Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2011
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 000-22855
AMERICAN SOIL TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 95-4780218
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7745 Alabama Ave #9 Canoga Park, CA 91304
(Address of principal executive offices)
(818) 899-4686
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X}
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell Company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of February 8, 2012, the number of shares of common stock issued and
outstanding was 68,090,590.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited) 3
Consolidated Balance Sheets -
December 31, 2011 and September 30, 2011 3
Consolidated Statements of Operations -
For the three months ended December 31, 2011 and 2010 4
Consolidated Statements of Cash Flows -
For the three months ended December 31, 2011 and 2010 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Qualitative and Quantitative Disclosures About Market Risk 14
Item 4. Controls and Procedures 14
Item 4T. Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits 16
SIGNATURES 17
2
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, September 30,
2011 2011
------------ ------------
Assets:
Current assets
Cash and cash equivalents $ 5,332 $ 4,356
Accounts receivable, net of allowance of $38,538 at
December 31, 2011 and September 30, 2011, respectively 6,677 25,922
Inventories 6,283 6,286
Prepaid expenses and other current assets 676 1,020
------------ ------------
Total current assets 18,968 37,584
Property and equipment, net 624 760
Intangible assets 82,894 93,256
------------ ------------
Total assets $ 102,486 $ 131,600
============ ============
Liabilities and Stockholders' Deficit:
Current liabilities
Accounts payable $ 1,695,605 $ 1,697,987
Accrued liabilities 2,296,193 2,158,796
Notes payable 1,919,585 1,919,585
Notes payable to related parties 1,114,866 1,104,866
------------ ------------
Total liabilities 7,026,249 6,881,234
------------ ------------
Stockholders' deficit:
Series A preferred stock, $0.50 stated value, 25,000,000 shares authorized,
2,763,699 shares issued and outstanding at December 31, 2011 and
September 30, 2011, respectively 1,381,849 1,381,849
Common stock, $0.001 par value, 100,000,000 shares authorized,
68,090,590 shares issued and outstanding at December 31, 2011 and
September 30, 2011, respectively 68,091 68,091
Additional paid-in capital 19,831,800 19,831,800
Accumulated deficit (28,205,503) (28,031,374)
------------ ------------
Total stockholders' deficit (6,923,763) (6,749,634)
------------ ------------
Total liabilities and stockholders' deficit $ 102,486 $ 131,600
============ ============
See accompanying Notes to Consolidated Financial Statements.
3
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
December 31, December 31,
2011 2010
------------ ------------
Revenue $ 9,154 $ 21,014
Cost of goods sold (excluding amortization
of intangible assets) 2,170 13,644
------------ ------------
Gross profit 6,984 7,370
------------ ------------
Operating expenses:
General and administrative 144,285 167,622
Sales and marketing 207 75
Amortization of intangible assets 10,362 12,473
------------ ------------
Total operating expenses 154,854 180,170
------------ ------------
Loss from operations (147,870) (172,800)
Other (income) expense:
Interest expense 26,259 26,744
Loss on sale of property and equipment -- 1,200
------------ ------------
Loss before income taxes (174,129) (200,744)
Provision for income taxes -- --
------------ ------------
Net loss $ (174,129) $ (200,744)
============ ============
Net loss per share basic and diluted $ (0.00) $ (0.00)
============ ============
Weighted average common shares outstanding
used in per share calculations 68,090,590 68,090,590
============ ============
See accompanying Notes to Consolidated Financial Statements.
4
AMERICAN SOIL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Three Months
Ended Ended
December 31, December 31,
2011 2010
---------- ----------
Cash flows from operating activities:
Net loss $ (174,129) $ (200,744)
Adjustments to reconcile net loss to net cash
Loss on disposal of assets -- 1,200
Depreciation and amortization 10,498 18,496
Stock-based compensation -- 8,936
Changes in operating assets and liabilities:
Accounts receivable 19,245 (6,661)
Inventory 3 1,312
Pre-paids and other current assets 344 --
Accounts payable (2,382) 38,137
Accrued expenses 137,397 138,948
---------- ----------
Net cash provided by (used in) operating activities (9,024) (376)
---------- ----------
Cash flows from financing activities:
Proceeds from related party notes 10,000 3,000
Payments on capital lease obligations -- (3,527)
Repayments on notes payable -- --
---------- ----------
Net cash provided by (used in) financing activities 10,000 (527)
---------- ----------
Net decrease in cash and cash equivalents 976 (903)
Noncash investing & financing activities:
Cash and cash equivalents at beginning of period 4,356 2,045
---------- ----------
Cash and cash equivalents at end of period $ 5,332 $ 1,142
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 2,127 $ --
========== ==========
Cash paid during the period for income taxes $ -- $ --
========== ==========
See accompanying Notes to Consolidated Financial Statements.
5
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
(UNAUDITED)
1. BUSINESS
The Company is primarily engaged in the developing, manufacturing and marketing
of polymer and other soil amendments to the agricultural, turf and horticulture
industries. The Company's products are used to decrease water usage, increase
nutrient retention in soil, enhance seed germination and sprout emergence,
clarify ponds and increase the effectiveness of chemical fertilizers and
biological additives. In 2006, the Company acquired the patent to a slow release
fertilizer. The Company also has exclusive license rights to the use of patented
polymer application techniques, as well as numerous patents on a unique machine
designed to inject polymer and other liquid products into existing turf and some
crops.
The Company expanded to provide next-generation and sustainable fertilizers thru
the acquisition of Smart World Organics, Inc. ("Smart World") on December 20,
2006. Smart World sells homogenized fertilizers, non-toxic insect controls,
plant protectants, seed, and soil and silage inoculants. Due to losses incurred
in 2008, management terminated Smart World employees and seeks to operate
through commission-based sales representatives. Additionally, the Company has
several debt obligations that are past the contractual maturity date or are due
and payable due to non payment of interest.
2. GOING CONCERN AND MANAGEMENT'S PLAN
The Company has sustained significant losses and has an accumulated deficit of
$28,205,503 and negative working capital of $7,007,281 as of December 31, 2011.
The ability of the Company to continue as a going concern is dependent upon
obtaining additional capital and financing, and ultimately generating positive
cash flows from operations. Management intends to seek additional capital either
through debt or equity offerings. Due to the current economic environment and
the Company's current financial condition, management cannot be assured there
will be adequate capital available when needed and on acceptable terms. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.
3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements of the Company are unaudited and have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information, pursuant to the
6
rules and regulations of the Securities and Exchange Commission. Notes to the
consolidated financial statements which would substantially duplicate the
disclosures contained in the audited financial statements for the most recent
fiscal year 2011 as reported in the Company's Form 10-K have been omitted. The
results of operations for the three month periods ended December 31, 2011 and
2010 are not necessarily indicative of the results to be expected for the full
year. In the opinion of management, the consolidated financial statements
include all adjustments, consisting of normal recurring accruals, necessary to
present fairly the Company's financial position, results of operations and cash
flows. These statements should be read in conjunction with the financial
statements and related notes which are part of the Company's Annual Report on
Form 10-K for the year ended September 30, 2011.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. The Company's significant estimates made in connection
with the preparation of the accompanying financial statements include the
valuation of inventories, carrying value of the intangible assets, and valuation
of stock options.
CONCENTRATION OF CREDIT RISK
Accounts receivable from individual customers representing 10% or more of the
net accounts receivable balance consists of the following as of December 31:
2011 2010
---- ----
Percent of accounts receivable 100% 76%
Number of customers 1 2
Sales from individual customers representing 10% or more of sales consist of the
following customers for the three months ended December 31:
2011 2010
---- ----
Percent of sales 100% 95%
Number of customers 1 4
As a result of the Company's concentration of its customer base, the loss or
cancellation of business from, or significant changes in scheduled deliveries of
product sold to the above customers or a change in their financial position
could materially and adversely affect the Company's consolidated financial
position, results of operations and cash flows.
7
NET LOSS PER SHARE
Basic net loss per share is calculated by dividing net loss by the weighted
average common shares outstanding during the period. Diluted net loss per share
reflects the potential dilution to basic net loss per share that could occur
upon conversion or exercise of securities, options or other such items to common
shares using the treasury stock method, based upon the weighted average fair
value of our common shares during the period. For each period presented, basic
and diluted net loss per share amounts are identical as the effect of potential
common shares is antidilutive.
The following is a summary of outstanding securities which have been excluded
from the calculation of diluted net loss per share because the effect would have
been antidilutive for the three months ended December 31:
2011 2010
---------- ----------
Series A convertible preferred stock 2,763,699 2,763,699
Convertible debt -- --
---------- ----------
2,763,699 2,763,699
========== ==========
NEW ACCOUNTING PRONOUNCEMENTS
In May 2011, FASB issued an update (ASU No. 2011-04) to ASC 820, Fair Value
Measurements and Disclosures, to develop common requirements for measuring fair
value and for disclosing information about fair value measurements in accordance
with GAAP and IFRS. This update is effective for interim and fiscal years
beginning after December 15, 2011. The Company does not feel that this will have
a material impact on the consolidated financial statements.
Other recent authoritative guidance issued by governing bodies did not, or are
not expected to have a material effect on the Company's consolidated financial
statements.
4. INVENTORIES
Inventories consist of the following at:
December 31, September 30,
2011 2011
---------- ----------
Raw materials $ -- $ --
Finished goods 6,283 6,286
---------- ----------
$ 6,283 $ 6,286
========== ==========
8
5. ACCRUED EXPENSES
Accrued expenses consist of the following at:
December 31, September 30,
2011 2011
---------- ----------
Interest $ 381,846 $ 370,335
Interest to related parties 213,513 200,892
Compensation and related 1,700,834 1,587,569
---------- ----------
$2,296,193 $2,158,796
========== ==========
6. NOTES PAYABLES AND RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
During the three months ended December 31, 2011, the Company's secretary Ms.
Visco loaned the Company an additional $10,000. This note was consolidated with
a note issued in May 2010 for $789,842, and accordingly the previous note has
been superseded. The new note is for a total of $799,842. Principal is due
January 1, 2013. Interest is payable monthly based upon the current prime rate.
The note is included in the accompanying consolidated balance sheet under
current notes payable to related parties due to the default status for
non-payment of monthly interest.
7. COMMON STOCK
STOCK OPTIONS
As of December 31, 2011, there were 1,976,000 stock options outstanding with a
weighted average exercise price of $0.20 and a remaining contractual life of
0.75 years. Stock option expense for the quarters ended December 31, 2011 and
2010 was $0 and $8,936, respectively which is included in general and
administrative expenses in the accompanying Consolidated Statement of
Operations. All outstanding options were fully vested as of September 30, 2011.
There were no issuances of common stock, options or warrants during the periods
presented.
8. LITIGATION
On or about September 21, 2007, Stockhausen, Inc. ("Stockhausen") filed a
Complaint in the United States District Court, for the Middle District of North
Carolina, against us seeking damages. The parties entered into a settlement
agreement on June 2, 2010. Under the settlement agreement, we agreed to pay
Stockhausen $250,000 on or before June 23, 2010 as a compromise to Stockhausen's
claims that currently total $603,921. We further agreed that we would consent to
the entry of a Judgment against us in favor of Stockhausen in the amount of
$603,921 if we failed to make complete and timely payment as agreed. The company
9
was unable to make the agreed upon payment and on July 8, 2010 Stockhausen
entered a judgment for the above stated amount against the Company.
On or about October 4, 2007, Raymond J. Nielsen and Cheryl K. Nielsen
(collectively, "Plaintiffs"), filed a Complaint in the Circuit Court in the
Sixth Judicial District of Pasco County, Florida, against us and Smart World
(collectively "Defendants") seeking damages, declaratory, and injunctive relief.
Plaintiffs allege that Defendants failed to pay interest when due on the
Convertible Debenture from Defendants to Plaintiffs and, thus, the entire amount
of the Convertible Debenture is accelerated and Plaintiffs are seeking a
judgment in the amount of $1,500,000 plus interest. On December 29, 2009, the
matter was settled for $400,000 and the Company had 60 days in which to remit
the amount or a judgment in the entire amount claimed will be entered against
us. The Company was not able to meet the terms of the settlement and have been
actively communicating with the Plaintiffs to extend the terms of the
settlement. On January 21, 2011, we agreed to pay interest on the settlement
amount at 4% per annum.
To the best knowledge of our management, there are no other significant legal
proceedings pending against us.
9. SUBSEQUENT EVENTS
On January 27, 2012, Ms. Visco loaned the Company an additional $7,000.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with our
financial statements, including the notes thereto, appearing elsewhere in this
Report.
FORWARD-LOOKING STATEMENTS
The following information contains certain forward-looking statements.
Forward-looking statements are statements that estimate the happening of future
events and are not based on historical fact. Forward-looking statements may be
identified by the use of forward-looking terminology, such as "may," "could,"
"expect," "estimate," "anticipate," "plan," "predict," "probable," "possible,"
"should," "continue," or similar terms, variations of those terms or the
negative of those terms. The forward-looking statements specified in the
following information have been compiled by our management on the basis of
assumptions made by management and considered by management to be reasonable.
Our future operating results, however, are impossible to predict and no
representation, guaranty, or warranty is to be inferred from those
forward-looking statements.
OVERVIEW
We develop, manufacture on an outsourced basis 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.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, our selected
financial information:
Three Months Three Months
Ended Ended
December 31, December 31,
2011 2010
------------ ------------
(Unaudited) (Unaudited)
STATEMENT OF OPERATIONS DATA:
Revenue $ 9,154 $ 21,014
Net Loss (174,179) (200,744)
Net Loss per Share $ (0.00) $ (0.00)
December 31, September 30,
2011 2011
------------ ------------
(Unaudited)
BALANCE SHEET DATA:
Current Assets $ 18,968 $ 37,584
Total Property & Equipment, Net 624 760
Intellectual Property, Net 82,894 93,256
Net Deferred Tax Asset -- --
Total Assets 102,486 131,600
Total Current Liabilities 7,026,249 6,881,234
Accumulated Deficit $(28,205,503) $(28,031,374)
11
THREE MONTHS ENDED DECEMBER 31, 2011 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
2010
REVENUES
Revenues for the three months ended December 31, 2011 were $9,154, compared to
$21,014 for the three months ended December 31, 2010, a decrease of 56%. This
decrease in revenue is a direct result of our lack of financing resulting in our
inability to promote sales.
COST OF SALES
Cost of goods sold decreased to $2,170 for the three months ended December 31,
2011 from $13,644, for the three months ended December 31, 2010. The decrease in
the cost of sales is the result of the decreased revenues during this period.
Our gross margins were 76% and 35% for the three months ended December 31, 2011
and 2010, respectively. The increase in our gross margins was due to an increase
in the proportion of revenues from royalties as opposed to sales of product in
the current period. Revenues associated with royalties have relatively minor
costs when compared to the costs of product sales.
OPERATING EXPENSES
Operating expenses decreased 14% to $154,854 from $180,170 for the three month
period ended December 31, 2011 and 2010, respectively.
This decrease in operating expenses was a result in decreased operations. Our
general and administrative expenses decreased to $144,285 for the three months
ended December 31, 2011 from $167,622 for the three months ended December 31,
2010 due to the continued reduction in rent, certain administrative costs, and
lack of stock based compensation in the current quarter as all options became
fully vested at September 30, 2011.
NET LOSS
We experienced a net loss from operations of $174,129 for the three months
ended December 31, 2011 as compared to a net loss of $200,744 for the three
months ended December 31, 2010. The decrease in net loss was primarily a result
of the decreased operating expenses offset by decreasing revenues during the
current quarter, as described above in the preceding paragraphs.
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 proceeding 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
12
exists although the initial indication is that our markets will become diverse
and therefore not indicate significant seasonal variations. As we expand into
the residential and commercial segments nationally, we will experience some
seasonal declines in sales during the fall and winter quarters in less temperate
climates. We intend to expand into the hydroponics organic market, and if
successful, we should experience a significant lessening of seasonal variations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $5,332 and $4,356 at December 31, 2011 and
December 31, 2010, respectively. Net cash used in operating activities was
$9,024 for the period ended December 31, 2011 compared to $376 during the period
ended December 31, 2010. Net cash provided by financing activities was $10,000,
for the period ended December 31, 2011 compared to net cash used in operations
of $527 for the comparable period ended December 31, 2010. We have historically
relied upon one of our officers and significant shareholders to provide cash to
meet short term operating cash requirements.
At December 31, 2011, the outstanding balance of notes payable was $3,034,451.
These notes consisted of: a) $1,500,000, 8% per annum convertible debentures at
the closing price on the day immediately preceding the day of conversion which
is currently in default and in dispute; (b) various debentures totaling $419,585
with interest per annum from 8-10%; (c) a loan from an officer and shareholder
for $799,842 bearing interest at prime; and (d) various loans from related
parties totaling $315,024 bearing interest from prime to 12%. All of the above
mentioned notes are beyond their due dates or in default status. In addition,
all convertible notes are no longer convertible unless the company and the
holders agree to convert individual notes.
Interest expense for the three months ended December 31, 2011 and 2010 was
$26,259 and $26,744, respectively.
We have a working capital deficit $7,007,281 as of December 31, 2011 compared to
working capital deficit of $6,843,650 as of September 30, 2011. Our increase in
current liabilities is directly related to an increase in our notes payable,
accounts payable and accrued liabilities.
As shown in the accompanying financial statements, we have incurred an
accumulated deficit of $28,205,503 and a working capital deficit of
approximately $7,007,281 as of December 31, 2011. 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.
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
13
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 auditors issued an explanatory paragraph regarding substantial doubt about
the Company's ability to continue as a going concern in our most recent 10-K for
the year ended September 30, 2011.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to provide
reasonable assurance that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives and in reaching a reasonable level of assurance
management necessarily was required to apply its judgment in evaluating the cost
benefit relationship of possible controls and procedures.
Our President and Chief Financial Officer (the "Certifying Officers") Is
responsible for establishing and maintaining our disclosure controls and
procedures. The Certifying Officer have designed such disclosure controls and
procedures to ensure that material information is made known to him particularly
during the period in which this report was prepared. The Certifying Officer has
evaluated the effectiveness of our disclosure controls and procedures and has
determined that they are effective.
There has been no other change in our internal controls over financial reporting
during our most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal controls over financial
reporting.
ITEM 4T. CONTROLS AND PROCEDURES
Not applicable
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On or about September 21, 2007, Stockhausen, Inc. ("Stockhausen") filed a
Complaint in the United States District Court, for the Middle District of North
Carolina, against us seeking damages. The parties entered into a settlement
agreement on June 2, 2010. Under the settlement agreement, we agreed to pay
Stockhausen $250,000 on or before June 23, 2010 as a compromise to Stockhausen's
claims that currently total $603,921. We further agreed that we would consent to
the entry of a Judgment against us in favor of Stockhausen in the amount of
$603,921 if we failed to make complete and timely payment as agreed. The company
was unable to make the agreed upon payment and on July 8, 2010 Stockhausen
entered a judgment for the above stated amount against the company.
On or about October 4, 2007, Raymond J. Nielsen and Cheryl K. Nielsen
(collectively, "Plaintiffs"), filed a Complaint in the Circuit Court in the
Sixth Judicial District of Pasco County, Florida, against us and Smart World
(collectively "Defendants") seeking damages, declaratory, and injunctive relief.
Plaintiffs allege that Defendants failed to pay interest when due on the
Convertible Debenture from Defendants to Plaintiffs and, thus, the entire amount
of the Convertible Debenture is accelerated and Plaintiffs are seeking a
judgment in the amount of $1,500,000 plus interest. On December 29, 2009, the
matter was settled for $400,000 and the Company had 60 days in which to remit
the amount or a judgment in the entire amount claimed will be entered against
us. The Company was not able to meet the terms of the settlement and have been
actively communicating with the Plaintiffs to extend the terms of the
settlement. On January 21, 2011, we agreed to pay interest on the settlement
amount at 4% per annum.
To the best knowledge of our management, there are no other legal proceedings
pending against us.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following Exhibits are filed herein:
No. Title
--- -----
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
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
16
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, duly authorized.
DATED: February 8, 2012 AMERICAN SOIL TECHNOLOGIES, INC.
By: /s/ Carl P. Ranno
------------------------------------------
Carl P. Ranno
Its: President, Chief Executive Officer, Chief
Financial Officer (Principal Executive
Officer, Principal Financial Officer
and Principal Accounting Officer)
1
