the option may be exercised for any or all of those vested
shares prior to the effective date of such acquisition. However, such
accelerated vesting will not occur if our repurchase rights with respect to the
unvested option shares are assigned to the acquiring entity. The Plan

                                       17
<PAGE>
Administrator will have the discretion to structure one or more option grants
under the Plan so that the shares subject to those options will immediately vest
in the event the optionee's service is involuntarily terminated within 18 months
following an acquisition in which our repurchase rights are so assigned, and the
optionee would then have a one-year period to exercise the accelerated options
for fully-vested shares. It is anticipated that this special vesting
acceleration provision would be made available only on a limited case-by-case
basis.

The stock purchase agreement will provide us with the right to repurchase, at
the original exercise price paid per share, any unvested shares held by the
optionee at the time of his or her termination of service. The applicable
vesting schedule will be set forth in the Notice of Grant. Full and immediate
vesting of all the option shares will occur upon an acquisition by merger or
asset sale, unless the repurchase right applicable to those shares is assigned
to the successor company. One or more repurchase rights outstanding under the
Plan may be structured so that those rights will subsequently lapse (and the
option shares will immediately vest) upon an involuntary termination of the
optionee's service within 18 months following the effective date of an
acquisition in which the repurchase rights are assigned to the successor
company.

STOCK ISSUANCE PROGRAM

Shares of common stock may be issued to employees and other people, including
our directors and officers.

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

The stock issuance component is structured as a stock purchase transaction, with
the purchase price for the shares to be paid in cash or by promissory note at
the time of issuance of the shares. The same repurchase rights summarized above
for the "Stock Purchase Agreement" under the option grant program will apply to
the purchased shares, namely, our right to repurchase, at the original purchase
price, any unvested shares held by the participant at the time of his or her
termination of service.

It is anticipated that any issued shares will vest either immediately or in a
series of installments over the participant's period of service. Full and
immediate vesting of all the shares will occur upon an acquisition by merger or
asset sale, unless the repurchase right applicable to those shares is assigned
to the successor company. The assigned repurchase rights may be structured so
that they will subsequently lapse (and the shares will immediately vest) upon an
involuntary termination of the participant's service within 18 months following
the effective date of the acquisition.

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

The following table sets forth certain information regarding our shares of
outstanding common stock beneficially owned as of the date hereof by (i) each of
our directors and executive officers, (ii) all directors and executive officers
as a group, and (iii) each other person who is known by us to own beneficially
more than 5% of our common stock based upon 26,640,174 issued common shares.

     Name and Address                      Amount and Nature of      Percent
 of Beneficial Owners (1)                  Beneficial Ownership    Ownership (2)
 ------------------------                  --------------------    -------------
Carl P. Ranno                                  1,602,900 (3)           6.0%
Neil C. Kitchen                                1,551,455 (4)           5.8%
Diana Visco                                      152,000 (5)             *
Louie Visco                                   12,910,262 (6)          48.4%
Scott Baker                                      504,818 (7)           1.9%
Johnny Dickinson                                 174,000 (8)             *
Donette Lamson                                    75,000                 *
All executive officers and directors
 as a group (7 persons)                       16,970,435              63.7%
The Sterling Group                             2,000,000               7.5%
The Benz Group                                 4,536,932 (9)          17.0%
FLD Corporation                                7,198,330 (10)         27.0%

----------
*  Less than 1%.
1    C/o the Company's address, 12224 Montague Street Pacoima, CA 91331,, 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 a debenture convertible to 40,000 shares of Common Stock at an
     exercise price of $0.50 expiring June 15, 2007.
6    Consists of 2,773,233 shares of Common Stock, 2,763,699 shares of Preferred
     Stock convertible into 2,763,699 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, 2007, a debenture convertible into 500,000 shares of Common
     Stock expiring on March 27, 2007, a debenture convertible to 400,000 shares
     of Common Stock expiring on February 1, 2007 and 5,798,330 Common Shares
     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 and 25,000 shares held
     by Mr. Visco.
7    Includes 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 60,000 shares of Common Stock at an exercise
     price of $0.50 expiring June 30, 2012.
9    Consists of 2,773,233 shares of Common Stock, 2,763,699 shares of Preferred
     Stock convertible into 2,763,699 shares of Common Stock
10   Consists of a debenture convertible into 500,000 shares of Common Stock
     expiring on February 1, 2007, a debenture convertible into 500,000 shares
     of Common Stock expiring on March 27, 2007, a debenture convertible to
     400,000 shares of Common Stock expiring on February 1, 2007 and 5,798,330
     Common Shares

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

The Company purchased the Debenture due Neil C. Kitchen, a Director and Vice
President.

Diana Visco the corporate Secretary purchased a Debenture for $20,000
convertible to 40,000 shares of Common Stock at an exercise price of $0.50
expiring June 15, 2007.

Louie Visco, Director, is an owner and director of FLD Corporation, which holds
a debenture convertible into 500,000 shares of Common Stock expiring on February
1, 2007, a debenture convertible into 500,000 shares of Common Stock expiring on
March 27, 2007, a debenture convertible to 400,000 shares of Common Stock
expiring on February 1, 2007 with interest rates of 8% and 5,798,330 Common
Shares.

Louie Visco, Director, is an owner and director of Benz Group, the holder of
2,773,233 shares of Common Stock, 2,763,699 shares of Preferred Stock
convertible into 2,763,699 shares of Common Stock.

On April 1, 2004, we entered into a Sublease Agreement to sublet 923.50 square
feet located at a facility in Pacoima, California. The majority shareholder of
the sublessor is a related party to us. All of our operations are conducted from
this facility, which requires monthly rental payments of approximately $554. The
Sublease Agreement terminates on December 31, 2008.

                                       20
<PAGE>
ITEM 13. 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, 2000 (2)
3.4     Amendment to Articles of Incorporation of American Soil Technologies,
        Inc., dated August 4, 2003
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 (3)
4.1     Convertible Debenture - Lump Sum Contribution (Form) (4)
4.2     Convertible Debenture - Incremental (Form) (4)
10.1    License Agreement between Ron Salestrom, American Soils Technologies,
        Inc., and Polymers Plus, L.L.C., dated January 4, 2000 (2)
10.2    Distributorship Agreement with Ag Specialties, LLC, dated June 27,
        2002 (5)
10.3    Distributorship Agreement with Gigot Agra Services effective date August
        15, 2002 (6)
10.4    Distributorship Agreement with Stockhausen, Inc., dated August 20,
        2002 (5)
10.5    Distributorship Agreement with Bentonite Performance Minerals, dated
        August 26, 2002 (5)
10.6    Distributorship Agreement with J T Water Management, dated September 20,
        2002 (5)
10.7    Distributorship Agreement with X-Treme Green Landcare, dated October 11,
        2002 (6)
10.8    Distributorship Agreement with Quantus Corporation, November 14,
        2003 (7)
10.9    Dealer Agreement with A Plus Service, dated March 8, 2004 (11)
10.10   Sublease Agreement with The Customized Box Company, dated April 1,
        2004 (11)
10.11   Stock Placement Agreement with Bellador Advisory Services (Labaun) Ltd.,
        dated July 16, 2004 (12)
10.12   Dealer Agreement with Dick Hansen Distributing, dated August 2,
        2004 (12)
10.13   Dealer Agreement with HRE of Benton City dated August 31, 2004 (8)

----------
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 our Form 10-KSB for the fiscal year ended
     June 30, 1998, filed on September 16, 1998.
4    Incorporated by reference from our Form 10-QSB for the quarterly period
     ended March 31, 2000, filed on May 15, 2000.
5    Incorporated by reference from our Form 10-KSB for the fiscal year ended
     June 30, 2002, filed on September 30, 2002.
6    Incorporated by reference from our Form 10-QSB for the quarterly period
     ended September 30, 2002 filed on November 13, 2002.
7    Incorporated by reference from our Form 10-QSB for the quarterly period
     ended March 31, 2004, filed on May 5, 2004.
8    Incorporated by reference from our Form 10-QSB for the quarterly period
     ended September 30, 2004, filed on November 15, 2004.

                                       21
<PAGE>
10.14   Dealer Agreement with Donald Weishuhn dated November 19, 2004 (9)

10.15   Marketing Agreement with Spectrum Advisors, LLC, dated October 20,
        2004 (8)
10.16   Investor Relations Agreement with Crosscheck Capital, LLC, dated
        November 24, 2004 (9)
10.17   Marketing Agreement with West Coast Fairways, dated December 2, 2004 (9)
10.18   Dealer Agreement with Ag Pro Tech, Inc., dated January 10, 2005 (9)
10.19   Exclusive Worldwide Marketing Agreement with Dick Hansen and Richard
        Roos, dated February 18, 2005 (9)
10.20   Dealer Agreement with Midwest Industrial Supply, dated March 2, 2005 (9)
10.21   Dealer Agreement with Jerry Schuelke, dated March 26, 2005 (9)
10.22   Dealer Agreement with Reinke Pasco, Inc, dated May 6, 2005 (10)
10.23   Financial Public Relations Consulting Agreement with Reynolds World
        Investment Enterprises, LLC, dated May 23, 2005 (11)
10.24   Dealer Agreement with The Kern Company dated June 28, 2005 (11)
10.25   Representation Agreement with Pure Chemicals, dated July 13, 2005
10.26   Consulting Agreement with Telperion Business Consultants, LLC, dated
        September 6, 2005 (12)
10.27   Strategic Alliance Agreement with UTEK Corporation, dated September 28,
        2005 (12)
10.28   Advertising and Marketing Agreement with Hortus, Ltd., dated October 3,
        2005 (12)
10.29   Promissory Note (the "Note") with Gary D. Willis and Cynthia A. Willis,
        dated December 15, 2005
10.30   Professional Services Agreement with Grosvenor with Financial Partners,
        LLC, dated March 6, 2006
10.31   Brokerage Services Agreement with Alchemy Alternatives, Inc., dated
        March 8, 2006
10.32   Agreement and Plan of Acquisition with UTEK Corporation and Advanced
        Fertilizer Technologies, Inc., dated March 14, 2006
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

----------
9    Incorporated by reference from our Form 10-KSB for the fiscal year ended
     December 31, 2004, filed on March 31, 2005.
10   Incorporated by reference from our Form 10-QSB for the quarterly period
     ended March 31, 2005, filed on May 20, 2005.
11   Incorporated by reference from our Form 10-QSB for the quarterly period
     ended June 30, 2005, filed on August 15, 2005.
12   Incorporated by reference from our Form 10-QSB for the quarterly period
     ended September 30, 2005, filed on November 14, 2005.

                                       22
<PAGE>
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

EPSTEIN WEBER & CONOVER, PLC, CERTIFIED PUBLIC ACCOUNTANTS ("EPSTEIN")

Epstein was our independent auditor and examined our financial statements for
the fiscal years ending December 31, 2005 and December 31, 2004. Epstein
performed the services listed below and was paid the fees listed below for the
fiscal years ended December 31, 2005 and December 31, 2004.

AUDIT FEES

Epstein was paid aggregate fees of approximately $5,200 for the fiscal year
ended December 31, 2005 and approximately $39,240 for the fiscal year ended
December 31, 2004 for professional services rendered for the audit of our annual
financial statements and for the reviews of the financial statements included in
our quarterly reports on Form 10-QSB during these fiscal years.

AUDIT RELATED FEES

Epstein was not paid additional fees for either of the fiscal years ended
December 31, 2005 or December 31, 2004 for assurance and related services
reasonably related to the performance of the audit or review of our financial
statements.

TAX FEES

Epstein was paid fees in the amount of $0 for the fiscal year ended December 31,
2005 and fees of $2,565 for the fiscal year ended December 31, 2004 for
professional services rendered for tax compliance, tax advice and tax planning
during these fiscal years.

ALL OTHER FEES

Epstein was not paid any other fees for professional services during the fiscal
years ended December 31, 2005 and December 31, 2004.

AUDIT COMMITTEE

We do not have an audit committee.

                                       23
<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 31, 2006       By: /s/ Carl P. Ranno
                               -------------------------------------------------
                               Carl P. Ranno
                               Director, Chief Executive Officer, President, and
                               Chief Financial Officer
                               (Principal Executive Officer, Principal Financial
                               Officer and Principal Accounting Officer)



DATED: March 31, 2006       By: /s/ Neil C. Kitchen
                               -------------------------------------------------
                               Neil C. Kitchen
                               Director, Vice President

                                       24
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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. and subsidiaries as of December 31, 2005 and the related
statements of operations, stockholders' deficit and cash flows for each of the
two years in the period ended December 31, 2005. 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 audits.

We conducted our audit in accordance with the standards of the Public Company
Accounting Standards Board (United States). Those standards require that we plan
and perform the audits 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 audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American Soil
Technologies, Inc. and subsidiaries as of December 31, 2005, and the
consolidated results of its operations and cash flows for each of the two years
in the period ended December 31, 2005, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company incurred material net
losses for the year ended December 31, 2005 and there was negative cash flows
from operations of $1,320,819 for the year ended December 31, 2005. Management's
plans with regard to these matters are discussed in Note 1. 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, PLC
----------------------------------------
Scottsdale, Arizona
March 28, 2006

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

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2005
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                            <C>
ASSETS:

CURRENT ASSETS
   Cash and cash equivalents                                                   $    272,648
   Accounts receivable, net of allowance of doubtful accounts of $32,356            133,153
   Employee advances                                                                    764
   Inventory                                                                        212,960
   Prepaid expenses and other current assets                                         94,352
                                                                               ------------
      Total current assets                                                          713,877
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $226,887                 385,654
INTELLECTUAL PROPERTY, net of accumulated amortization of $281,060                  398,157
RELATED PARTY NOTES RECEIVABLE                                                       62,215

                                                                               ------------
      TOTAL ASSETS                                                             $  1,559,903
                                                                               ============
LIABILITIES AND STOCKHOLDERS' DEFICIT:

CURRENT LIABILITIES:
   Accounts payable                                                            $    335,797
   Accrued liabilities                                                               42,400
   Notes payable - current portion                                                  265,182
   Capital lease obligation - current portion                                         8,085
   Debentures payable to related parties - current portion                           15,970
                                                                               ------------
      Total current liabilities                                                     667,434
NOTES PAYABLE - long-term portion                                                    73,019
CAPITAL LEASE OBLIGATION - long-term portion                                         13,054
NOTES PAYABLE TO RELATED PARTIES                                                    427,500
DEBENTURES PAYABLE TO RELATED PARTIES - long term portion                           961,609
                                                                               ------------
      Total liabilities                                                           2,142,616
                                                                               ------------
STOCKHOLDERS' DEFICIT:
   Series A preferred stock, $0.50 stated value, 10,000,000 shares
    authorized, 2,763,699 shares issued and outstanding                           1,381,849
   Common stock, $0.001 par value, 100,000,000 shares authorized,
     25,436,174 shares issued and outstanding                                        25,436
   Paid in capital                                                               12,000,411
   Accumulated deficit                                                          (13,990,409)
                                                                               ------------
      Total stockholders' deficit                                                  (582,713)
                                                                               ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                              $  1,559,903
                                                                               ============
</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
YEARS ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                      Year Ended             Year Ended
                                                      December 31,           December 31,
                                                         2005                   2004
                                                     ------------           ------------
<S>                                                  <C>                    <C>
NET REVENUES                                         $    643,688           $    597,588
                                                     ------------           ------------

COST OF GOODS SOLD                                        405,426                376,776
                                                     ------------           ------------
GROSS INCOME                                              238,262                220,812
                                                     ------------           ------------
OPERATING EXPENSES
  General and administrative                            1,546,058              1,014,487
  Sales and marketing                                     318,882                392,117
  Research and development                                149,023                154,599
  Depreciation                                            103,524                105,187
  Amortization                                             46,844                 46,846

                                                     ------------           ------------
      Total operating expenses                          2,164,331              1,713,236
                                                     ------------           ------------

OPERATING LOSS                                         (1,926,069)            (1,492,424)
                                                     ------------           ------------
OTHER (INCOME)/EXPENSE
  Interest expense and related costs                      150,865                165,114
  Other expense                                             1,188                     --
  Interest income                                          (2,700)                (2,700)
                                                     ------------           ------------
      Total other (income)/expense                        149,353                162,414
                                                     ------------           ------------

LOSS BEFORE INCOME TAXES                               (2,075,422)            (1,654,838)
                                                     ------------           ------------

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

NET LOSS                                             $ (2,075,422)          $ (1,654,838)
                                                     ============           ============
NET LOSS PER SHARE:
  Basic:                                             $      (0.10)          $      (0.16)
                                                     ============           ============
  Diluted:                                           $      (0.10)          $      (0.16)
                                                     ============           ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                                21,837,059             10,218,158
                                                     ============           ============
  Diluted                                              21,837,059             10,218,158
                                                     ============           ============
</TABLE>

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

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE
YEARS ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                          Common Stock               Preferred A            Paid-in     Accumulated
                                      Shares         Amount      Shares        Amount       Capital       Deficit          Total
                                      ------         ------      ------        ------       -------       -------          -----
<S>                              <C>             <C>         <C>          <C>            <C>           <C>            <C>
BALANCE DECEMBER 31, 2003            9,096,585     $  9,097    4,763,699    $ 2,381,849   $ 7,069,252   $(10,260,149)  $  (799,951)

Common stock issued for services        50,000           50                                    22,450                       22,500

Common stock issued for cash         5,065,144        5,065                                   695,619                      700,684

Net loss                                                                                                  (1,654,838)   (1,654,838)
                                   -----------     --------   ----------    -----------   -----------   ------------   -----------
BALANCE DECEMBER 31, 2004           14,211,729       14,212    4,763,699      2,381,849     7,787,321    (11,914,987)   (1,731,605)
                                   -----------     --------   ----------    -----------   -----------   ------------   -----------

Common stock issued for services       682,857          683                                   253,817                      254,500

Common stock issued to employees
 officers and directors                498,240          498                                   223,710                      224,208

Common stock issued for cash         2,996,350        2,996                                   651,811                      654,807

Options exercised                       60,000           60                                    29,940                       30,000

Conversion of preferred stock
 to common stock                     2,000,000        2,000   (2,000,000)    (1,000,000)      998,000                           --

Conversion of debt and accrued
 interest to common stock            4,986,998        4,987                                 1,989,812                    1,994,799

Value of warrants issued with debt                                                             66,000                       66,000

Net loss                                                                                                  (2,075,422)   (2,075,422)
                                   -----------     --------   ----------    -----------   -----------   ------------   -----------

BALANCE DECEMBER 31, 2005           25,436,174     $ 25,436    2,763,699    $ 1,381,849   $12,000,411   $(13,990,409)  $  (582,713)
                                   ===========     ========   ==========    ===========   ===========   ============   ===========
</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 YEARS
ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               Year Ended            Year Ended
                                                           December 31, 2005     December 31, 2004
                                                           -----------------     -----------------
<S>                                                          <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                   $(2,075,422)          $(1,654,838)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
     Provision for doubtful accounts                              (5,306)               33,555
     Depreciation and amortization                               150,367               152,034
     Amortization of debt discount                                11,000                    --
     Common stock issued for services                            254,500                22,500
     Common stock issued to employees and directors              224,208                    --
  Changes in assets and liabilities:
     Accounts receivable                                         (72,456)              (60,638)
     Receivables from officers and employees                       1,541                 2,195
     Prepaid and other current assets                            (48,876)              (28,521)
     Deposits and other assets                                     9,924                 4,107
     Inventory                                                   114,621              (147,118)
     Accounts payable                                             78,901                65,491
     Accrued liabilities                                          36,179                (2,712)
                                                             -----------           -----------
        Net cash used by operating activities                 (1,320,819)           (1,613,945)
                                                             -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                            (75,000)               (2,283)
                                                             -----------           -----------
        Net cash used for investing activities                   (75,000)               (2,283)
                                                             -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from related party notes payable                      480,500                    --
  Proceeds from issuance of debt                                 300,000             1,004,673
  Proceeds from convertible debentures                           200,000                    --
  Principal repayments on convertible debentures                 (14,455)              (13,022)
  Principal repayments on capital lease obligation               (16,868)              (12,003)
  Repayments on notes payable                                    (17,984)              (43,357)
  Proceeds from exercise of stock options                         30,000                    --
  Proceeds from stock issuances                                  654,807               700,684

                                                             -----------           -----------
        Net cash provided by financing activities              1,616,000             1,636,975
                                                             -----------           -----------

INCREASE IN CASH AND CASH EQUIVALENTS                            220,181                20,747

CASH AND CASH EQUIVALENTS, beginning of period                    52,467                31,720
                                                             -----------           -----------

CASH AND CASH EQUIVALENTS, end of period                     $   272,648           $    52,467
                                                             ===========           ===========
</TABLE>

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004


<TABLE>
<CAPTION>
                                                      Year Ended             Year Ended
                                                   December 31, 2005      December 31, 2004
                                                   -----------------      -----------------
<S>                                                   <C>                    <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest Paid                                       $   76,340             $  119,810
                                                      ==========             ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
  Equipment acquired under capital lease              $        0             $   32,000
                                                      ==========             ==========
  Conversion of Preferred Stock to Common Stock
                                                      $1,000,000             $        0
                                                      ==========             ==========
  Conversion of debt and interest to common
   stock                                              $1,994,799             $        0
                                                      ==========             ==========

  Value of warrants issued with debt                  $   66,000             $        0
                                                      ==========             ==========
</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
YEAR ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004


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 turf and horticulture industries in North America. 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 an exclusive license to the use of patented
    polymer application techniques as well as numerous patents on a unique
    machine designed to inject polymer and other liquid products into existing
    turf and some crops.

    GOING CONCERN AND MANAGEMENT'S PLANS

    The Company has sustained significant losses and has an accumulated deficit
    of $13,990,000. 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. 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 December 31, 2005 cash
    deposits exceeded government insured limits by $170,000.

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

                                      F-7
<PAGE>
    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 $103,524 and $105,187 for the year ended December
    31, 2005 and 2004, 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 $262,367 and $304,540 for the year ended December 31, 2005 and
    2004, 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 accounts
    receivable, related party notes receivable, and obligations under accounts
    payable, convertible debentures and notes payable. The carrying amounts of
    accounts receivable and accounts payable approximate fair value because of
    the short term maturity of those instruments. The carrying values of notes
    payable to unrelated entities approximate fair value because they contain
    market value interest rates and have specified repayment terms. The fair
    value of the related party note receivable, debentures and notes payable
    cannot be determined because of the Company's affiliation with the parties
    with whom the agreements exist. 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.

    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.

    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.

                                      F-8
<PAGE>
    PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
    the accounts of the Company and its wholly owned subsidiary. All significant
    intercompany accounts and transactions are eliminated.

    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.

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

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

    A 2005 Stock Option/Stock Issuance Plan (the "2005 Plan") was authorized by
    the majority shareholders during the three months ended June 30, 2005. The
    2005 Plan provides for the issuance of up to 10,000,000 shares of common

                                      F-9
<PAGE>
    stock to our directors, officers, employees and consultants in the form of
    stock options and shares of common stock.

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

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

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

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

    There were no stock options granted. Sixty thousand (60,000) options were
    exercised during the year ended December 31, 2005. All granted options were
    fully vested as of June 30, 2003. During the year ended December 31, 2005,
    the Company issued 300,000 warrants to an unrelated entity as an additional
    incentive for debt.

    The following summarizes information at December 31, 2005:

<TABLE>
<CAPTION>
                    Options Outstanding                           Options Exercisable
    --------------------------------------------------    --------------------------------------
                                           Weighted
                         Number            Average        Weighted        Number        Weighted
                     outstanding at       Remaining        Average    Exercisable at    Average
        Range of       December 31,      Contractual      Exercise     December 31,     Exercise
    Exercise Prices       2005         Life (in years)     Price           2005          Price
    ---------------       ----         ---------------     -----           ----          -----
<S>                   <C>                <C>            <C>            <C>            <C>
        $ 0.50          680,000              7.0           $ 0.50         680,000        $ 0.50
        $ 0.50          680,000              7.0           $ 0.50         680,000        $ 0.50

                      Warrants Outstanding                        Warrants Exercisable
    --------------------------------------------------    --------------------------------------
                                           Weighted
                         Number            Average        Weighted        Number        Weighted
                     outstanding at       Remaining        Average    Exercisable at    Average
        Range of       December 31,      Contractual      Exercise     December 31,     Exercise
    Exercise Prices       2005         Life (in years)     Price           2005          Price
    ---------------       ----         ---------------     -----           ----          -----
        $ 0.23          300,000              2.0           $ 0.23         300,000        $ 0.23
</TABLE>

                                      F-10
<PAGE>
    No stock-based employee compensation cost is reflected in the December 31,
    2005 or December 31, 2004 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:

                                             Year Ended           Year Ended
                                         December 31, 2005     December 30, 2004
                                         -----------------     -----------------
    Net Loss                                $(2,075,422)          $(1,654,838)

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

    Pro forma net loss                      $(2,075,422)          $(1,654,838)
                                            ===========           ===========

    Net loss per share as reported          $     (0.10)          $     (0.16)
                                            ===========           ===========

    Net loss per share pro forma            $     (0.10)          $     (0.16)
                                            ===========           ===========

    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.

    The per share weighted average fair values of warrants granted during the
    year ended December 31, 2005 was $0.23 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 Life of 2 years.

    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.

    RECLASSIFICATIONS: Certain reclassifications have been made to the December
    31, 2004 financial statements in order to conform to the December 30, 2005
    presentation.

    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: In April 2003, the FASB issued
    SFAS No. 149, "AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND
    HEDGING ACTIVITIES," effective for contracts entered into or modified after
    June 30, 2003. This amendment clarifies when a contract meets the
    characteristics of a derivative, clarifies when a derivate contains a
    financing component and amends certain other existing pronouncements. The
    adoption of SFAS No. 149 did not have a material effect on the Company's
    financial statements.

                                      F-11
<PAGE>
    In May 2003, the FASB issued SFAS No. 150, "ACCOUNTING FOR CERTAIN FINANCIAL
    INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY." SFAS No.
    150 was effective for financial instruments entered into or modified after
    May 31, 2003, and otherwise was 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 and therefore, the adoption of SFAS 150 did 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
    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
    adoption of FIN 46 did not have a significant impact on the Company's
    financial statements.

    In December 2004 the FASB issued a revised Statement 123 (SFAS 123R),
    "ACCOUNTING FOR STOCK-BASED COMPENSATION" requiring public entities to
    measure the cost of employee services received in exchange for an award of
    equity instruments based on grant date fair value. The cost will be
    recognized over the period during which an employee is required to provide
    service in exchange for the award -- usually the vesting period. The
    effective date for this statement is as of the first interim period that
    begins after June 15, 2005. The Company is evaluating the impact of this new
    pronouncement and has not yet estimated the effect of implementation on the
    Company's financial statements.

3. INVENTORY

    Inventory is entirely comprised of finished goods at December 31, 2005.

                                      F-12
<PAGE>
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 $46,844 and $46,846 for the year
    ended December 31, 2005 and 2004, respectively. The following summarizes the
    estimated future amortization expense of the intellectual property:

                        Year                      Amount
                        ----                      ------
                         2006                    $ 46,844
                         2007                      46,844
                         2008                      46,844
                         2009                      46,844
                         2010                      46,844
                      Thereafter                  163,937
                                                 --------
                        Total                    $398,157
                                                 ========

5. PROPERTY AND EQUIPMENT

    Property and equipment consisted of the following at December 31, 2005:

    Machinery                                    $ 549,995
    Vehicle                                         44,615
    Office furnishings, fixtures and equipment      17,931
                                                 ---------
      Total                                        612,541
      Less accumulated depreciation               (226,887)
                                                 ---------

             Property and equipment, net         $ 385,654
                                                 =========

    Included in the machinery category is approximately $380,000 of capitalized
    costs associated with the construction of a demonstration injection machine.
    The machine was placed in service in the quarter ended March 31, 2004.

6. NOTE RECEIVABLE

    The $60,000 note receivable is due from an individual who was formerly
    contracted to perform services for the Company as its Chief Technical
    Officer, and who also holds the patents licensed to the Company. Under the
    terms of the note receivable, the Company is to receive 4.5% interest on the
    note, to be satisfied through the reduction of royalties due to the
    individual. During the year ended December 31, 2005, the Company recognized
    $2,700 in interest income and $2,709 in royalty expense, respectively,
    related to this agreement.

                                      F-13
<PAGE>
7. NOTES PAYABLE

    Notes payable at December 30, 2005 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. Note is unsecured. Principal due
    February 1, 2007.                                                $  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. Note is unsecured. Principal due
    March 27, 2007.                                                     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. Note is unsecured. Principal due
    February 1, 2007.                                                    25,000

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

    Convertible debenture to related party, original balance of
    $25,000, interest at 8% per annum, interest payable
    quarterly. Principal is convertible at a rate of $0.50 for
    one share of common stock. Note is unsecured. Principal due
    August 15, 2007.                                                     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. Note is unsecured.                                           207,578

    Convertible debenture to related party, original balance of
    $200,000, interest at 8% per annum, interest payable
    quarterly. Principal is convertible at a rate of $0.50 for
    one share of common stock. Note is unsecured. Principal due
    February 1, 2007.                                                   200,000

    Note payable to related party, original balance of $427,500,
    interest at prime rate and payable monthly. Note is
    unsecured. Principal is due December 30, 2007.                      427,500

                                      F-14
<PAGE>
    Note payable to lending institution, original balance of
    $48,542, and interest at 2.9% per annum. Requires monthly
    principal and interest payments of $736 through 2009.
    Collateralized by vehicle.                                           33,326

    Note payable to finance company, original balance of $75,000,
    and interest at 17.7% per annum. Requires monthly principal
    and interest payments of $1,814 through 2009. Collateralized
    by polymer injection machine.                                        59,876

    Note payable to unrelated party, original balance of $300,000
    and interest at 12%, $100,000 due January 31, 2006 and
    $200,000 due March 15, 2006. Note is unsecured.                     300,000
                                                                     ----------
        Total                                                         1,798,280

        Less: debt discount                                             (55,000)
                                                                     ----------
        Total                                                         1,743,280

        Less: current portion                                          (281,152)
                                                                     ----------

        Total long-term portion                                      $1,462,128
                                                                     ==========

    Future maturities of principal at December 30 are as follows:

         2006                                                        $  281,152
         2007                                                         1,237,909
         2008                                                            45,302
         2009                                                            45,967
         2010                                                            23,783
         Thereafter                                                     109,167
                                                                     ----------

                  Total                                              $1,743,280
                                                                     ==========

    The note payable of $427,500 is held by an entity that holds approximately
    27% of the Company's common stock. Notes are payable in two years providing
    payment is not detrimental to the company.

    During the year ended December 31, 2005, related party notes payable of
    $1,600,000, $125,673 and $152,000 and their related accrued interest were
    converted into common stock at $0.40 per share for a total of 4,986,998
    shares of common stock. In addition, three convertible debentures totaling
    $700,000 are held by entities that hold approximately 43% of the Company's
    common stock.

    During the year ended December 31, 2005, the Company entered into a $300,000
    note agreement that included 300,000 warrants as an additional incentive.
    The imputed value of the warrants was calculated to be $66,000 using the

                                      F-15
<PAGE>
    Black-Scholes valuation model. The note was discounted by this amount and at
    December 31, 2005, $11,000 in expense was recognized on the discount. The
    effective interest rate of this instrument was determined to be 125%.

8. 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 the years ended December 31, are summarized as follows:

                                            December 31,         December 31,
                                               2005                 2004
                                             ---------            ---------

    Current Benefit                          $(738,811)           $(648,245)
    Deferred Provision                         738,811              648,245
                                             ---------            ---------

    Net income tax provision                 $       0            $       0
                                             =========            =========

    A reconciliation of the differences between the effective and statutory
    income tax rates ended December 31, 2005 and December 31, 2004, is as
    follows:

                                      December 31, 2005      December 31, 2004
                                      -----------------      -----------------
    Federal                          $(705,650)     (34)%    $(561,892)    (34)%
    State                             (124,527)      (6)%      (99,157)     (6)%
    Additional valuation allowance     827,698       40%       517,537      31%
    Other                                2,478       -- %      145,512        9%
                                     ---------     -----     ---------    -----
    Effective rate                   $       0        0%     $       0       0%
                                     =========     =====     =========    =====

    At December 31, 2005, deferred income tax assets totaling $5,024,000 was
    comprised of $4,914,000 related to the tax effect of the federal and state
    net operating losses, $89,600 related to stock based compensation and
    $20,000 related to differences in the book and tax bases of accounts
    receivable and intangible assets. The valuation allowance was increased by a
    total of $828,000 during the period ended December 31, 2005. At December 31,
    2005, the Company had federal net operating loss carryforwards of
    $13,702,000 that expire from 2008 through 2025 and state net operating
    carryforwards of $3.370,000 expiring from 2006 through 2009.

9. STOCKHOLDERS' DEFICIT

    COMMON STOCK

    The Company has 100,000,000 shares authorized. At December 31, 2005, the
    Company had 25,436,174 shares of $0.001 par value common stock outstanding.

                                      F-16
<PAGE>
    SERIES A CONVERTIBLE PREFERRED STOCK

    The Company has 10,000,000 shares of Series A Convertible Preferred Stock
    authorized. At December 31, 2005, the Company had 2,763,699 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.
    During the three months ended June 30, 2005, 2,000,000 shares of preferred
    stock were converted to common stock.

    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 years ended
    December 31, 2005 or December 31, 2004. The following securities have been
    excluded from the calculation because inclusion of such would be
    anti-dilutive:

                                        Year Ended              Year Ended
                                     December 31, 2005       December 31, 2004
                                     -----------------       -----------------
    Convertible preferred stock          2,763,699              4,763,699
    Common stock options                   680,000              1,250,000
    Warrants                               300,000                      0
    Convertible debt                     1,609,193              1,214,011
                                         ---------              ---------
                                         5,352,892              7,227,710
                                         =========              =========

                                      F-17
<PAGE>
    The following presents the computation of basic and diluted loss per share
    from continuing operations:

<TABLE>
<CAPTION>
                                            Year Ended                      Year Ended
                                         December 31, 2005               December 31, 2004
                                      -----------------------         ------------------------
<S>                                   <C>                             <C>
    Net Loss                          $(2,075,422)                    $(1,654,838)

    Preferred stock dividends                  --                              --
                                      -----------                     -----------
    Loss available to common
     Stockholders                     $(2,075,422)                    $(1,654,838)
                                      ===========                     ===========
    BASIC EARNINGS PER SHARE:

    Loss available to common
     stockholders                     $(2,075,422)    $  (0.10)       $(1,654,838)    $  (0.16)
                                      ===========     ========        ===========     ========

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

    DILUTED EARNINGS PER SHARE        $(2,075,422)    $  (0.10)       $(1,654,838)    $  (0.16)
                                      ===========     ========        ===========     ========
</TABLE>

11. RELATED PARTY TRANSACTIONS

    During the years ended December 31, 2005 and December 31, 2004, the Company
    conducted related party transactions with Board members, officers and
    affiliated entities as described below:

    DIRECTORS & OFFICERS

    Diana Visco, Company Secretary, has a $20,000 Debenture with the Company
    which is convertible at $0.50 per share with interest at 8%, maturing in the
    third calendar quarter of 2007. Interest incurred on this debenture was
    $1,600 and $1,600 during the years ended December 31, 2005 and 2004,
    respectively.

    The holders of the two (2) $25,000 convertible debentures and the $207,579
    convertible debenture are personally related to Louis Visco. Interest
    incurred on these debentures during the year ended December 31, 2005 and
    2004 were $25,545 and $26,978 respectively.

    AFFILIATED ENTITIES

    Louie Visco, Director, is an owner and director of the FLD Corporation, the
    holder of two (2) $250,000 and one (1) $200,000 debentures convertible at
    $0.50 per share with interest at 8%, maturing in the first calendar quarter
    of 2007 and $427,500 in notes payable. During the three months ended June
    30, 2005, notes payable and the related accrued interest due to this entity
    totaling $1,837,732 were converted at a rate of $0.40 per share for a total
    of 4,594,330 shares of common stock. Interest incurred on these debentures
    and notes during the year ended December 31, 2005 and 2004 was $100,138 and
    $118,917 respectively.

    Louis Visco is also an owner of the Benz Disposal Company. During the three
    months ended June 30, 2005, a note payable and its related interest due to
    this entity totaling $157,067 was converted at a rate of $0.40 per share
    into 392, 668 shares of common stock.

                                      F-18
<PAGE>
    The Company also entered into a five year operating lease in 2004 for its
    office space with Customized Box Company, an entity beneficially owned by
    Louie Visco. The lease terms require monthly payments of $554 per month
    December 31, 2008. Rents charged by this entity for the year ended December
    31, 2005 and 2004 was $6,649 and $4,986, respectively.

    Ronald Salestrom, a former contract employee, is the holder of the patents
    under license to the Company. Per the terms of the license agreement, the
    Company is required to pay Mr. Salestrom one and a half percent (1.5%) of
    net sales generated by the Company as a result of holding the patent. For
    the year ending December 31, 2005, total royalties earned were $2,709. In
    addition, Mr. Salestrom has a note receivable with the Company of $60,000.
    The note accrues interest at 4.5% per annum, with payments to be reduced by
    royalties earned under the license agreement. In the year ending December
    31, 2005, the Company recognized interest income on this note of $2,700.
    Accrued interest receivable at December 30, 2005 is $2,215.

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, 2005 the Company exceeded those limits by $170,000.

    During the year ended December 31, 2005 sales to four customers aggregated
    to approximately 63% of total sales for the period. Approximately 76% of the
    accounts receivable balance at December 30, 2005 was comprised of balances
    due from three customers.

    The Company has 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 77%
    and 76% of product in inventory at December 31, 2005 and 2004, respectively,
    and represents 75% and 82% of the products sold in the year ending December
    31, 2005 and 2004, respectively.

13. COMMITMENTS

    During the year ended December 31, 2004, the Company arranged to have
    polymer injection machines built by a third party. In the year ended
    December 31, 2005, one machine was delivered to the Company and is recorded
    in fixed assets at its cost, $75,000. The Company has approved the
    construction of a second machine. The cost estimated to complete the machine
    is $75,000, of which no costs were incurred as of December 31, 2005.

    Additionally, on October 20, 2004, the Company entered into an agreement
    with an unrelated entity to obtain marketing and sales consulting services
    The agreement has an initial term of six months with automatic six month
    renewals unless either party notifies the other in writing at least thirty
    days prior to the expiration that it does not consent to such renewal. The
    Company will pay $7,000 per month and commissions ranging from five percent
    to ten percent on related sales for these services. This agreement is now on
    a month-to-month basis at $5,000 per month subject to performance.

                                      F-19
<PAGE>
    The Company also entered into an agreement on November 24, 2004 with an
    unrelated entity whereby the entity will provide investor relation services
    for an initial period of six months beginning December 1, 2004. In exchange
    for these services, the Company will provide a total of $60,000 and 250,000
    shares of common stock in remuneration, payable in monthly installments of
    $10,000 and 50,000 shares of common stock per month. The contract has been
    renewed by the Company for another six months at $10,000 per month without
    additional stock compensation.

    During the three months ended September 30, 2005, the Company entered into a
    consulting agreement for consulting services. The Company will pay $1,000
    upon signing the agreement and $5,000 per month. The monthly payment will
    accrue until such time as financing is completed the Company. In addition,
    100,000 shares of common stock of the Company stock will be issued by the
    Company.

    OPERATING LEASES

    The Company leases real property located in Pacoima California from an
    entity owned by a Director and majority shareholder under a long-term
    operating lease (see Note 10). The lease began April 2004 and expires
    December 2008. The Company also leases warehouse space under a month to
    month operating lease. Rent expense under these leases for the years ended
    December 31, 2005 and December 31, 2004 was $14,299 and $14,886,
    respectively. Future minimum lease payments under operating leases are as
    follows:

           Years ended December 31:
                   2006                                         $  6,756
                   2007                                            6,648
                   2008                                            6,648
                   Thereafter                                          0
                                                                --------
                                                                $ 20,052
                                                                ========

    CAPITAL LEASES

    The Company leases certain equipment under capital leases that expire
    through 2008. Minimum required lease payments under the lease agreements for
    the years ending December 31 are as follows:

       Year ending December 31,
          2006                                                  $ 10,968
          2007                                                    10,968
          2008                                                     3,660
          Thereafter                                                   0
                                                                --------
                Total                                             25,596
       Less: Amount representing interest                         (4,457)
                                                                --------
                Total payments, net of interest                   21,139
       Less: Current portion                                      (8,085)
                                                                --------
                Total long term minimum lease payments          $ 13,054
                                                                ========

                                      F-20
<PAGE>
    Equipment under capital leases is included in machinery and equipment as
    follows:

                                                               December 31,
                                                                  2005
                                                                --------
       Machinery and equipment                                  $ 32,000
       Less: Accumulated depreciation                             (8,001)
                                                                --------
                                                                $ 23,999
                                                                ========

13. SUBSEQUENT EVENTS

    On March 6, 2006, the Company entered into a Professional Services Agreement
    with Grosvenor Financial Partners, LLC, a Delaware corporation, located in
    New Jersey The Agreement provides that Grosvenor will provide advisory and
    consulting services in connection with qualifying suitable strategic
    partners and other business opportunities. The Agreement has a term of three
    years from the date an introduction is made. The Company will pay Grosvenor
    $2,500 per month for five months and $5,000 per month for twelve months if
    the Company enters into a strategic partnership agreement with a client
    introduced by Grosvenor.

    On March 8, 2006, the Company entered into a Brokerage Services Agreement
    with Alchemy Alternatives, Inc., a registered broker/dealer with the
    Securities and Exchange Commission and member of the National Association of
    Securities Dealers, Inc., located in California.

    The Brokerage Agreement provides that Alchemy will provide brokerage and
    advisory services in connection with obtaining financing for the Company in
    an amount up to $10,000,000. The Agreement has a term of three years from
    the date an introduction is made. The Company will pay Alchmey a cash fee of
    10% and common stock in the amount of 10% of the amount of financing
    received from an introduction by Alchemy.

    There is no material relationship between the Company or its affiliates and
    any of the parties, other than with respect to the Agreement and the
    Brokerage Agreement.

    On March 14, 2006, the Company entered into an Agreement and Plan of
    Acquisition with UTEK Corporation, a Delaware corporation, located in
    Florida and Advanced Fertilizer Technologies, Inc., a Florida corporation,
    located in Florida ("AFTI").

    The Agreement provides that UTEK, as 100% owner of AFTI, shall exchange all
    of their shares of common stock of AFTI for newly issued shares of Series B
    Preferred Stock of the Company. AFTI will then become a wholly-owned
    subsidiary of the Company. AFTI is the owner of a patented method for
    producing suspension fertilizer. The Company also acquired the rights to
    develop and market this patented and proprietary technology as part of this
    transaction.

    There is no material relationship between the Company or its affiliates and
    any of the parties, other than with respect to the Agreement.

    On January 17, 2006, 1,204,000 shares of common stock were issued to FLD
    corporation to retire $250,000 in debt and $51,000 in accrued interest.

                                      F-21