ECO SOIL SYSTEMS INC, SB-2/A, 1997-01-16

ECO SOIL SYSTEMS INC
SB-2/A, 1997-01-16
AGRICULTURAL SERVICES

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As filed with the Securities and Exchange Commission on January 16, 1997
Registration No. 333-15883

U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
ECO SOIL SYSTEMS, INC.
(Name of small business issuer in its charter)

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NEBRASKA 0711 47-0709577
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

10890 THORNMINT ROAD, SUITE 200 WILLIAM B. ADAMS, CHIEF EXECUTIVE OFFICER
SAN DIEGO, CALIFORNIA 92127 ECO SOIL SYSTEMS, INC.
(619) 675-1660 10890 THORNMINT ROAD, SUITE 200
(Address and telephone number SAN DIEGO, CALIFORNIA 92127
of registrant's principal executive (619) 675-1660
offices and principal place of business) (Name, address and telephone number
of agent for service)

Copies to:

KENNETH L. CUTLER, ESQ. Michele D. Vaillancourt, Esq.
DORSEY & WHITNEY LLP Winthrop & Weinstine, P.A.
PILLSBURY CENTER SOUTH 3000 Dain Bosworth Plaza
220 SOUTH SIXTH STREET 60 South Sixth Street
MINNEAPOLIS, MINNESOTA 55402-1498 Minneapolis, Minnesota 55402
TELEPHONE: (612) 340-2740 Telephone: (612) 347-0700
FACSIMILE: (612) 340-8738 Facsimile: (612) 347-0600

Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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===========================================================================================================
PROPOSED
MAXIMUM OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
--------------------------- ---------------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value 3,795,000 shares $4.50 $17,077,500 $5,175(3)
</TABLE>

(1) Includes the Underwriters' over-allotment option to purchase up to 495,000
shares.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933, as amended.
(3) Of this amount, $4,705 was paid upon the filing of the Company's initial
registration statement.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.

SUBJECT TO COMPLETION, DATED JANUARY 16, 1997

3,300,000 SHARES

[LOGO] ECO SOIL SYSTEMS

COMMON STOCK

All of the shares of Common Stock offered hereby (the "Shares") are being
sold by Eco Soil Systems, Inc. (the "Company"). Prior to this offering, there
has been no public market for the Common Stock of the Company (the "Common
Stock"). It is currently anticipated that the initial public offering price per
share will be in the range of $4.00 to $4.50. See "Underwriting" for information
relating to the factors considered in determining the initial public offering
price. The Common Stock has been approved for trading on The Nasdaq SmallCap
Market ("Nasdaq") under the symbol "ESSI" upon completion of this offering.

THE COMMON STOCK OFFERED BY THIS PROSPECTUS IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
BEGINNING ON PAGE 6 AND "DILUTION" ON PAGE 17.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

===============================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)

Per Share $ $ $

Total (3) $ $ $
===============================================================

(1) The Company has agreed to pay to R. J. Steichen & Company, as the
representative of the Underwriters (the "Representative"), a
nonaccountable expense allowance equal to 2.0% of the total Price to
Public. The Company has also agreed to sell to the Representative, for a
nominal purchase price, a five-year warrant (the "Representative's
Warrant") to purchase up to 330,000 shares of Common Stock exercisable at
a per share price equal to 120% of the per share Price to Public. In
addition, the Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $736,500
(including the Representative's nonaccountable expense allowance of 2.0%
of the gross proceeds referenced in Note 1 above).

(3) The Company has granted the Underwriters a 45-day option to purchase up
to 495,000 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See
"Underwriting."

The Shares are being offered by the Underwriters on a "firm commitment"
basis, subject to prior sale, when, as and if delivered to and accepted by
them, and subject to certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject any order in
whole or in part. It is expected that delivery of the certificates for the
Shares will be made on or about , 1997 in Minneapolis, Minnesota.

[LOGO] RJ STEICHEN & COMPANY

The date of this Prospectus is , 1997.

[DIAGRAM OF BIOJECT SYSTEM]

The BioJect System

The following trademarks of the Company are used in this Prospectus:
BioJect(tm), ClearLake(tm) and CleanRack(tm). This Prospectus also includes
trade names, trademarks and registered trademarks of companies other than Eco
Soil Systems, Inc.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MAY BE EFFECTED ON THE NASDAQ
SMALLCAP MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

FOR CALIFORNIA RESIDENTS ONLY

WITH RESPECT TO SALES OF THE COMMON STOCK BEING OFFERED HEREBY TO
CALIFORNIA RESIDENTS, SUCH COMMON STOCK MAY BE SOLD ONLY TO (1) "ACCREDITED
INVESTORS" WITHIN THE MEANING OF REGULATION D UNDER THE SECURITIES ACT OF 1933,
(2) BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST COMPANIES, INSURANCE COMPANIES,
INVESTMENT COMPANIES REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
PENSION AND PROFIT SHARING TRUSTS, CORPORATIONS OR OTHER ENTITIES WHICH,
TOGETHER WITH THE CORPORATION'S OR OTHER ENTITY'S AFFILIATES, HAVE A NET WORTH
ON A CONSOLIDATED BASIS ACCORDING TO THEIR MOST RECENT REGULARLY PREPARED
FINANCIAL STATEMENTS (WHICH SHALL HAVE BEEN REVIEWED, BUT NOT NECESSARILY
AUDITED, BY OUTSIDE ACCOUNTANTS) OF NOT LESS THAN $14,000,000 AND SUBSIDIARIES
OF THE FOREGOING, (3) ANY CORPORATION, PARTNERSHIP OR ORGANIZATION (OTHER THAN A
CORPORATION, PARTNERSHIP OR ORGANIZATION FORMED FOR THE SOLE PURPOSE OF
PURCHASING THE SECURITIES OFFERED HEREBY) WHO PURCHASES AT LEAST $1,000,000
AGGREGATE AMOUNT OF THE SECURITIES OFFERED HEREBY, (4) ANY NATURAL PERSON WHO
(A) HAS INCOME OF $65,000 AND A NET WORTH OF $250,000, OR (B) HAS A NET WORTH OF
$500,000 (IN EACH CASE, EXCLUDING HOME, HOME FURNISHINGS AND PERSONAL
AUTOMOBILES), OR (5) ANY "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED UNDER RULE
144A OF THE SECURITIES ACT.

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, ALL INFORMATION HEREIN ASSUMES THAT THE UNDERWRITERS'
OVER-ALLOTMENT OPTION IS NOT EXERCISED. SEE "UNDERWRITING." THIS PROSPECTUS
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE
COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN
THE FORWARD-LOOKING STATEMENTS.

THE COMPANY

Eco Soil Systems, Inc. (the "Company") has developed two patented
distribution systems that enable the Company to market and support a proprietary
line of microbial products which control and manage a wide variety of soil, crop
and water problems. The Company believes that these biological products, when
introduced through its BioJect and ClearLake delivery systems, will
cost-effectively replace or complement the use of chemical pesticides or
fertilizers in the turf maintenance, agricultural crop, soil remediation and
water quality management industries. Use of the Company's systems can contribute
to a reduction in the negative cumulative environmental effect of chemical use
with no increase in cost or crop damage. The Company's goals are to increase the
market share for biocontrol products and to make its delivery systems the
principal methods for distributing biotechnology products in its targeted
industries.

The Company's delivery systems ferment environmentally-safe microorganisms
at the site of application and automatically dispense the appropriate amount and
type of cultured product at the desired frequency directly into the customer's
irrigation system, pond or lake. By fermenting its biological products at the
customer's site, the Company is able to preserve and protect the potency of the
microorganisms, significantly reduce shipping costs and control the frequency of
application and concentration of product. The Company believes that its
microbial products, delivery systems and bioaugmentation expertise have
positioned it as a leader in the introduction, marketing and management of
biological complements or alternatives to many chemical pesticide and fertilizer
products.

To date, the Company has marketed its products and services primarily to
golf courses and currently has approximately 300 BioJect or ClearLake systems in
operation throughout the world. The Company intends to leverage this experience
in the turf maintenance industry into irrigation-dependent agricultural crops
and the soil remediation and water quality management industries. The Company is
pursuing applications of its bioaugmentation technology in agricultural markets
that suffer from chronic problems such as plant diseases and insects that attack
crops, in soil remediation markets that involve hazardous chemicals such as PCBs
and Atrazine, and in water quality management markets that involve problems with
algae, sediment and oxygen levels.

The Company has entered into technology transfer agreements to obtain
certain microorganisms indirectly from the University of California, Michigan
State University and Cornell University, and is pursuing the licensing of
microbial discoveries from other major biotechnological centers around the
world. The Company currently has the exclusive rights through licenses or
marketing agreements to twelve microbial products that: (i) suppress plant
diseases, (ii) improve soil porosity, (iii) break down thatch, (iv) fix
atmospheric nitrogen, (v) inhibit the growth of certain insect pests and (vi)
bioremediate certain hazardous chemicals.

Distribution and sales of the Company's products have historically occurred
through direct sales efforts and independent dealers and distributors. The
Company has initiated a strategy of acquiring selected independent dealers and
distributors of turf maintenance products throughout the United States. The
Company acquired two independent dealers as of May 31, 1996 and intends to
continue its acquisition strategy to build a nationwide distribution system to
market its proprietary products. The Company believes that its products can be
more effectively marketed by leveraging the customer relationships developed by
these dealers and distributors, particularly in the golf course industry, and by
significantly increasing the size of the Company's own sales force through the
acquisition of an established network of salespersons.

The Company's principal proprietary products are sold or distributed in
regions where approximately 30% of all United States golf courses are located.
Although international sales to date have represented less than 20% of the
Company's sales, the Company has established formal distribution relationships
in Japan, South America, Mexico, Canada, Spain and Korea.

The Company was incorporated under the laws of the State of Nebraska in
1987. The Company's principal executive offices are located at 10890 Thornmint
Road, Suite 200, San Diego, California 92127, and its telephone number is (619)
675-1660.

THE OFFERING

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Common Stock offered 3,300,000 shares

Common Stock outstanding(1):
Before the offering 6,564,166 shares

After the offering 9,864,166 shares

Use of proceeds Acquisitions of dealers and distributors,
repayment of Bridge Notes, repayment of
certain short-term debt and working
capital purposes. See "Use of Proceeds."

Proposed Nasdaq SmallCap Market symbol ESSI
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- ----------------------------

(1) The foregoing calculations do not include (i) 1,086,765 shares of Common
Stock issuable upon conversion of $3,695,000 in promissory notes issued
by the Company in July 1996 (the "Bridge Notes") (assuming all of the
Bridge Notes are converted and assuming an initial public offering price
of $4.25 per share), (ii) 739,000 shares of Common Stock subject to
warrants (the "Bridge Warrants") at an exercise price of 80% of the
initial public offering price, (iii) 2,406,568 shares of Common Stock
subject to outstanding options at a weighted average exercise price of
$2.13 per share, (iv) 1,721,065 shares of Common Stock subject to other
outstanding warrants at a weighted average exercise price of $2.70 per
share, and (v) 330,000 shares of Common Stock subject to the
Representative's Warrant at an exercise price of 120% of the initial
public offering price. See "Dilution," "Description of Securities" and
"Underwriting."

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:

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SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30, NINE MONTHS ENDED SEPTEMBER 30,
----------------------- ------------------------- -----------------------------------
1994 1995 1995 1996 1995 1996 1996(1)
--------- --------- ----------- ---------- -------- -------- -----------
(AUDITED) (UNAUDITED) (AUDITED) (UNAUDITED) (PRO FORMA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales ................... $ 2,688 $ 3,757 $ 1,940 $ 4,139 $ 2,783 $ 9,229 $ 15,749
Cost of sales ............... 1,998 1,980 844 2,329 1,615 5,705 10,421
-------- -------- -------- -------- -------- -------- --------
Gross profit ................ 690 1,777 1,096 1,810 1,168 3,524 5,328
Selling, general and
administrative ............. 2,996 2,938 1,373 2,961 1,929 5,079 7,099
Research and development .... 286 413 160 275 264 353 353
-------- -------- -------- -------- -------- -------- --------
Loss from operations ........ (2,592) (1,574) (437) (1,426) (1,025) (1,908) (2,124)
Interest expense ............ (224) (262) (131) (192) (172) (523) (652)
-------- -------- -------- -------- -------- -------- --------
Net loss .................... $ (2,816) $ (1,836) $ (568) $ (1,618) $ (1,197) $ (2,431) $ (2,776)
======== ======== ======== ======== ======== ======== ========
Net loss per share(2) ....... $ (.62) $ (.35) $ (.11) $ (.27) $ (.23) $ (.40) $ (.44)
======== ======== ======== ======== ======== ======== ========
Shares used in calculation of
net loss per share(2) ...... 4,557 5,207 5,184 5,980 5,304 6,050 6,359
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:

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SEPTEMBER 30, 1996
--------------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
(UNAUDITED)

<S> <C> <C>
Cash ............................................... $ 437 $ 6,983
Working capital (deficit) .......................... (3,875) 8,110
Total assets ....................................... 13,979 20,525
Long-term debt and other obligations, net of current
portion ........................................... 2,020 2,020
Common stock/paid in capital ....................... 12,717 24,813
Accumulated deficit ................................ (11,125) (11,236)
Total shareholders' equity ......................... 1,759 13,744

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(1) The pro forma consolidated statement of operations data give effect to the
acquisition of Turf Specialty, Inc. and Turf Products, Ltd., as if they
were acquired on January 1, 1995. The pro forma consolidated statement of
operations data are presented for illustrative purposes only and not
necessarily indicative of what actual results of operations would have been
for the period presented had the transactions occurred on that date. See
"Unaudited Pro Forma Condensed Consolidated Statements of Operations."

(2) Computed on the basis described in Note 1 to the Consolidated Financial
Statements.

(3) Adjusted to give effect to the sale of the 3,300,000 Shares offered hereby
at an assumed initial public offering price of $4.25 per Share and the
application of net proceeds therefrom (including repayment of indebtedness
under the Bridge Notes and the write off of $111,000 of related debt
issuance costs). The foregoing calculations do not include (i) 1,086,765
shares of Common Stock issuable upon conversion of the Bridge Notes
(assuming all of the Bridge Notes are converted and assuming an initial
public offering price of $4.25 per share), (ii) 739,000 shares of Common
Stock subject to the Bridge Warrants at an exercise price of 80% of the
initial public offering price, (iii) 2,406,568 shares of Common Stock
subject to outstanding options at a weighted average exercise price of
$2.13 per share, (iv) 1,721,065 shares of Common Stock subject to other
outstanding warrants at a weighted average exercise price of $2.70 per
share, and (v) 330,000 shares of Common Stock subject to the
Representative's Warrant at an exercise price of 120% of the initial public
offering price. See "Dilution," "Description of Securities" and
"Underwriting."

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY BY POTENTIAL INVESTORS IN EVALUATING AN
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.

ACCUMULATED DEFICIT; CONTINUING OPERATING LOSSES; GOING CONCERN CONSIDERATIONS

At September 30, 1996, the Company had an accumulated deficit of
$11,125,000. The Company has never generated net income and continues to sustain
operating losses. To date, the Company has been principally engaged in
organizational activities, research and development, licensing activities,
product introductions and the establishment of a sales and marketing
organization. Due to increased expenditures for product development, U.S. patent
protection and sales and marketing expenses, including the costs of the
Company's recent dealer acquisitions, the Company expects to continue generating
losses at least through the first six months of 1997. The Company is dependent
upon improvements in the profitability of its operations, the availability of
additional financing, revenue growth from acquisitions, the successful
integration of dealers and distributors, and obtaining rights to additional
microbial products to increase revenues to a level necessary to achieve
profitability. The report of the independent auditors on the Company's
consolidated financial statements for the years ended December 31, 1994 and 1995
and the six months ended June 30, 1996 includes an explanatory paragraph stating
that the Company's recurring losses from operations raise substantial doubt
about its ability to continue as a going concern. There can be no assurance that
the Company will ever achieve successful or profitable operations. See "Selected
Consolidated Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

DEPENDENCE ON FUTURE GROWTH; RISKS OF NEW PRODUCT CONCEPTS

In order to expand its business and achieve significant growth in sales,
the Company must continue to broaden its sales and marketing capability and
increase the size of its customer base, in part through the acquisition of
independent dealers and distributors. Although sales of certain of the Company's
products are growing, the Company's products and operations remain in the early
stages of market introduction and are subject to the risks inherent in the
commercialization of new product concepts. These risks include unforeseen
problems, delays, expenses and complications frequently encountered in the early
phases of research, development and commercialization of products, and expenses
associated with hiring and training additional sales, marketing and customer
service personnel. Many of these events may be beyond the Company's control. The
Company is also attempting to market its products into several new industries,
including the agricultural crop and soil remediation markets. There can be no
assurance that such efforts will prove to be successful or that the Company's
intended customers will purchase the Company's systems and products instead of
competing products. Failure to obtain significant customer satisfaction or
market share would have a material adverse effect on the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

RISKS ASSOCIATED WITH DEALER ACQUISITION STRATEGY

Distribution and sales of the Company's products have historically occurred
through direct sales efforts and independent dealers and distributors. The
Company has initiated a strategy of attempting to establish a nationwide
distribution system for its products through the acquisition of various
independent dealers and distributors. Such acquisitions will require significant
capital outlays and, due to the generally lower margins associated with those
dealers' existing products, may have the effect of lowering the Company's gross
profit margins. Achieving the anticipated benefits of such acquisitions will
depend on a variety of factors, including whether the integration of such
dealers and distributors with the Company's organization can be accomplished in
an efficient and effective manner and whether or not the acquired sales force
can effectively sell the Company's proprietary products. Any failure to identify
acquisition candidates properly, any large expenditures on acquisitions that
prove to be unprofitable, or any inability to sell the Company's proprietary
products through the acquired distribution system could have a material adverse
effect on the Company's business, financial position and results of operations.
See "Use of Proceeds" and "Business -- Strategy."

FUTURE ADDITIONAL CAPITAL REQUIREMENTS; NO ASSURANCE FUTURE CAPITAL WILL BE
AVAILABLE

The commercialization of the Company's products requires the commitment of
significant capital expenditures. Although the Company believes that existing
capital resources, including the proceeds of this offering and interest earned
thereon, will allow it to maintain its current and planned operations and
finance any potential acquisitions for at least 18 months following this
offering, no assurance can be given in that regard. Furthermore, the Company
will require additional funds to support its development activities through the
rigorous testing and marketing phases of development. The Company will seek to
obtain additional funds through public or private equity or debt financing,
collaborative or other arrangements with corporate partners or from other
sources. There can be no assurance that such additional financing can be
obtained on desirable terms or at all. If additional funds are not available,
the Company may be required to curtail its operations significantly or eliminate
one or more of its research, discovery or development programs or otherwise
curtail marketing efforts in certain territories for one or more of its product
lines. While the Company has established a line of credit with Imperial Bank of
San Diego ("Imperial Bank"), if additional financing is required, there can be
no assurance that the Company will be able to renew or increase its line of
credit on acceptable terms, if at all. See "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business" and "Certain Transactions."

POTENTIAL CREDIT RISKS

Historically, the Company has experienced longer collection cycles for its
proprietary products and systems compared to its distributed products. As of
September 30, 1996, approximately 17% of the Company's total accounts receivable
were over 90 days past due. The Company generally does not require a pledge of
collateral securing these accounts receivable and provides for estimated losses
on uncollectible accounts at the time of sale. Although losses on uncollectible
accounts have been minimal and within management's expectations, the failure of
the Company to maintain adequate procedures relative to the issuance of credit
or establish adequate allowances for uncollectible accounts receivable could
have a material adverse effect upon the Company's business, financial position
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of Notes to
Consolidated Financial Statements.

CUSTOMER CONCENTRATION

For the years ended December 31, 1994 and 1995, the Company recognized
revenues from Wilbur-Ellis Company representing approximately 45% and 13% of the
Company's net sales for such periods, respectively. The Company does not have
any long-term purchase agreements with Wilbur-Ellis Company. No customer
accounted for more than 10% of net sales during the six months ended June 30,
1996 or the nine months ended September 30, 1996. The loss of or a significant
reduction in orders from major customers could have a material adverse effect on
the Company's business, financial condition and results of operations. In
addition, the timing of orders from major customers could cause fluctuations in
the Company's quarterly financial results. See " -- Quarterly Fluctuations in
the Company's Results of Operations," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of Notes to
Consolidated Financial Statements.

PATENTS, PROPRIETARY TECHNOLOGY AND LICENSES

The Company's success will be dependent in large measure upon its ability
to obtain and enforce patent protection for its products, maintain
confidentiality of its trade secrets and know-how and operate without infringing
upon the proprietary rights of third parties. The Company has been granted two
U.S. patents for the technology relating to the BioJect system and has filed two
other applications covering modifications to the BioJect system, one of which
has been approved. The Company has also obtained U.S. patent protection for its
ClearLake system and may apply for foreign patent protection in selected
countries. The Company does not have foreign patent rights with respect to the
claims covered by the two initial BioJect patents, and the Company is precluded
from obtaining such foreign rights due to the expiration of the period for
filing such claims. However, in connection with the two subsequent BioJect
patent applications, the Company expects to be permitted to apply for foreign
patent protection with respect to these inventions and may apply for such
protection in selected countries. The Company has registered or applied for
registration of a number of trademarks used in its business and also relies on
trade secrets and proprietary know-how. The Company occasionally has elected to
disclose its trade secrets and proprietary know-how to employees, consultants,
potential corporate partners and contract manufacturers.

Despite the precautions described above, it may be possible for a third
party to copy or otherwise obtain or use the Company's products or technology
without authorization, or to develop similar products or technology
independently. There can be no assurance that the Company's patent or trademark
applications will be granted, that its means of protecting its proprietary
rights will be adequate or that the Company's competitors will not independently
develop similar products. Furthermore, if any of the Company's patents are
infringed upon, it may not have sufficient resources to prosecute a patent suit
to defend its patents. In addition, an adverse determination in any litigation
would subject the Company to significant liabilities to third parties, require
the Company to seek licenses from or pay royalties to third parties, or prevent
the Company from manufacturing, selling or using its products, any of which
could have a material adverse effect on the Company's business and prospects.
See "Business -- Patents and Proprietary Rights."

LACK OF MANUFACTURING CAPABILITY; RISKS RELATED TO DEPENDENCE ON CONTRACT
MANUFACTURERS AND SUPPLIERS

The Company currently does not have any manufacturing capability and must
rely on third parties to manufacture its products and components. The Company
has more than one supplier for the manufacture of most of its products and
components; however, some are being obtained from only one source. Although the
Company believes that it will be able to contract production with a number of
suppliers, there can be no assurance that this will be the case or that the need
to contract with additional suppliers will not delay the Company's ability to
have its products and components manufactured. There can be no assurance that
these manufacturers will meet the Company's requirements for quality, quantity
and timeliness, or that the Company will be able to find substitute
manufacturers for its products and components in the future. In the first six
months of 1996, the Company experienced a problem with a circuit board in its
BioJect system which required the Company to incur expenses in making circuit
board repairs in its installed BioJect systems and resulted in a delay in
certain installations of new BioJect systems. Although the Company believes that
it has solved this problem by contracting with a different manufacturer for its
circuit boards, there can be no assurance that similar unforeseen problems will
not develop in the future, any of which could have a material adverse effect on
the Company's operations. In addition, if the Company is unable to obtain or
retain contract manufacturers, or to obtain manufacturing on commercially
acceptable terms, it may not be able to commercialize its products as planned.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" and "Business."

NO ASSURANCE THAT ADDITIONAL MICROBIAL PRODUCTS WILL BE ACQUIRED

The Company plans to acquire the rights to additional microbial products.
The Company does not engage in its own research and development with respect to
microbial products. Although the Company is actively seeking to obtain licenses
for additional microbial products, there can be no assurance that the Company
will be successful in obtaining any such licenses on terms acceptable to the
Company, if at all. The failure of the Company to acquire rights to additional
products could have a material adverse effect on the Company, its results of
operations and prospects. See "Business -- Business Strategy."

PRODUCT LIABILITY CLAIMS AND UNINSURED RISKS

The Company may be exposed to liability resulting from the commercial use
of its products. Such liability might result from claims made directly by
customers or others manufacturing such products on behalf of the Company. The
Company currently carries a product liability insurance policy with an aggregate
limit of $2,000,000. There can be no assurance, however, that such product
liability insurance will adequately protect the Company against any product
liability claim. A product liability or other claim with respect to uninsured
liabilities or in excess of insured liabilities could have a material adverse
effect on the business and prospects of the Company.

The Company has obtained insurance of such types and in such amounts as it
believes to be adequate and customary for similarly situated firms in its
business, including casualty insurance and workers' compensation insurance.
However, there are risks not normally covered by insurance over which the
Company has no control but which could result in the Company incurring losses
not covered by insurance. Losses incurred as the result of the improper
application of fertilizers or other compounds, or which result from the
violation of environmental or other governmental regulations, are generally not
covered by insurance and could result in losses being incurred by the Company.
There can be no assurance that any losses covered by insurance will be
adequately covered or that any claim by the Company will be approved for payment
by the insurer. See "Business."

ENVIRONMENTAL LIABILITY

Some states have laws imposing liability on certain parties for the release
of fertilizers and other agents into the environment in certain manners or
concentrations. Such liability could include, among other things, responsibility
for cleaning up the damage resulting from such a release. In addition, the
federal Comprehensive Environment Response, Compensation and Liability Act
(CERCLA), commonly known as the "Superfund" law, and other applicable laws
impose liability on certain parties for the release into the environment of
hazardous substances, which might include fertilizers and water treatment
chemicals. The Company is also subject to certain other environmental laws,
including the Environmental Protection Act, the Toxic Substance Control Act, the
Resource Conservation and Recovery Act, the Clean Air Act and the Clean Water
Act and may be subject to other present and potential future federal, state or
local regulations. The Company does not currently maintain insurance for any
environmental claims which might result from the release of its products into
the environment in a manner or in concentrations not permitted by law. Thus, a
claim for environmental liability could have a material adverse effect on the
Company. See "Business -- Government Regulation."

COMPETITION AND RAPID TECHNOLOGICAL CHANGE

The Company competes for market share with a number of companies that
manufacture and market chemical compounds. In addition, a number of companies
are developing biological and organic products for turf maintenance. Many of
these competitors have substantially greater capital resources, research and
development staffs and facilities than the Company, and many of these
competitors have extensive experience in turf maintenance. The Company's
competitors may develop and introduce products and processes competitive with or
superior to those of the Company. For certain of the Company's potential
products, an important factor in competition may be the timing of market
introduction of its products compared to those of potential competitors. Such
timing will be based on the effectiveness with which the Company or the
competition can complete product testing and approval processes and supply
quantities of these products to market. Competition among products approved for
sale will be based on, among other things, product efficacy, safety,
reliability, price, market capability and patent protection.

The fields of biotechnology and related technologies in which the Company
is engaged have undergone rapid and significant technological changes. The
Company expects that the technologies associated with its research and
development will continue to develop rapidly. There can be no assurance that the
Company will be able to establish itself in such fields or, if established, that
it will be able to maintain a competitive position. Further, there can be no
assurance that the development by others of new or improved processes or
products will not make the Company's products and processes less competitive or
obsolete. See "Business -- Competition."

GOVERNMENT REGULATION

The Company is subject to laws and regulations administered by federal,
state and foreign governments, including those requiring registration or
approval of fertilizers, soil additives and amendments, water treatment products
and product labeling. The Company's current products are subject to regulation
by the Environmental Protection Agency (the "EPA"), the Food and Drug
Administration (the "FDA") and by certain state agricultural departments.
Compliance with laws and regulations will increase the costs and time necessary
to allow the Company to operate successfully and may affect the Company in other
respects not currently foreseeable. More stringent requirements for regulation
or environmental controls may be imposed, which could have a material adverse
effect on the Company. See "Business -- Government Regulation."

LIMITED SALES AND MARKETING CAPABILITY

The Company has limited experience in sales, marketing and distribution. To
market any of its products directly, the Company must develop or acquire a
marketing and sales force with technical expertise and sufficient distribution
capability, and a customer service capability necessary to effectively market
and service its proprietary products and systems. Although the Company has begun
to develop sales, marketing and distribution service capabilities through the
acquisition of selected independent dealers and distributors, there can be no
assurance that additional acquisition candidates will continue to be available
or that any acquisition efforts will be successful. There can be no assurance
that the Company will be able to establish sales, distribution and customer
service capabilities or be successful in gaining market acceptance for its
products. See "Business."

QUARTERLY FLUCTUATIONS IN THE COMPANY'S RESULTS OF OPERATIONS

The Company's operating results vary from quarter to quarter as a result of
various factors, including the fact that customers who purchase the Company's
ClearLake and CleanRack systems generally purchase such systems out of their
available capital expenditure budget, the amount of which is typically approved
on a yearly basis due to the capital expenditure nature of the product. As a
result, sales of ClearLake and CleanRack systems are generally higher in the
first three quarters than in the fourth quarter since many customers have
already spent their full capital budgets by the fourth quarter. To date, sales
of the Company's BioJect systems have not varied materially due to seasonal
factors. Because the Company's business is directly related to the capital
expenditure budget of its customers, the Company expects that quarterly
fluctuations in its operating results will continue. Therefore, results for any
quarter are not necessarily indicative of results for any future period. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Fluctuations."

MAINTENANCE CRITERIA FOR NASDAQ SECURITIES; PENNY STOCK RISKS

The National Association of Securities Dealers, Inc. (the "NASD"), which
administers Nasdaq, has adopted certain criteria for continued eligibility on
Nasdaq. In order to continue to be included on Nasdaq, the Company must maintain
$2 million in total assets, a $200,000 market value of its public float and $1
million in total capital and surplus. In addition, continued inclusion requires
two market-makers, at least 300 holders of the Common Stock and a minimum bid
price of the Common Stock of $1 per share; provided, however, that, if the
Common Stock falls below such minimum bid price, it will remain eligible for
continued inclusion on Nasdaq if the market value of the public float is at
least $1 million and the Company has $2 million in capital and surplus. The NASD
has proposed changing these maintenance standards by increasing certain minimum
amounts and by applying corporate governance standards to Nasdaq SmallCap Market
issuers that currently are applicable only to Nasdaq National Market issuers.
These corporate governance standards include a requirement that the issuer have
at least two independent directors on its board of directors. There can be no
assurance as to whether these or other maintenance standards will be enacted.
The Company's failure in the future to meet these maintenance criteria, as now
in effect or as may be hereafter amended, may result in the discontinuance of
the inclusion of its securities on Nasdaq. In such event, trading, if any, in
the securities may then continue to be conducted in the non-Nasdaq
over-the-counter market in less orderly markets commonly referred to as the
electronic bulletin board and the "pink sheets." As a result, an investor may
find it more difficult to dispose of or to obtain accurate quotations as to the
market value of the securities. In addition, the Company would be subject to a
rule promulgated by the Securities and Exchange Commission that, if the Company
fails to meet criteria set forth in such rule, imposes various sales practice
requirements on broker-dealers who sell securities governed by the rule to
persons other than established customers and accredited investors. For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and must have received the purchaser's written
consent to the transactions prior to sale. Consequently, the rule may have an
adverse effect on the ability of broker-dealers to sell the Company's
securities, which may affect the ability of purchasers in this offering to sell
the Company's Common Stock in the secondary market.

If the Company fails to maintain its qualification for Common Stock to
trade on Nasdaq and is trading below $5.00 per share, the Common Stock will be
subject to the rules of the Securities Exchange Act of 1934, as amended,
relating to penny stock. In that event, the Company's securities will be subject
to the disclosure rules for transactions involving penny stocks which require
broker-dealers, among other things, to (i) determine the suitability of
purchasers of the securities, and obtain the written consent of purchasers to
purchase such securities, and (ii) disclose the best (inside) bid and offer
prices for such securities and the price at which the broker-dealers last
purchased or sold the securities. The additional burdens imposed upon
broker-dealers may discourage them from effecting transactions in penny stocks,
which could reduce the liquidity of the Common Stock.

DEPENDENCE ON KEY PERSONNEL

The Company is dependent upon the active participation of William B. Adams,
its Chairman of the Board and Chief Executive Officer, Jeffrey A. Johnson, its
President and Chief Operating Officer, and Douglas M. Gloff, its Executive Vice
President. The loss of the services of any of these individuals could have a
material adverse effect upon the Company's future operations. Messrs. Adams,
Johnson and Gloff have each entered into an employment agreement with the
Company which provides for their continued employment with the Company through
September 1998. The Company does not have key person life insurance on any of
its key employees. See "Management."

NEED FOR TECHNICAL PERSONNEL

The Company's success depends in large part on its ability to attract and
retain qualified scientific and management personnel. The Company faces
competition for such persons from other companies, academic institutions,
government entities and other organizations. There can be no assurance that the
Company will be successful in recruiting or retaining personnel of the requisite
caliber or in adequate numbers to enable it to conduct its business as proposed.
Furthermore, the Company's expected expansion into activities requiring
additional expertise will place increased demands on its resources and
management skills. The Company's Scientific Advisory Board members and
consultants are employed by or consult with others, and they are expected to
devote only a small portion of their time to the Company. In addition, the
Company's Scientific Advisory Board members and consultants may have consulting
or other advisory arrangements with other entities which may conflict or compete
with their obligations to the Company. See "Management."

CONTROL BY PRINCIPAL SHAREHOLDERS

The current principal shareholders and management of the Company own
approximately 57% of the outstanding shares of Common Stock of the Company
before the offering and will own approximately 41% after the offering, assuming
the exercise of all outstanding options and the conversion of debt held by them
and no exercise of options or warrants or the conversion of debt held by others.
Accordingly, even though the Company currently has cumulative voting, the
current principal shareholders and management, if voting in concert, may have
the ability to effectively control the election of a majority of the directors
of the Company or any other major decisions involving the Company or its assets.
See "Principal Shareholders" and "Description of Securities."

LACK OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market will
develop or be sustained after this offering. The initial public offering price
was determined by negotiations between the Company and the Representative. See
"Underwriting" for a discussion of the determination of the initial public
offering price. If a public market does develop, the market price of the
Company's Common Stock may be significantly affected by factors such as
announcements of the introduction of new microbial products by the Company or
its competitors and quarterly variations in the Company's operating results.
Further, the stock market occasionally experiences extreme volatility in stock
prices. Such volatility may adversely affect the market prices of the Company
and other similar companies in ways that are unrelated or disproportionate to
the operating performance of such companies. See "Underwriting."

OUTSTANDING WARRANTS AND OPTIONS

As of September 30, 1996, there were 4,866,633 shares of Common Stock
subject to issuance pursuant to options and warrants issued by the Company. In
addition, in connection with this offering, the Representative will receive the
Representative's Warrant to purchase up to 330,000 shares of Common Stock.
Holders of warrants and options are likely to exercise them when, in all
likelihood, the Company could obtain additional capital on terms more favorable
than those provided by the warrants and options. While the warrants and options
are outstanding, they may adversely affect the terms on which the Company can
obtain additional capital. See "Description of Securities."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Sales of significant amounts of Common Stock in the public market or the
perception that such sales will occur could adversely affect the market price of
the Common Stock or the future ability of the Company to raise capital through
an offering of its equity securities. Of the 9,864,166 shares of Common Stock to
be outstanding upon completion of this offering, the 3,300,000 Shares offered
hereby will be eligible for immediate sale in the public market without
restriction, with the exception of any shares purchased in the offering by
"affiliates" of the Company within the meaning of Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"). The remaining 6,564,166 shares
of Common Stock held by existing shareholders upon completion of this offering
will be "restricted securities," as that term is defined in Rule 144 under the
Securities Act. Of these shares, ___________ shares will be eligible for resale
in the open market pursuant to Rule 144 beginning 90 days after the date of this
Prospectus. An additional ____________ shares will become eligible for resale
under Rule 144 between ___________, 1997 and _____________, 1997. Directors and
executive officers of the Company (representing 2,703,640 of such restricted
shares plus 2,471,504 shares subject to options, warrants or convertible debt)
and shareholders of the Company holding an additional 2,418,504 shares have
agreed that they will not sell, directly or indirectly, any Common Stock without
the prior written consent of the Underwriter for a period of 180 days from the
date of this Prospectus. In addition, certain shareholders have the right,
subject to certain conditions, to participate in future Company registrations
and to cause the Company to register certain shares of Common Stock owned by
them. See "Shares Eligible for Future Sale."

UNDESIGNATED PREFERRED STOCK; ANTITAKEOVER PROVISIONS

The Board of Directors is authorized, without any action by the Company's
shareholders, to issue up to 5,000,000 shares of authorized but undesignated
Preferred Stock and to fix the powers, preferences, rights and limitations of
any such Preferred Stock or any class or series thereof. Persons acquiring
Preferred Stock could have preferential rights with respect to voting,
liquidation, dissolution or dividends over existing shareholders, including
purchasers of Shares in this offering. This ability of the Board would permit
the Company to adopt a shareholders' rights plan or to take other action that
could deter a hostile takeover of the Company, entrench the Board of Directors
or deter an unsolicited tender offer. In addition, certain provisions of the
Company's Bylaws, as amended, including provisions creating a staggered board of
directors, and certain provisions of Nebraska law, including the Nebraska
Shareholders Protection Act, could have the effect of deterring or delaying a
takeover or other change in control of the Company, could deny shareholders the
receipt of a premium on their Common Stock and could have a depressive effect on
the market price of the Company's Common Stock. See "Description of Securities."

DILUTION

Purchasers of the Shares offered hereby will experience immediate and
substantial dilution in net tangible book value of the Common Stock. Such
investors will incur additional dilution to the extent that options or warrants
outstanding prior to this offering are exercised. See "Dilution."

NO DIVIDENDS

The Company has never paid a cash dividend on its Common Stock, and the
Company is currently prohibited from paying dividends by the terms of a loan
agreement between the Company and Imperial Bank. For the foreseeable future, it
is anticipated that any earnings that may be generated from the Company's
operations will be used to finance its growth and that cash dividends will not
be paid to holders of Common Stock. See "Dividend Policy."

USE OF PROCEEDS

The net proceeds to the Company from the sale of Shares offered hereby are
estimated to be $12,096,000 ($13,937,000 if the Underwriters' over-allotment
option is exercised in full) after deducting the underwriting discount and
estimated offering expenses payable by the Company and assuming an initial
public offering price of $4.25 per share. The Company intends to apply such
net proceeds substantially as follows:

<TABLE>
<CAPTION>
<S> <C>
Acquisitions ............... $ 4,000,000
Repayment of Bridge Notes .. 3,787,000
Repayment of short-term debt 1,763,000
Capital expenditures ....... 1,000,000
Working capital ............ 1,546,000
-----------
Total ...................... $12,096,000
===========
</TABLE>

ACQUISITIONS. The Company currently intends to use up to $1,500,000 of the
net proceeds to make the final payments due in connection with one of the
Company's recent acquisitions and to use up to an additional $2,500,000 of the
net proceeds for future acquisitions of independent dealers and distributors of
turf maintenance products. The Company is currently evaluating additional
acquisition opportunities throughout the United States but currently does not
have any formal agreements to acquire other companies. See "Certain
Transactions."

REPAYMENT OF BRIDGE NOTES. Approximately $3,787,000 of the net proceeds
will be used to pay principal and accrued interest on the Bridge Notes, assuming
none of the Bridge Notes are converted into Common Stock. If some or all of the
Bridge Notes are converted, the net proceeds that would have been used to repay
indebtedness under such Bridge Notes will be used for general working capital
purposes. The outstanding principal and accrued interest on the Bridge Notes
will be due and payable within 30 days after the date of this Prospectus and
bear interest at the rate of 10% per annum. Up to 100% of the principal amount
of the Bridge Notes is convertible for a period of 20 days after the date of
this Prospectus, at the option of the holder thereof, into the Company's Common
Stock at a conversion price of 80% of the initial public offering price. The
proceeds from the Bridge Notes were used to finance the Company's acquisitions,
to repay $100,000 of short-term debt and for general working capital purposes.
See "Description of Securities -- Bridge Financing."

REPAYMENT OF SHORT-TERM DEBT. The Company currently maintains a line of
credit of $1,000,000 with Imperial Bank for working capital purposes. This line
consists of a $500,000 revolving line of credit from the California Export
Financing Office that bears interest at the prime rate plus 1.5% and is payable
in April 1997 and a $500,000 revolving line of credit that bears interest at an
annual rate equal to the prime rate plus 2% and is payable in April 1997. As of
September 30, 1996, the outstanding balance of this loan was $500,000. This line
of credit requires an annual short-term repayment before it can be renewed. The
Company plans to use $1,000,000 of the proceeds of this offering to repay the
line of credit, and to renew the line of credit for use in the future. See
"Certain Transactions."

As of September 30, 1996, the Company owed Peninsula Bank $263,000 under a
loan payable in January 1997. This loan is collateralized with assets pledged by
William S. Potter, a director of the Company. The Company plans to use $263,000
of the proceeds of the offering to repay this loan and to cause the release of
this director's collateral. The Company also plans to repay $500,000 of
unsecured demand notes bearing interest at the rate of 8% per annum from
directors William B. Adams and Douglas M. Gloff, and from Heartland Capital
Fund, Ltd. ("Heartland Capital"), a limited partnership of which Bradley K.
Edwards, a director of the Company, is a general partner. See "Certain
Transactions." All of the proceeds from this short-term debt were used for
working capital purposes.

CAPITAL EXPENDITURES. The Company currently intends to use approximately
$1,000,000 of the net proceeds for capital expenditures, primarily related to
the construction of additional BioJect systems to satisfy current and future
customer orders.

WORKING CAPITAL AND GENERAL CORPORATE PURPOSES. The remainder of the net
proceeds, approximately $1,546,000, will be allocated to working capital and
will be used to (i) add customer service and installation personnel necessary to
support expansion of the Company's customer base in existing territories and in
new markets (such as the agricultural crop, soil remediation and water quality
management industries), (ii) finance the growth of receivables and inventory as
revenues expand, thereby reducing dependence on the Company's bank line of
credit, (iii) finance the growth in capital expenditures that occurs as the
installed base of BioJect systems increases without being dependent on obtaining
outside financing, and (iv) provide working capital to expand into potential new
geographical territories.

Pending the use of the net proceeds, the Company intends to invest such
funds in interest-bearing money market funds, short-term certificates of deposit
and United States governmental obligations. The described use of proceeds is
based upon management's assumptions concerning marketing, selling, development,
financial and other matters which may affect the Company. If the development of
the Company's business varies materially from these assumptions, the Company may
reallocate the use of proceeds in such a manner as it deems appropriate under
the circumstances.

CAPITALIZATION

The following table sets forth, at September 30, 1996, the actual
capitalization of the Company and the capitalization as adjusted to give effect
to the sale by the Company of the 3,300,000 Shares offered hereby at an assumed
public offering price of $4.25 per Share (after deduction of the underwriting
discount and estimated offering expenses) and the application of the estimated
net proceeds therefrom. See "Use of Proceeds." The information set forth below
should be read in conjunction with the financial statements and notes thereto
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------
ACTUAL(1) AS ADJUSTED(2)
--------- --------------
<S> <C> <C>
Long-term debt and other obligations, net of current
portion ................................................ $ 2,020 $ 2,020
Shareholders' equity (deficit):
Preferred Stock, no par value; 5,000,000 shares
authorized; none issued and outstanding, actual and as
adjusted ............................................. -- --
Common Stock, $.005 par value; 20,000,000 shares
authorized; 6,564,166 shares issued and outstanding,
9,864,166 shares as adjusted(3) ...................... 33 49
Additional paid-in capital ............................ 12,684 24,764
Warrants .............................................. 239 239
Note receivable from shareholder ...................... (72) (72)
Accumulated deficit ................................... (11,125) (11,236)
-------- --------
Total shareholders' equity .......................... 1,759 13,744
-------- --------
Total capitalization ................................ $ 3,779 $ 15,764
======== ========
</TABLE>
- ------------------------
(1) Derived from the Company's audited consolidated financial statements
included elsewhere in this Prospectus. See "Consolidated Financial
Statements."

(2) Adjusted to give effect to the sale of the 3,300,000 Shares offered hereby
at an assumed initial public offering price of $4.25 per Share and the
application of net proceeds therefrom (including repayment of indebtedness
under the Bridge Notes and the write off of $111,000 of debt issuance
costs).

(3) Excludes (i) 1,086,765 shares of Common Stock issuable upon conversion of
the Bridge Notes (assuming all of the Bridge Notes are converted and
assuming an initial public offering price of $4.25 per Share), (ii) 739,000
shares of Common Stock subject to the Bridge Warrants at an exercise price
of 80% of the initial public offering price, (iii) 2,406,568 shares of
Common Stock subject to outstanding options at a weighted average exercise
price of $2.13 per share, (iv) 1,721,065 shares of Common Stock subject to
other outstanding warrants at a weighted average exercise price of $2.70
per share and (v) 330,000 shares of Common Stock subject to the
Representative's Warrant at an exercise price of 120% of the initial public
offering price. See "Description of Securities" and "Underwriting."

DILUTION

The Company's net tangible book value (deficit) at September 30, 1996 was
approximately $(3,608,000), or $(.55) per share. "Net tangible book value per
share" represents the Company's total tangible assets less its total
liabilities, divided by the number of shares of Common Stock outstanding.
Without giving effect to changes in net tangible book value after September 30,
1996, except for the sale of the Shares offered hereby (assuming a public
offering price of $4.25 per Share and after deducting the underwriting discount
and estimated offering expenses payable by the Company), the Company's net
tangible book value at September 30, 1996 would have been approximately
$8,488,000, or $.86 per share. This amount represents an immediate increase in
net tangible book value per share of $1.41 to existing shareholders and an
immediate dilution of $3.39 per Share to the investors purchasing the Shares
offered hereby. The following table illustrates this per share dilution in net
tangible book value to new investors:

<TABLE>
<CAPTION>
<S> <C> <C>
Assumed initial public offering price per Share ...................... $ 4.25
Net tangible book value (deficit) per share at September 30, 1996... $ (.55)
Increase per share attributable to new investors ................... 1.41
------
Net tangible book value per share after this offering ................ .86
------
Dilution per Share to new investors .................................. $ 3.39
======
</TABLE>

If the Underwriter's over-allotment option is exercised in full, and
assuming an initial public offering price of $4.25 per Share, the net tangible
book value of the Company as of September 30, 1996 would have been $10,329,000,
or $1.00 per share, representing an immediate increase in net tangible book
value of $1.55 per share to existing shareholders and an immediate dilution of
$3.25 per Share to the investors purchasing the Shares offered hereby.

The following summarizes, on a pro forma basis, the differences between
existing shareholders and purchasers of the Shares offered hereby, with respect
to their ownership of Common Stock upon the closing of this offering, the total
consideration paid and the average consideration paid per share:

<TABLE>
<CAPTION>
SHARES OWNED TOTAL CONSIDERATION AVERAGE
---------------------------------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------------------------------------------------- ---------
<S> <C> <C> <C> <C>
Existing shareholders.... 6,564,166 66.5% $14,243,000 50.4% $2.17
New investors ............ 3,300,000 33.5% 14,025,000 49.6% $4.25
--------- ----- ----------- -----
Total .................. 9,864,166 100.0% $28,268,000 100.0%
========= ===== =========== =====
</TABLE>

The foregoing calculations do not include (i) 1,086,765 shares of Common
Stock issuable upon conversion of the Bridge Notes (assuming all of the Bridge
Notes are converted and assuming an initial public offering price of $4.25 per
share), (ii) 739,000 shares of Common Stock subject to the Bridge Warrants at an
exercise price of 80% of the initial public offering price, (iii) 2,406,568
shares of Common Stock subject to other outstanding options at a weighted
average exercise price of $2.13 per share, (iv) 1,721,065 shares of Common Stock
subject to other outstanding warrants at a weighted average exercise price of
$2.70 per share, and (v) 330,000 shares of Common Stock subject to the
Representative's Warrant at an exercise price of 120% of the initial public
offering price. To the extent such securities are converted or exercised, there
may be further dilution to new investors. See "Description of Securities" and
"Underwriting."

DIVIDEND POLICY

The Company has never paid or declared any cash dividends on its Common
Stock and does not intend to pay dividends on its Common Stock in the
foreseeable future. The Company is currently prohibited from paying dividends by
the terms of a loan agreement between the Company and Imperial Bank. The Company
intends to retain any earnings for use in the operation and expansion of its
business.

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The selected consolidated financial data set forth below, with respect to
the Company's consolidated statement of operations data for the years ended
December 31, 1994 and 1995 and the six months ended June 30, 1996, and the
consolidated balance sheet data set forth below as of December 31, 1995, have
been derived from the consolidated financial statements of the Company which
have been audited by Ernst & Young LLP, independent auditors (except for the
financial statements of Turf Specialty, Inc., a consolidated subsidiary, which
were audited by Bigelow & Company Certified Public Accountants, P.C.), as set
forth in their report, which includes an explanatory paragraph that indicates
there is substantial doubt about the Company's ability to continue as a going
concern, included elsewhere in this Prospectus. The consolidated statement of
operations data set forth below for the six months ended June 30, 1995 and the
nine months ended September 30, 1995 and 1996 and the consolidated balance sheet
data as of September 30, 1996 have not been audited but, in the opinion of
management, reflect all adjustments (consisting of only normal recurring
adjustments) that the Company considers necessary to present fairly the
financial data for such period. Results of the interim periods are not
necessarily indicative of the results that may be expected for the entire year
or other interim periods. The information presented below should be read in
conjunction with the consolidated financial statements and notes thereto
presented elsewhere in this Prospectus and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

CONSOLIDATED STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30, NINE MONTHS ENDED SEPTEMBER 30,
----------------------- ----------------------- ------------------------------------
1994 1995 1995 1996 1995 1996 1996(1)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales .............. $ 2,688 $ 3,757 $ 1,940 $ 4,139 $ 2,783 $ 9,229 $ 15,749
Cost of sales .......... 1,998 1,980 844 2,329 1,615 5,705 10,421
-------- -------- -------- -------- -------- -------- --------
Gross profit ........... 690 1,777 1,096 1,810 1,168 3,524 5,328
Selling, general and
administrative ........ 2,996 2,938 1,373 2,961 1,929 5,079 7,099
Research and development 286 413 160 275 264 353 353
-------- -------- -------- -------- -------- -------- --------
Loss from operations ... (2,592) (1,574) (437) (1,426) (1,025) (1,908) (2,124)
Interest expense ....... (224) (262) (131) (192) (172) (523) (652)
-------- -------- -------- -------- -------- -------- --------
Net loss ............... $ (2,816) $ (1,836) $ (568) $ (1,618) $ (1,197) $ (2,431) $ (2,776)
======== ======== ======== ======== ======== ======== ========
Net loss per share(2) .. $ (.62) $ (.35) $ (.11) $ (.27) $ (.23) $ (.40) $ (.44)
======== ======== ======== ======== ======== ======== ========
Shares used in calculation
of net loss per share(2) 4,557 5,207 5,184 5,980 5,304 6,050 6,359
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------
DECEMBER 31, 1995 ACTUAL AS ADJUSTED(3)
----------------- -------- ------------------
<S> <C> <C> <C>
Cash ............................................... $ -- $ 437 $ 6,983
Working capital (deficit) .......................... (1,324) (3,875) 8,110
Total assets ....................................... 3,981 13,979 20,525
Long-term debt and other obligations, net of current
portion ........................................... 941 2,020 2,020
Common stock/paid in capital ....................... 8,535 12,717 24,813
Accumulated deficit ................................ (8,694) (11,125) (11,236)
Total shareholders' equity (deficit) ............... (159) 1,759 13,744
</TABLE>
- ------------------------

(1) Pro forma to give effect to the acquisition of Turf Specialty, Inc. and
Turf Products, Ltd. as if they were acquired on January 1, 1995. The pro
forma consolidated statement of operations data are unaudited, presented
for illustrative purposes only and not necessarily indicative of what
actual results of operations would have been for the period presented had
the transactions occurred on that date. See "Unaudited Pro Forma Condensed
Consolidated Statements of Operations."

(2) See Note 1 to Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in calculating
net loss per share.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company has financed its operations since inception by generating
cumulative revenues through September 30, 1996 of approximately $17,000,000 and
by raising approximately $15,600,000 in equity and debt financing.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995

The Company generated revenues of $9,229,000 for the nine months ended
September 30, 1996, compared to $2,783,000 for the nine months ended September
30, 1995. On May 31, 1996, the Company acquired Turf Products, Ltd. ("Turf
Products") and Turf Specialty, Inc. ("Turf Specialty"), and the acquisition of
each of these companies has been accounted for as a purchase. The results for
the first nine months of 1996 contain four months of revenues from Turf
Products, $2,508,000, and Turf Specialty, $2,884,000. Revenues generated by
sources other than Turf Products and Turf Specialty increased by approximately
38% to $3,837,000 during the first nine months of 1996, compared to $2,783,000
during the first nine months of 1995. In September 1995, the Company acquired
Aspen Consulting, Inc. ("Aspen"), an irrigation design and planning firm, and
Aspen added $795,000 of revenues for the first nine months of 1996. In addition,
in February 1996 the Company acquired Direct Products and Machinery Pty. Ltd.
and Golf and Turf CC ("Direct Products"), a distributor of the Company's
products in South Africa. From February 1996 through September 30, 1996, Direct
Products contributed $502,000 to the Company's revenues.

In the first nine months of 1996, the Company's lease and service revenues
on its BioJect system increased 47% to $652,000, compared to $445,000 during the
first nine months of 1995. The Company's revenues from its BioJect menu items,
primarily microbes, increased to $1,040,000 during the first nine months of
1996, up 48%, compared to $703,000 during the first nine months of 1995. The
primary cause of the increase in lease, installation and menu items was the
increase in the number of BioJect systems installed. At September 30, 1996, the
Company had 238 BioJect systems installed, up 49% compared to 160 installed at
September 30, 1995. In addition, the Company increased the number of menu items
available to customers in 1996 compared to 1995.

Revenues from sales of CleanRack systems increased 17% during the first
nine months of 1996 to $224,000, compared to $191,000 during the first nine
months of 1995. The increase in CleanRack revenues was due to an increase in the
installed base of CleanRack units from nine units at September 30, 1995 to 15
units at September 30, 1996. Revenues from sales of ClearLake systems during the
first nine months of 1996 declined 65% to $147,000, compared to $425,000 during
the first nine months of 1995. The decline in the sales of ClearLake systems
during the first nine months of 1996 was due to a decline in unit sales as the
Company redesigned its ClearLake product. As a result, the Company did not
actively market its ClearLake system during that time period.

Other revenues, which consisted primarily of non-proprietary fertilizer,
nutrient and seed sales, declined to $477,000 during the first nine months of
1996, compared to $1,019,000 during the first nine months of 1995. This decrease
resulted from the Company's decision to focus on the marketing of its BioJect
system and its other proprietary products.

The Company's gross profit during the first nine months of 1996 increased
to $3,524,000, compared to $1,168,000 during the first nine months of 1995. The
Company's gross profit margin declined to 38% during the first nine months of
1996, compared to 42% during the first nine months of 1995, primarily due to a
problem with circuit boards for its BioJect system.

During the first and second quarters of 1996, the Company purchased a
significant number of faulty circuit boards from an outside vendor. These
circuit boards caused the Company to incur in excess of $800,000 of expenses,
which decreased the Company's gross profit and increased its selling, general
and administrative expenses. The additional expenses were due to (i) the costs
of diagnosing the problem, (ii) the costs of designing, producing and installing
new circuit boards, (iii) excess product usage of menu items and (iv)
significant customer service expenses. In addition, given the circuit board
problem, the Company chose to stop marketing its BioJect system to additional
customers in May 1996 until the problem was rectified. The Company has
redesigned the circuit board and resumed marketing the BioJect system in August
1996.

Selling, general and administrative expenses increased to $5,079,000 during
the first nine months of 1996, compared to $1,929,000 during the first nine
months of 1995. The increase in selling, general and administrative expenses was
the result of the costs associated with the integration of the Company's
acquisitions, an increase in the number of personnel at the Company and the
previously discussed circuit board problem.

Research and development expenses increased to $353,000 during the first
nine months of 1996, compared to $264,000 during the first nine months of 1995.
The increase in research and development expenses was due to increased
expenditures on the BioJect and ClearLake systems.

Interest expense for the first nine months of 1996 was $523,000, compared
to $172,000 for the first nine months of 1995. The increase in interest expense
was primarily due to the amount of debt outstanding. The amount of short-and
long-term debt increased to $8,195,000 at September 30, 1996, compared to
$2,661,000 at September 30, 1995.

The Company incurred $145,000 of expenses associated with the amortization
of goodwill during the first nine months of 1996, compared to $1,500 during the
first nine months of 1995. The increase in expenses associated with the
amortization of goodwill was due to the acquisition of Turf Products and Turf
Specialty in May 1996 as well as nine months of amortization of the goodwill
associated with the acquisition of Aspen. The amount of goodwill associated with
these acquisitions as of September 30, 1996 was $5,317,000 and is currently
being amortized over a period of 15 years.

The Company reported a net loss of $2,431,000 during the first nine months
of 1996, compared to a net loss of $1,197,000 during the first nine months of
1995.

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

The Company generated revenues of $4,139,000 in the six months ended June
30, 1996, compared to $1,940,000 for the six months ended June 30, 1995. On May
31, 1996 the Company acquired Turf Products and Turf Specialty. The acquisition
of each of these companies has been accounted for as a purchase. Accordingly,
the Company's results for the first six months of 1996 included 30 days of
revenues from Turf Products, $876,000, and Turf Specialty, $538,000. Revenues
from sources other than Turf Products and Turf Specialty increased by
approximately 40% to $2,725,000 during the first six months of 1996, compared to
$1,940,000 during the first six months of 1995. In September 1995 the Company
acquired Aspen, which added $541,000 to the Company's revenues for the first six
months of 1996. In addition, in February 1996 the Company acquired Direct
Products, and from February 1996 through June 30, 1996, Direct Products
generated $295,000 of revenues. In the first six months of 1996, the Company's
lease and installation revenues from its BioJect system increased 37% to
$556,000, compared to $405,000 during the first six months of 1995. The
Company's sale of BioJect menu items, primarily microbes, increased to $565,000
during the first six months of 1996, up 72% compared to $328,000 during the
first six months of 1995. The primary cause of the increase in lease,
installation and menu items was the increase in the number of BioJect systems
installed. At June 30, 1996 the Company had 235 BioJect systems installed, up
53% compared to 154 installed at June 30, 1995. In addition, the Company
increased the number of menu items available to customers in 1996 compared to
1995, which partially accounted for the significant increase in menu item sales.

Revenues from CleanRack sales increased 34% during the first six months of
1996 to $188,000, compared to $140,000 during the six months ended June 30,
1995. The increase in CleanRack revenues was due primarily to an increase in the
installed base of CleanRack units from seven units at June 30, 1995 to 12 units
at June 30, 1996. Revenues from sales of ClearLake systems during the six months
ended June 30, 1996 declined to $135,000, compared to $422,000 during the first
six months of 1995. The decline in the sales of ClearLake systems during the
first six months of 1996 was due to a decline in unit sales as the Company
improved the design of its ClearLake system. As a result, the Company did not
actively market its ClearLake system during that time period.

Other revenues, which consisted primarily of non-proprietary fertilizer,
nutrient and seed sales, declined to $445,000 during the first six months of
1996, compared to $645,000 during the first six months of 1995. This decline
resulted from the Company's decision to focus on the marketing of its BioJect
system and its other proprietary products.

The Company's gross profit during the first six months of 1996 increased to
$1,810,000, compared to $1,096,000 during the first six months of 1995. The
Company's gross profit margin declined to 44% during the first six months of
1996 compared to 56% during the first six months of 1995, primarily due to the
previously discussed circuit board problem.

Selling, general and administrative expenses increased to $2,961,000 during
the first six months of 1996, compared to $1,373,000 during the first six months
of 1995. The increase in selling, general and administrative expenses was the
result of the costs associated with the integration of the Company's
acquisitions, an increase in the number of personnel at the Company and the
previously discussed circuit board problem.

Research and development expenses increased to $275,000 for the six months
ended June 30, 1996, compared to $160,000 during the first six months ended June
30, 1995. The increase in research and development expenses was due primarily to
increased expenditures on the BioJect and ClearLake systems.

Interest expense for the first six months of 1996 increased to $192,000,
compared to $131,000 for the first six months of 1995. The increase in interest
expense was due to an increase in the amount of debt outstanding and capital
lease obligations at June 30, 1996, which was $5,563,000, compared to $1,999,000
at June 30, 1995, as well as an increase in the interest rates on the Company's
debt.

The Company reported a net loss of $1,618,000 during the first six months
of 1996, compared to a net loss of $568,000 during the first six months of 1995.

FISCAL YEAR ENDED DECEMBER 31, 1995 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1994

The Company generated revenues of $3,757,000 for the year ended December
31, 1995, compared to $2,688,000 for the year ended December 31, 1994, an
increase of $1,069,000, or 40%. The major reason for the increase in revenues
was a growth in revenues on its BioJect system from $719,000 in 1994 to
$1,503,000 in 1995, an increase of $784,000, or 109%. At December 31, 1995, the
Company had 171 BioJect systems installed, up 116% compared to 79 installed at
December 31, 1994. The average revenue per BioJect account also increased in
1995, from approximately $10,000 per BioJect account in 1994 to more than
$11,000 in 1995, as the Company restructured its BioJect system to sell a number
of biological programs, each of which utilizes distinct bacteria or other
biological products. Sales of ClearLake systems also increased in 1995 and
contributed significantly to the Company's overall sales growth. ClearLake
system revenues increased from $105,000 in 1994 to $436,000 in 1995, an increase
of approximately $331,000. Sales of ClearLake systems increased from 13 systems
in 1994 to 30 systems in 1995. The other principal changes in revenue generated
by the Company in 1995 were (i) the inclusion of $353,000 of revenue from Aspen
and a decrease in seed sales of approximately the same magnitude, as the Company
made the decision at the end of the first quarter in 1995 to discontinue
carrying this product line due to inconsistent product quality, and (ii) a
decrease in sales to Wilbur-Ellis Company from approximately 45% of net sales in
1994 to approximately 13% in 1995 as the Company made the decision to expand the
number of distribution outlets for its products. The Company's international
revenues, which are included in these amounts, also showed significant growth
during 1995. International revenues increased by $68,000 to $598,000 in 1995,
compared to $530,000 in 1994.

The growth of higher margin BioJect and ClearLake sales, as well as the
inclusion of Aspen in the Company's results, produced a significant change in
product mix in 1995 that led to a substantial improvement in the gross profit
generated by the Company. In 1995 more than 56% of sales were generated by the
BioJect, ClearLake, and CleanRack product lines. In 1994 these product lines
contributed approximately 40% of sales. The gross profit on each of these
products is significantly higher than the gross profit from sales of the
Company's non-proprietary product lines, such as fertilizer, seed and third
party product sales. As a result of this favorable improvement in product mix,
the gross profit from sales generated by the Company improved from $690,000 in
1994, or 26% of sales, to $1,777,000 in 1995, or 47% of sales, an increase of
$1,087,000.

Selling, general and administrative expenses decreased by $58,000 to
$2,938,000 in 1995, compared to $2,996,000 in 1994. In addition to the total
amount of these expenses decreasing by 2%, the composition of these expenses
changed significantly as the Company reduced spending on its mobile laboratory
program to support nutrient (granular and liquid fertilizer) sales in the latter
half of 1994 and into 1995, and reallocated resources to field and scientific
support of its BioJect and ClearLake systems.

Research and development expenses increased by $127,000, from $286,000 in
1994 to $413,000 in 1995. The increase in research an development expenses in
1995 reflects the increased costs associated with a new generation of the
BioJect system that was developed in 1995 and introduced to the market in 1996.

Net interest expense increased by $38,000 to $262,000 in 1995, compared to
$224,000 in 1994, as the Company's total borrowing increased from $2,375,000 at
the end of 1994 to $2,933,000 at the end of 1995.

The improvements in gross profit from the growth in revenues, improved
product mix and control of operating expenses led to a $980,000 reduction in the
net loss generated by the Company in 1995 compared to 1994. The Company lost
$1,836,000, or $.35 per share, in 1995, compared to $2,816,000, or $.62 per
share, in 1994.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has incurred net losses and negative cash
flows from operations, and at September 30, 1996, the Company had a working
capital deficit of $3,875,000. Since its inception, the Company has financed its
operations from private placements of Common Stock, borrowing from its principal
shareholders, bank financing and the sale of the Bridge Notes and Bridge
Warrants. Until 1991, the Company funded its operations and product development
activities through approximately $600,000 in loans, equity investments and loan
guarantees by the Nebraska Research and Development Authority ("NRDA"), the
predecessor of Heartland Capital Fund, Ltd. ("Heartland Capital"), and through
approximately $100,000 in loans from one of the founders. Since 1991, the
Company has funded its operations primarily by (i) completing a private
placement of Common Stock in February 1992, in which $1,091,502 in capital was
raised at $1.50 per share, (ii) completing a private placement of Common Stock
in February 1993, in which $1,327,000 was raised at $2.00 per share, (iii)
completing a private placement of Common Stock in December 1993, in which
$1,060,000 was raised at $2.50 per share, (iv) completing a private placement of
Common Stock in July 1994, in which $1,574,000 was raised at $2.50 per share,
(v) obtaining a bank line of credit for $1,013,000 in September 1994, (vi)
converting $1,200,000 of shareholder advances and a promissory note from Mr.
William B. Adams, the Company's Chief Executive Officer, into 400,000 shares of
Common Stock at $3.00 per share during the period between December 1994 and
February 1995, (vii) issuing $750,000 of subordinated debentures to certain
principal shareholders in March 1995, (viii) completing a private placement of
Common Stock in November 1995, in which $1,888,000 was raised at $3.00 per
share, (ix) issuing $700,000 of subordinated debentures to certain principal
shareholders in November 1995, (x) issuing $100,000 of unsecured, subordinated
promissory notes to a principal shareholder in March 1996, (xi) obtaining a
$1,000,000 line of credit from Imperial Bank in March 1996, (xii) issuing
$250,000 of promissory notes to certain principal shareholders in March and
April 1996, (xiii) completing its financing of Bridge Notes and Bridge Warrants
in July 1996, in which approximately $3,695,000 was raised and (xiv) converting
$99,000 of outstanding convertible debentures into 66,000 shares of Common Stock
at $1.50 per share in July 1996.

Holders of the Bridge Notes will have the option of being repaid from the
proceeds of this offering or converting up to 100% of the principal amount of
the Bridge Notes into shares of Common Stock at a conversion price equal to 80%
of the initial public offering price. See "Description of Securities -- Bridge
Financing."

As of September 30, 1996, approximately 17% of the Company's total accounts
receivable were over 90 days past due. Historically, the Company has experienced
longer collection cycles for its proprietary products and systems compared to
its distributed products. The Company has established a reserve for bad debt and
returns and allowances of $83,000 as of September 30, 1996 and believes that
such reserve will be adequate to cover potential writeoffs or returned sales.

As of September 30, 1996, no individual account which was over 90 days past
due was significant to the financial position of the Company. Based on the
collections received through January 9, 1997, the Company anticipates that a
preponderance of receivables over 90 days past due will be collected by the end
of the first quarter of 1997. In addition, the Company believes that the
allowance for doubtful accounts at September 30, 1996 is adequate to provide for
any uncollectible accounts.

When evaluating whether to extend credit to a potential customer, the
Company considers, among other factors: (i) the credit-worthiness of the
customer; (ii) the customer's prior payment history; and (iii) the type of the
products to be sold and the related dollar value of the sale. The Company may
grant credit to slow-paying customers depending on the customer's prior history
of eventual payment or the perceived long-term importance of the customer to the
Company. Receivables arising from sales of proprietary products often have
longer collection periods because they represent a significant capital
expenditure to the customer, and customers may delay payment as a form of
short-term financing and to ensure the product is working effectively prior to
making payment. Sales of distributed products tend to be of smaller dollar value
on an individual basis and are often routine, repetitive purchases. The Company
anticipates that proprietary product sales will continue to require longer
collection periods than distributed products due to the above factors. The
Company considers the likely collection period in establishing sales prices for
proprietary products, whereas distributed products are priced according to a
standard price list.

The Company records a general allowance for uncollectible accounts at the
time of sale based upon its historical experience. The allowance is allocated to
specific customers if and when collection from such customers appears doubtful,
and further sales to such customers are restricted. The remaining general
allowance is then adjusted accordingly, if appropriate.

The consolidated financial statements of the Company included elsewhere
herein were prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities and commitments in the
normal course of business. The Company incurred net losses of $2,816,000 and
$1,836,000 for the years ended December 31, 1994 and December 31, 1995,
respectively, and had an accumulated deficit of $11,125,000 at September 30,
1996. The commercialization of the Company's products requires the commitment of
significant capital expenditures. Although the Company believes that existing
capital resources, including the proceeds of this offering and interest earned
thereon, will allow it to maintain its current and planned operations for at
least 18 months following this offering, no assurance can be given in that
regard. Furthermore, the Company will require additional funds to support its
development activities through the rigorous testing and marketing phases of
development. The Company will seek to obtain additional funds through public or
private equity or debt financing, collaborative or other arrangements with
corporate partners or from other sources. There can be no assurance that such
additional financing can be obtained on desirable terms or at all. If additional
funds are not available, the Company may be required to reduce or eliminate one
or more of its research, discovery or development programs or otherwise curtail
its marketing efforts in certain territories of one or more of its product
lines. While the Company has established a line of credit with Imperial Bank, if
additional financing is required, there can be no assurance that the Company
will be able to renew or increase its line of credit on acceptable terms, if at
all. See "Risk Factors -- Future Additional Capital Requirements; No Assurance
Future Capital Will Be Available."

The Company's independent auditors have included an explanatory paragraph
in their report on the Company's financial statements for the six months ended
June 30, 1996, which indicates there is substantial doubt about the Company's
ability to continue as a going concern due to the Company's need to generate
cash from operations and obtain additional financing. See "Report of Ernst &
Young LLP, Independent Auditors" on the Company's Consolidated Financial
Statements appearing at page F-2 of this Prospectus.

QUARTERLY FLUCTUATIONS

The Company's operating results vary from quarter to quarter as a result of
various factors, including the fact that customers who purchase the Company's
ClearLake and CleanRack systems and other capital items generally purchase such
systems out of their available capital expenditure budget, the amount of which
is typically approved on a yearly basis. As a result, sales of ClearLake and
CleanRack systems and other capital items are generally higher in the first
three quarters than in the fourth quarter since many customers have already
spent their full capital budgets by the fourth quarter. To date, sales of the
Company's BioJect systems have not varied materially due to seasonal factors.
Because the Company's business is directly related to the capital expenditure
budgets of its customers, the Company expects that quarterly fluctuations in its
operating results will continue. Therefore, results for any quarter are not
necessarily indicative of results for any future period. See "Risk Factors --
Quarterly Fluctuations in the Company's Results of Operations."

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." SFAS No. 121 requires recognition of impairment of long-lived assets if the
net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. The Company adopted the provisions of SFAS No. 121
effective January 1, 1996. There was no effect of such adoption on the Company's
financial position or results of operations. See Note 1 of Notes to Consolidated
Financial Statements.

In addition, the FASB has issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a fair value-based method of accounting
for stock-based compensation plans and encourages, but does not rquire, entities
to adopt that method in place of Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees." APB No. 125 and related
Interpretations use an intrinsic value-based accounting method. The Company does
not intend to adopt SFAS No. 123 in measuring expenses. However, the Company
must present pro forma net income (loss) and related per share amounts as if
SFAS No. 123 had been adopted, and such pro forma amounts reflect higher amounts
of expenses than the amounts reported in the financial statements. See Note 1 of
Notes to Consolidated Financial Statements.

BUSINESS

GENERAL

The Company has developed two patented distribution systems that enable the
Company to market and support a proprietary line of microbial products which
control and manage a wide variety of soil, crop and water problems. The Company
believes that these biological products, when introduced through its BioJect and
ClearLake delivery systems, will cost-effectively replace or complement the use
of chemical pesticides or fertilizers in the turf maintenance, agricultural
crop, soil remediation and water quality management industries. Use of the
Company's systems can contribute to a reduction in the negative cumulative
environmental effect of chemical use with no increase in cost or crop damage.
The Company's goals are to increase the market share for biocontrol products and
to make its delivery systems the principal methods for distributing
biotechnology products in its targeted industries.

HISTORY

The Company was incorporated under Nebraska law in November 1987. The
Company initially marketed a program that developed blended fertilizers and soil
amendments to golf courses and to other residential and commercial customers in
the Lincoln, Nebraska area. In 1991, the Company decided that it needed a
broader strategic vision and, consequently, concentrated on the development of
biological inoculation service and nutrient programs. In the next several years,
the Company developed its BioJect, ClearLake and CleanRack systems for
distribution to the turf maintenance industry.

As the Company evolved from a product development and market introduction
oriented business to a more sales-driven organization, the Company decided to
de-emphasize its non-proprietary nutrient and seed business and instead
concentrate its resources on the proprietary BioJect, ClearLake and CleanRack
systems. The Company also established new distributor relationships and expanded
its international marketing activities.

MARKET OVERVIEW

In 1995, an estimated $30 billion was spent on fertilizers and pesticides
in the turf maintenance and agricultural crop markets. Most biological and
chemical products are applied by manual means by tank mixing the products in
water and then manually spraying the products on the areas that need to be
treated. Due to the need for manual application, this process is time consuming
and labor intensive, especially when performed on large acreages. In the case of
biocontrol products, where more frequent applications are required compared to
their chemical counterparts, the need for frequent manual applications has made
these biocontrol products economically uncompetitive.

Despite the potential environmental benefits of biological pesticides
compared to their chemical counterparts, the agricultural and turf markets have
been slow to accept the use of biological products due to the poor shelf life
characteristics of biological products using traditional transportation and
distribution systems. Pesticide and fertilizer products have typically been
shipped over land and stored for long periods before application, practices
which create an inhospitable environment for biological products that
deteriorate rapidly when exposed to light, high temperatures or long storage
periods. In 1995, according to the Organization for Economic Cooperation and
Development, biological products comprised only 0.5% of the overall market for
fertilizers and pesticides in the turf maintenance and agricultural crop
industries, or approximately $150 million per year.

To address these problems, the Company developed a patented process and
designed proprietary equipment to automatically ferment microbial products
on-site to high population levels and then inject the microorganisms during the
irrigation cycles into the customer's irrigation or sprinkler system. A major
advantage of the Company's BioJect system is that it uses the irrigation water
as the distribution medium, thereby eliminating the substantial labor costs
incurred in traditional methods and making the BioJect system the most
cost-effective means of distributing biological products over large acreages.
The BioJect system also allows customers to choose from a "menu" of biological
control products, thereby enabling the Company to address a variety of turf and
crop problems and to customize its products to the needs of individual customers
and markets.

The Company has initially targeted its biological products, delivery
systems and support services to the golf course industry. A survey performed by
the National Golf Foundation indicates that in 1995 there were over 15,000 golf
courses in the United States that purchased annually in excess of $500 million
of fertilizer and chemicals. Although the Company has focused initially on the
turf maintenance and water quality management industries, the Company believes
that it can leverage its experience in these industries into the agricultural
crop and soil remediation markets.

BUSINESS STRATEGY

The Company's goals are to increase the market share of biological products
in the turf maintenance, agricultural crop, soil remediation and water quality
management industries and to make the BioJect system the preferred delivery
mechanism for all biological products in these industries. The Company intends
to accomplish these goals by developing and controlling a distribution system
through the acquisition of selected independent regional dealers and
distributors, commercializing new biotechnology innovations, and expanding the
use of these new products in additional markets.

Over the past five years, the Company has focused primarily on its core
delivery technology and the licensing of microbial products that can be
delivered through the Company's BioJect and ClearLake delivery systems. During
this period, only a minimal amount of capital and personnel resources were
devoted to manufacturing and distribution, and the Company's sales and marketing
efforts were limited to the efforts of its executive officers, a small number of
salespersons and relationships with a few regional distributors. In order to
expand its customer base, the Company determined that it would have to make
substantial capital and personnel commitments, and the Company believes that the
most efficient method of accomplishing this objective is to pursue a strategy of
acquiring and consolidating independent dealers and distributors. In May 1996,
the Company launched its strategy of acquiring selected dealers and distributors
in an attempt to integrate and consolidate them into a single sales
organization, thereby improving the Company's ability to market and sell its
proprietary products, increasing its penetration into the turf maintenance
industry, and enhancing its visibility within its target markets.

ACQUISITION AND PRODUCT DISTRIBUTION CONSOLIDATION STRATEGY

In general, major golf course markets are dominated by a single sales
organization that controls all new product introductions and their subsequent
penetrations into golf courses in their regions. Prior to the Company's initial
dealer acquisitions in May 1996, the Company sold its proprietary products
primarily through direct sales efforts and relationships with certain regional
dealers. Although this strategy enabled the Company to introduce its proprietary
products into selected golf course markets, these markets represented regions
where only approximately 30% of all United States golf courses are located. The
Company also discovered that many of these dealers were accustomed to selling
traditional fertilizers and pesticides and therefore lacked the technical
expertise necessary to market and service the Company's
technologically-advanced, proprietary products.

The Company believes that a significant strategic and financial opportunity
currently exists to acquire a number of small independent dealers and
distributors. At the present time, there are a group of approximately 35 such
dealers and, to date, no group-buying opportunities have been pursued among
these dealers. The Company believes that if it is able to acquire a number of
these small independent dealers, it will be able to develop coordinated
marketing strategies and improve its purchasing terms through group-buying
opportunities. The Company believes that this acquisition strategy will also
enable it to leverage its products into new markets at higher sales penetration
rates than would otherwise be possible and enhance the performance of these
dealers by providing higher margin, proprietary products for these dealers to
sell.

In May 1996, the Company initiated its dealer acquisition and consolidation
strategy by acquiring two regional turf distributors -- Turf Products, a
Chicago-based dealer that markets turf products throughout the greater Chicago
area, and Turf Specialty, a New Hampshire-based dealer that markets turf
products throughout the New England region. These two dealers have traditionally
offered a wide variety of turf maintenance products, including fertilizers and
pesticides, and the Company anticipates that these traditional turf products
will contribute approximately 60% of the Company's total revenues for the year
ending December 31, 1997. The Company expects that the percentage of
non-proprietary turf products sold by these dealers will decline as the Company
uses these dealers to leverage its technologically-advanced, proprietary
products into their respective regions.

Turf Products and Turf Specialty are recognized in the turf maintenance
industry as leaders in the golf course market in the greater Chicago area and
New England region, respectively. While other dealers in these markets compete
for market share through aggressive pricing, the Company's acquired dealers have
adopted a value-added, customer service focus, an approach which is essential
for introducing technologically-advanced, proprietary products such as the
BioJect and ClearLake systems. In reviewing other potential acquisition
candidates, the Company will continue to seek dealers and distributors with a
similar value-added, customer service approach.

The Company is currently evaluating additional acquisition opportunities
throughout the United States. The Company intends to commit substantial time and
resources to create the necessary organizational framework and acquisition
structure (including pricing, employment contracts, reporting and
accountability) necessary to explore and analyze these acquisition opportunities
so that the Company can create an integrated marketing and distribution system
for its products.

The Company believes that its dealer acquisition and consolidation strategy
will offer several benefits to the Company as well as its acquired dealers,
including the following:

* improved profitability due to increased sales of proprietary products;

* improved overall financial results due to consolidated operations;

* increased margins to consolidated dealers due to group-buying
opportunities; and

* increased visibility in turf maintenance markets and greater
credibility in larger markets such as the agricultural crop and soil
remediation industries.

The direct acquisition of dealers also can provide these dealers with an
equity interest in the Company, thereby creating a financial incentive for such
dealers to introduce the Company's higher margin, proprietary products into
their respective regions. Dealers also can benefit from these acquisitions
because their relationship with the Company should provide these dealers with
access to greater financial resources.

Because new product introduction requires higher sales skills and advanced
marketing strategy, the Company believes that a consolidated group of dealers
possessing the necessary technical expertise could have a major impact on the
industry. Planning is underway to integrate fully the Company's products into
these newly acquired organizations and to begin building more important and
profitable relationships with other key suppliers in this industry. The Company
believes that proceeds from this offering, among other things, will allow the
dealer consolidations to continue and, through the acquisition and training of
an integrated sales force, will enable the Company to establish a nationwide
distribution channel in the turf maintenance and water quality management
industries and to expand into other related markets, including the agricultural
crop and soil remediation industries. Due to the increased visibility created by
the Company's recent dealer acquisitions, certain large agricultural companies
have already contacted the Company about exploring possible relationships for
the introduction of the Company's products into the agricultural crop industry.

OTHER STRATEGIC ACQUISITIONS

In September 1995, the Company acquired Aspen, which designs and plans
complete irrigation systems for golf courses, residential housing projects and
large commercial developments, in order to bring additional irrigation system
design and expertise in-house. The Company believes that the acquisition of
Aspen will enhance the distribution of the BioJect and ClearLake systems in the
new construction and large residential housing development markets and will
provide increased exposure in the golf course architectural community, where
Aspen has conducted business for years. The Company also believes that Aspen
will play an integral role in enhancing the design of both the BioJect and
ClearLake systems due to its knowledge and expertise in the design and operation
of all phases of irrigation systems.

In February 1996, the Company acquired Direct Products. Direct Products,
which had served as the Company's distributor in South Africa since June 1994,
distributes a wide range of turf maintenance products, including fertilizers,
seed and chemicals, and has also established relationships with citrus and
avocado growers in South Africa. The acquisition of Direct Products will form
the basis for the Company's international business unit.

PRODUCT AND MARKET STRATEGIES

In addition to its strategy of acquiring selected dealers and distributors
in key geographic markets, the Company also plans to develop and commercialize
new innovations in biotechnology and expand the use of its products in
additional markets and industries. The BioJect system is the Company's principal
product for achieving these goals, and the Company intends to continue to
position the BioJect system as the most efficient and cost-effective means of
distributing biological products into irrigation-dependent markets.

The Company believes that the introduction of naturally-occurring
biologicals through its patented delivery systems will enable customers to
overcome many of the environmental problems inherent in large-scale chemical
applications while offering significant cost savings over traditional chemical
applications. Some of the environmental advantages and potential cost savings
include the following:

ENVIRONMENTAL ADVANTAGES

* lower toxicity to humans and other non-target animals and plants;

* fewer residual pesticide contaminants in plants and their byproducts;

* rapid access to treated areas after application; and

* reduced soil and groundwater pollution.

POTENTIAL COST SAVINGS

* the use of well or effluent water as an alternative to more costly
city water for irrigation purposes;

* a reduction in water consumption of up to 40% due to improved soil
porosity and increased toxin remediation;

* a reduction in the rates and frequency of use of chemical fungicides,
herbicides, insecticides and other pesticides; and

* an increase in seed germination rates.

In addition to expanding the marketing and sale of its patented delivery
systems in the turf maintenance and water quality management industries, the
Company intends to leverage its experience in these industries into the
agricultural crop and soil remediation markets. The Company has recently
expanded its marketing efforts to encompass these additional markets and, in the
long term, expects to establish partnerships or other formal relationships with
large agricultural or chemical companies that service these markets.

PRODUCTS

The Company's principal products and services for accomplishing its goals
can be divided into two categories -- proprietary products and distributed
products. The Company's proprietary products include its patented BioJect,
ClearLake and CleanRack systems. The Company's distributed products consist of
other traditional fertilizers and pesticides that are distributed through the
Company's wholly owned dealers and distributors. Each of these product
categories is summarized below:

PROPRIETARY PRODUCTS

The Company's principal proprietary products consist of (i) the BioJect
system, which automatically cultures and distributes biological products through
irrigation water, (ii) the ClearLake system, a pond and lake restoration system,
and (iii) the CleanRack system, an equipment wash rack and water treatment
system that decontaminates equipment wash water so that it is suitable for
recycling or discharge. The Company intends to devote the majority of its
marketing and sales resources to its BioJect and ClearLake systems in the
immediate future. Each of these products is described below.

BIOJECT SYSTEM

The BioJect system is the Company's primary product, and the Company
intends to focus most of its efforts on enhancing the capabilities of and
selling the BioJect system to the turf maintenance industry and exploring
potential expansion of its BioJect system into the agricultural crop, soil
remediation and water quality management industries. The Company's BioJect
system includes fermentation chambers, pumps, injectors and computer controls
that coordinate the scale-up of microbial products and their injection into the
customer's irrigation system and a "menu" of microbial products that can be
delivered through its BioJect system.

[DIAGRAM OF BIOJECT SYSTEM]

The BioJect system has evolved over the past four years from delivering
only bacteria of the BACILLUS family to delivering a variety of microbial
products. These products appear on the Company's BioJect menu as replacements
for or complements to fungicides, insecticides or soil amendments. The
consumable product in each menu item is generally a microbe, and each microbe is
cultured in the BioJect device under a proprietary formula. Different microbes
are used for different applications because their mode of action and performance
varies. As a result, these microbes are targeted to very specific problems.

The microbial products delivered by the BioJect system are proprietary
formulations, consisting of a variety of different strains. Different microbes
are used for different applications because their function and performance
varies. The Company currently has under license or under control microbial
products that: (i) produce toxins harmful to plant diseases (PSEUDOMONAS
AUREOFACIENS), (ii) improve soil porosity (BACILLUS SPP.), (iii) break down
thatch (CELLULOMONAS), (iv) fix atmospheric nitrogen (AZOSPIRILLUM BRASILENSE),
(v) inhibit the growth of certain insect pests (BACILLUS THURINGIENSIS), and
(vi) bioremediate certain hazardous chemicals (PSEUDOMONAS FLOURESCENS,
CYTOPHAGA MICHIGANESE, CYTOPHAGA HEPARINA AND PSEUDOMONAS SPP.).

Because microorganisms are subject to degradation upon exposure to high
temperatures, ultraviolet light or long storage periods, the introduction of
these microbials into the soil on a regular basis had not been feasible prior to
the development of the BioJect system. The BioJect system permits, for the first
time, the introduction of microorganisms into the soil at the required frequency
and in a cost-effective and environmentally safe manner. The BioJect system
overcomes the traditional problems associated with the introduction of
microorganisms into the soil by culturing and growing the microbial colonies
during the day and then dispensing the microbial colonies into the customer's
irrigation system automatically at night. The current BioJect system has been
designed to pump large amounts of oxygen to the fermentation chamber, maintain a
specific temperature range, and keep the pH at a neutral level. By doing so, the
BioJect system creates an environment that optimizes the fermentation process,
thereby allowing the scale-up of microbial populations from a starter culture.

The Company believes that its BioJect system will become the preferred
distribution vehicle for many biocontrol products because it is able to overcome
the poor shelf life characteristics that have previously prevented biological
products from being practical alternatives or complements to chemical control
products. Consequently, the Company's primary strategy is to expand sales of the
BioJect system and continue to position the BioJect system as the most efficient
and cost-effective means of distributing biological products into
irrigation-dependent markets.

Compared to traditional applications of chemical fertilizers and
pesticides, the Company's BioJect system offers several advantages. Among other
factors, the BioJect system:

* introduces naturally occurring microorganisms that are environmentally
safe;

* permits increased frequency of applications at high doses and at
night, which minimizes degradation due to heat and ultraviolet light
exposure and long storage periods;

* eliminates the substantial labor costs associated with mixing and
spraying;

* reduces freight expenses associated with shipping the product; and

* provides a user-friendly system that is managed and serviced by
Company personnel.

The Company has obtained exclusive rights to several microorganisms
pursuant to a consulting agreement with Encore Technologies, Inc. ("Encore").
This thirty (30)-year consulting agreement provides that Encore shall (i)
identify organisms from third parties which may be used in the BioJect system as
pesticides, herbicides, fungicides or soil amendments, (ii) test such organisms
to determine whether they can be scaled up in the BioJect system, (iii) conduct
any necessary regulatory work and (iv) provide such organisms to the Company for
use in its proprietary systems. In return for these services, the Company pays
Encore a specified percentage of the price received from sales of the BioJect
system by the Company's dealers and distributors. In addition to the Encore
agreement, the Company has also acquired the rights to other microorganisms
through licensing and/or distribution agreements with CCT Corporation("CCT") and
Abbott Laboratories ("Abbott"). Under the CCT agreement, the Company has
exclusive rights to certain microbial products and pays a licensing fee based on
a percentage of the selling price of the products subject to the agreement. The
term of the CCT agreement extends through December 31, 1997, subject to one-year
renewals thereafter upon the agreement of the parties. Under the Abbott
agreement, which may be terminated by either party upon 30 days' notice, the
Company is to pay for products at the time of shipment.

To increase the menu of items for use in its BioJect system, the Company
intends to enter into additional exclusive licensing agreements with various
universities or owners once new microbial products have been proven effective.
To meet the technical challenges associated with the task of optimizing the
scale-up of these distinct microorganisms within the BioJect system and
distributing them within the irrigation cycle, the Company has entered into
research and development agreements with fermentation specialists. The Company
also intends to bring more technical expertise in-house in order to evaluate new
microbial products, maximize the value of its programs, and gain more expertise
in the area of registration and labeling requirements.

The Company generates revenues from its BioJect system by renting or
selling it to customers, collecting service and maintenance fees, and selling
the microbial products delivered through the BioJect system. The Company
generally rents the BioJect system to customers for approximately $5,000 per
year, plus a one-time installation fee of $1,000. The consumable microbial
products are sold separately on a seasonal basis at the annual rate of $5,000 to
$15,000 per microbial, and the cost of such microbials varies depending on the
type of microbials and the desired frequency of application. The Company is the
sole supplier of all of the consumables (biologicals and media) that are
required in its BioJect system, as well as hardware maintenance services.

The Company's installed base of BioJect systems has experienced rapid
growth in recent years, as evidenced by the following table:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- --------------
1990 1991 1992 1993 1994 1995 1996
------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative number of
installed BioJect systems.... 0 1 13 46 79 171 238
</TABLE>

CLEARLAKE SYSTEM

The ClearLake system is a patented system that is designed to improve the
aesthetics and water quality of water used for both irrigation and ornamental
ponds and lakes. The ClearLake system utilizes an injector to introduce
microbial products in small lakes and a BioJect system for larger lakes and
those that are more difficult to treat.

CLEAR LAKE SYSTEM
[DIAGRAM OF CLEAR LAKE SYSTEM]

The ClearLake system has been designed for lakes which are particularly
difficult to keep clean because the constant inflow of contaminants and
nutrients into the lake is too high for the lake's ecosystem to stay in balance.
The ClearLake system treats ponds and lakes by (i) injecting large amounts of
oxygen into the water through venturi intakes, (ii) creating circulation and
water movement around the perimeter of the pond or lake, (iii) redistributing
water from the deepest part of the pond or lake to the other parts through a
submersible pump, and (iv) distributing biological products throughout the lake
through an injection system. The biological products introduced through the
ClearLake system help to counteract excessive algae bloom. By significantly
reducing the amount of algae and increasing the dissolved oxygen levels in ponds
and lakes, the ClearLake system can dramatically improve the quality of water
used for irrigation and of water in ornamental ponds and lakes and can,
therefore, greatly reduce the quantity of water consumed in irrigation and
reduce the need for chemical algaecides.

The ClearLake system, which integrates a computer control center with a
proprietary oxygen diffusion system and a water delivery apparatus as described
above, is customized according to the specific dimensions of the pond or lake.
The ClearLake system can simultaneously utilize four methods of improving water
quality. These methods:

* increase the dissolved oxygen content of the water;

* eliminate water stagnation by introducing a current that travels
around the perimeter of the pond into the irregularly shaped fingers
and inlets;

* eliminate the cold anaerobic zone in the lake or pond by pumping the
coldest water from the deepest parts to the shallow, warmer edges; and

* introduce biologicals that out-compete the algae for food and, in some
cases, attack the algae directly.

Three different models of ClearLake systems are available depending on the
size of the pond or lake. ClearLake systems vary in price from $7,500 to $25,000
per year, depending on the size and shape of the pond or lake and the desired
horsepower of the ClearLake circulation center. Consumable microbial products
and a maintenance and service contract are sold separately to customers at the
annual rate of $1,500 to $5,000 per microbial, and the cost of such microbials
varies depending on the type of microbials and the desired frequency of
application.

The Company generates revenues from its ClearLake system by selling the
hardware and consumables and collecting maintenance and service fees. The number
of ClearLake systems sold by the Company has experienced rapid growth in recent
years, as evidenced by the following table:

DECEMBER 31, SEPTEMBER 30,
---------------------- -------------
1993 1994 1995 1996
---------------------- -------------

Cumulative number of installed
ClearLake systems.............. 0 13 30 48

CLEANRACK SYSTEM

The Company's CleanRack system cleans the water that is typically used to
wash golf course equipment and recycles it for use. If the water is reused
without treatment, it often contributes to serious mechanical breakdowns and can
pose serious health risks to those with whom it comes into contact. The
CleanRack system is designed to decontaminate wash water so that it complies
with applicable state and federal environmental and safety regulations and is
suitable for discharge or can be safely recycled. As of September 30, 1996, the
Company had sold 15 CleanRack systems.

DISTRIBUTED PRODUCTS

In addition to the proprietary products described above, the Company also
sells a complete line of traditional chemical fertilizers and pesticides and
other turf maintenance products through Turf Products and Turf Specialty, its
recently acquired dealers and distributors. Besides the Company's proprietary
products, these distributors keep in stock an inventory of branded pesticides,
fertilizers, seed, and other necessary products from many agricultural
manufacturers.

In addition to expanding the Company's product line, the acquisition of
these dealers provides the Company with an established sales and marketing force
and a presence in many new geographic markets. Although the Company estimates
that traditional chemical and turf products sold by these dealers will represent
approximately 60% of the Company's overall revenues in the year ending December
31, 1997 if no additional dealers are acquired, the Company expects this
percentage will decline as the Company uses these new dealers to leverage its
technologically-advanced, proprietary products into additional regional markets.
A brief description of these acquired dealers and the products sold by such
dealers is set forth below.

TURF PRODUCTS, LTD.

On May 31, 1996, the Company acquired Turf Products, a Chicago-based
company that markets and sells fertilizers, pesticides, grass seed, soil
amendments and golf accessories to golf courses throughout the greater Chicago
metropolitan area. Turf Products does not sell hardware such as irrigation
equipment or lawnmowers, but instead focuses on various fertilizers, pesticides
and other turf maintenance products. Turf Products currently sells fertilizers
from Lebanon Chemical Corporation, The Anderson's, Vicksburg Chemical Company,
IMC Vigoro, and the Company's own brand of fertilizer. Turf Products also sells
pesticides from many producers, including Bayer Corporation, Ciba-Geigy
Corporation, ISK Biotech Corporation, PBI Gordon Corporation, Rhone-Poulenc AG
Company, O.M. Scotts & Sons, Inc., and Rohm Haas Co.

As of September 30, 1996, Turf Products had ten employees, including four
general salespersons and a fifth salesperson who focuses exclusively on
servicing the BioJect system. Prior to acquiring Turf Products, the Company
distributed its BioJect system through Turf Products from May 1995 through May
1996. Because Turf Products has experience selling the BioJect and has
relationships with many golf course personnel in the greater Chicago
metropolitan area, a region containing over 500 golf courses, the Company
believes that this acquisition represents a significant market opportunity for
the Company.

TURF SPECIALTY, INC.

On May 31, 1996, the Company also acquired Turf Specialty, a New
Hampshire-based company that markets and sells fertilizers, pesticides, grass
seed, soil amendments and golf accessories to golf courses and municipalities
throughout the New England region. Turf Specialty, like Turf Products, does not
sell hardware such as irrigation equipment or lawnmowers, but instead focuses on
various fertilizers, pesticides and other turf maintenance products that meet
the needs of golf courses and municipalities in the New England area. Turf
Specialty currently sells fertilizers from The Anderson's, The Doggett
Corporation, Growth Products, Milwaukee Metropolitan Sewerage District
(Milorganite), Plant Marvel Lab, Inc., Ringer Corporation, Roots Inc., O.M.
Scotts & Sons, Inc., and the Company's own brand of fertilizer. Turf Products
also sells pesticides from many producers, including Bayer Corporation,
Ciba-Geigy Corporation, ISK Biotech Corporation, Kincaid Enterprises, PBI Gordon
Corporation, Rhone-Poulenc AG Company, O.M. Scotts & Sons, Inc. and Rohm Haas
Co.

As of September 30, 1996, Turf Specialty had 11 employees, including five
salespersons. Although Turf Specialty did not have any experience selling the
BioJect system prior to its acquisition by the Company in May 1996, the Company
believes that Turf Specialty has the technical expertise necessary to market and
service the BioJect system and also provides an inroad for the Company into golf
courses and municipalities in the New England region, which represents a new
geographic market for the Company.

PRODUCT DEVELOPMENT

In addition to the Company's existing proprietary and distributed products
described above, the Company is in the process of investigating and developing
other products which may provide long-term benefits to the turf maintenance,
agricultural crop, soil remediation, and water quality management industries.

The Company's Aspen subsidiary currently performs several services related
to product development. These services include water source evaluation, water
supply planning, computer analysis of distribution, and evaluation of applicable
products. Currently, Aspen is working with engineers at the Company to develop a
complete turn-key system for turf managers at major sports stadiums. This system
will be an improvement on the current state-of-the-art system because it will
bring together current technologies in heating and cooling, drainage, and
biological injection to sports fields.

The Company has completed a number of trials for water and soil remediation
and continues to test technologies in these markets. Two technologies appear to
show promise in these industries, and the Company intends to invest further in
their development. The first technology is the BioJect system, which ferments
new organisms at the contamination site at a high frequency and dosage in a
manner that the Company believes could make bioremediation cost effective. The
second technology encompasses the use of new microorganisms. The Company is
currently evaluating two new microbial products that have shown favorable
laboratory results. One product speeds up the breakdown of Atrazine, a widely
used herbicide and recently discovered deep water (aquifer) contaminant.
University trials have shown that the other product breaks up PCB molecules into
harmless gasses and liquids. Although the Company believes that there may be
significant markets for these products, extensive testing and governmental
approvals will be required before the Company can begin to market these
products.

CUSTOMERS

The Company has sold its BioJect system to some of the most famous and
notable golf courses in the world, including the following:

<TABLE>
<CAPTION>
<S> <C>
* Atlantic Golf Club (NY) * Monterey Peninsula Country Club (CA)
* Aviara Golf Club (CA) * North Shore Country Club (IL)
* Baltimore Country Club (MD) * Oakland Hills Country Club (MI)
* Bighorn Country Club (CA) * Pelican Hills - Links Ocean (CA)
* Caledonian Golf Club (Japan) * Point-O-Woods Country Club (MI)
* Congressional Country Club (MD) * Royal Brunei Golf Club (Brunei)
* John's Island (N,W&S) (FL) * San Francisco Country Club (CA)
* Jupiter Hills (FL) * Skokie Country Club (IL)
* Kyowe Country Club (Japan) * Spyglass Hill Golf Club (CA)
* Legacy Golf Club (NV) * Sun City Resorts - Gary Player (S. Africa)
* Leopard Creek Golf Course (Zimbabwe) * Sun City Resorts - Lost City (S. Africa)
* Merion Golf Club (PA) * Tres Vidas Golf Course (Mexico)
</TABLE>

Customers for the ClearLake system include the following:

* Del Mar Country Club (CA) * Somas Aguas Golf Club (Spain)
* The Lakes Country Club (CA) * Sunrise Golf Club (NV)

RESEARCH AND DEVELOPMENT

The Company does not conduct basic research. Instead, the Company licenses
microbial products that have test data suggesting beneficial uses in the turf
maintenance, agricultural crop, soil remediation and water quality management
industries. The Company spent approximately $286,000 and $413,000 on research
and development for the years ended December 31, 1994 and 1995, respectively,
and spent approximately $353,000 on research and development during the nine
months ended September 30, 1996. The Company believes its strategic objectives
can best be met by combining its in-house product development efforts with the
licensing of technology and the establishment of research collaborations with
scientists at academic institutions and at companies working in related fields.
Much of the in-house research and development effort is targeted at the
engineering of the fermentation and product delivery features of its BioJect
system. System adaptation by modification of the physical design allows
flexibility to accept a variety of microbial agents. System design also
considers the Company's service component and simplifies maintenance procedures
and the duration of the service visit.

GOVERNMENT REGULATION

Various state laws and regulations require the Company to register all of
its nutrient products with the Department of Agriculture in each state in which
the Company sells its products. Fertilizer products are also subject to periodic
monitoring by each state's Department of Agriculture. In each of the last two
fiscal years, the Company estimates that it has spent less than $100,000
complying with the registration and labeling requirements imposed by
environmental laws and regulations. The Company does not expect that continued
regulatory compliance will have a significant effect on its results of
operations. However, the Company can be subject to fines and loss of its
fertilizer license in any state where its products fail to comply substantially
with the Company's approved labels or registration. The Company is currently
subject to the Occupational Safety and Health Act, the Environmental Protection
Act, the Toxic Substance Control Act, the Resource Conservation and Recovery
Act, the Clean Air Act and the Clean Water Act and may be subject to other
present and potential future federal, state or local regulations. For marketing
and use of its products outside the United States, the Company will be subject
to foreign regulatory requirements. Such requirements vary widely from country
to country. In addition, as the Company expands, it may decide to register
certain of its microbial products as pesticides with the EPA, which involves a
complex approval process. Failure to achieve such registration could limit the
market potential of such microbial products. See "Risk Factors -- Government
Regulation."

PATENTS AND PROPRIETARY RIGHTS

The Company's success is dependent in large measure upon its ability to
obtain patent protection for its products and to maintain confidentiality and
operate without infringing upon the proprietary rights of third parties. The
Company has obtained and is seeking U.S. and foreign patents regarding the
technology relating to the automatic inoculation of irrigation water with
biological products to improve soil quality. Specifically, the Company was
granted two U.S. patents in July 1993 that cover both the process of
automatically inoculating irrigation water with biological products and the
equipment (the BioJect system) that the Company uses to inoculate irrigation
water automatically. In May 1994, the Company was granted a patent on its
ClearLake system for the improvement of water quality in a pond or similar body
of water. The Company also has six additional U.S. patents pending with respect
to its ClearLake system.

The Company filed a new patent application in 1994 relating to the
automatic inoculation of irrigation water with biological products that
incorporates a BioJect system that is able to grow, culture and dispense into
the irrigation system distinct microorganisms or combinations of microorganisms
on a frequent (daily) basis. The type of microorganism or combination of
microorganisms can be changed frequently as the tank is "cleansed" on a regular
basis. This application also expanded the scope of the invention to include
irrigation systems covering all types of vegetation, in addition to turf. This
application was approved by the Patent Examiners office in January 1995, and the
Company was issued a formal patent on September 5, 1995.

In August 1995, the Company submitted another patent application that
covers a further modification to the BioJect system. This application also
covers a system that is designed to grow and inject distinct microorganisms or
combinations of microorganisms that are selected on a preprogrammed basis.
However, this application incorporates biological and food sources being stored
and added to the BioJect system in a liquid state. The application also expands
the scope of the invention to cover the application of biological products to
all types of vegetation in addition to turf and expands the way these
microorganisms can be distributed onto vegetation to include utilizing a system
to fill up a spray tank for manual application to turf or vegetation in addition
to the utilization of the irrigation system. This application is still pending.

In addition to the patent applications described above, the Company has
registered or applied for registration of a number of trademarks used in its
business. The Company also relies on trade secrets and proprietary know-how. The
Company occasionally has elected to disclose its trade secrets and proprietary
know-how to employees, consultants, potential corporate partners, and contract
manufacturers.

COMPETITION

The Company's systems ferment and distribute environmentally-safe
alternatives to chemicals for the treatment of various soil and water problems.
The Company's proprietary products and services compete against traditional
means of plant and water maintenance that require heavy use of chemical
products, with an emphasis on treating problem areas as they develop. These
traditional technologies include chemical insecticides and fungicides, chemical
soil penetrants, acid injection systems, and the direct, manual application of
cultured microbial products. The Company competes against these traditional
technologies on the basis of its delivery mechanism and bioaugmentation
expertise.

PROPRIETARY PRODUCTS

The Company's principal competitors with respect to its various proprietary
systems are described below:

BIOJECT SYSTEM

The BioJect system competes against a number of companies that have
developed biological products for plant maintenance. The BioJect system also
competes against a number of technologies that are designed to reduce the
incidence and severity of turf and plant disease and sodium build-up in the
water, soil and tissue of the grass. These technologies include traditional
chemical insecticides and fungicides, chemical soil penetrants, acid injection
systems, and the direct, manual application of cultured microbial products.
Although the Company believes that none of its competitors offers an automated
means of regularly applying products to turf and crops in an effective manner,
many of these competitors have substantially greater access to financial,
technical and personnel resources than the Company and include such
well-established companies as Ciba Geigy Corporation, Rhone-Poulenc AG Company,
the Dow Chemical Company, O.M. Scotts & Sons, Inc., Lesco, Inc., and The Toro
Company, as well as a number of smaller local and regional competitors.

CLEARLAKE SYSTEM

There are a number of companies that have developed conventional pond and
lake aeration equipment, including The Toro Company, Otterbine Barebo, Inc.,
Dennis Manufacturing Co., Fresh-Flo Corp., Ziegler Bros., Inc. and Spraying
Systems Co. However, these systems use only one or two methods to improve water
quality, as compared to the four methods utilized in the ClearLake system.

CLEANRACK SYSTEM

Competitive equipment wash and water treatment systems are sold by RGF
Environmental and Llanda, Inc. RGF Environmental is the industry leader with
over 2,000 installations worldwide, while Llanda is estimated to have over 800
installations. Both companies have designed systems for heavy industrial
applications and have not, to date, focused on developing systems specifically
for the golf industry. The Company competes with RGF Environmental and Llanda on
the basis of the features and benefits of its product line in relation to cost.

DISTRIBUTED PRODUCTS

The Company's distributed products and services compete against
manufacturers and distributors of traditional technologies, including chemical
insecticides and fungicides, chemical soil penetrants, acid injection systems
and the direct, manual application of fertilizers and pesticides. Many of these
competitors have substantially greater access to financial, technical and
personnel resources than the Company and include such well-established companies
as Lesco, Inc., Terra Companies, Inc., Con-Agra, Inc. and Wilbur-Ellis Company.

PERSONNEL

As of September 30, 1996, the Company had 72 full-time employees,
consisting of six in general management, 17 in sales and marketing, 29 in
customer service, six in research and development, and 14 in finance and general
administrative activities. None of the Company's employees is represented by a
labor union or is covered by a collective bargaining agreement. The Company has
not experienced work stoppages and believes that it maintains good relations
with its employees.

FACILITIES

The Company's headquarters consist of 22,000 square feet located in San
Diego, California. The Company currently leases this building for warehouse,
sales and marketing, product development and administrative purposes. The
Company's lease for such space provides for base lease payments of $13,200 per
month, plus operating expenses, and expires in December 1999. The Company does
not own any real property.

The sales organizations recently acquired, Turf Products and Turf
Specialty, both have office and warehouse space. Turf Products leases 6,500
square feet in Chicago at a base rent of $3,750 a month plus operating expenses.
Turf Specialty leases 8,000 square feet in northern New Hampshire at a base rent
of $4,500 per month plus operating expenses.

LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings and is
not aware of any material proceedings that are contemplated by any third party
or governmental authority.

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The directors, executive officers and key employees of the Company and
their ages as of September 30, 1996 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
William B. Adams 50 Chairman of the Board, Chief Executive Officer, and
Director
Jeffrey A. Johnson 40 President, Chief Operating Officer, Secretary and
Director
Douglas M. Gloff 50 Executive Vice President and Director
L. Jean Dunn, Jr. 41 Chief Financial Officer
Dr. Thomas C. Quick 41 Vice President, Agriculture
John M. Doyle 37 Vice President of Product Development
Larry K. Runyon 58 Director of New Products
Kevin P. Lyons 40 Senior Vice President and Co-General Manager, Turf
Specialty
David W. Schermerhorn 37 Senior Vice President and Co-General Manager, Turf
Specialty
Wally Fuchs 56 Vice President and General Manager, Turf Products
Michael R. Scott 40 President of Aspen Consulting, Inc.
Bradley K. Edwards 37 Director
S. Bartley Osborn 54 Director
William S. Potter 51 Director
</TABLE>

The Company's Bylaws authorize the Board of Directors to fix the number of
directors from time to time, and the number is currently set at six directors.
All directors hold office until the next annual meeting of the shareholders or
until their successors have been elected and qualified. Officers serve at the
discretion of the Board of Directors. There are no family relationships between
any of the directors or executive officers of the Company.

WILLIAM B. ADAMS has served as Chairman of the Board, Chief Executive
Officer and as a director of the Company since March 1991. Mr. Adams is also
currently Chairman of Orphan Medical, Inc., a publicly traded spinoff of
Chronimed, Inc., a publicly held medical products company. From 1985 to 1994,
Mr. Adams was Chairman of the Board of Chronimed. Prior to his involvement with
the Company, Mr. Adams founded WBA Consultants, Ltd., a management consulting
firm, in 1980 and acted as an independent management consultant until 1994. From
August 1989 to February 1991, Mr. Adams was Executive Chairman of Printrak,
Inc., a developer of specialized computer systems for the law enforcement
community. From April 1986 to April 1988, Mr. Adams was President and Chief
Executive Officer of Check Technology Corporation, a manufacturer of electronic
printing equipment.

JEFFREY A. JOHNSON has served as President, Chief Operating Officer and a
director of the Company since March 1991. Prior to his involvement with the
Company, Mr. Johnson was a partner and employee of WBA Consultants from 1986
until March 1991. Mr. Johnson was also a Vice President of Printrak, Inc. from
1989 to 1991 and Vice President of Corporate Development of Check Technology
Corporation from 1986 to 1988. From 1983 to 1986, Mr. Johnson was Vice President
of Corporate Finance for Craig Hallum, Inc., an investment banking firm based in
Minneapolis, Minnesota.

DOUGLAS M. GLOFF joined the Company as Executive Vice President in January
1994 and became a director of the Company in August 1995. Mr. Gloff shares many
of the executive management duties of the Company with Mr. Adams. Prior to
joining the Company, Mr. Gloff acted as a consultant from 1992 until January
1994. From 1978 to 1992, he served in various capacities with U.S. Surgical,
Inc., a publicly held supplier of medical instruments used in surgery,
culminating in the position of Director of Sales for the western area.

L. JEAN DUNN, JR. joined the Company as Corporate Financial
Officer/Corporate Operations Officer in May 1996. From 1992 to 1996, Mr. Dunn
had been a partner in Capital Advisors LLC, an investment banking firm. Prior to
that, Mr. Dunn was a Vice President at Mitsubishi Bank in New York from 1989 to
1992, and a Vice President at Banque Paribas in Los Angeles and New York from
1982 to 1989.

DR. THOMAS C. QUICK has served as the Vice President, Agriculture of the
Company since September 1996. From October 1994 to August 1996, he served as an
International Product Manager, Biopesticides, for Abbott Laboratories. Prior to
that, he served in various capacities with Mycogen Corporation from May 1987
until March 1994, culminating in the position of Technical Sales Representative.

JOHN M. DOYLE joined the Company in May 1994 as the Company's Vice
President of Product Development. Mr. Doyle is responsible for product and
technology acquisition, regulatory issues, production, marketing and
communication materials, product testing, and sales support for the BioJect
system. Prior to joining the Company, Mr. Doyle spent seven years in various
positions with Ringer Corporation, a supplier of natural turf maintenance
products based in Minneapolis, Minnesota, culminating in the position of Vice
President of Product Development.

LARRY K. RUNYON served as a Vice President of the Company from August 1991
until October 1996 and is currently employed by the Company on a part-time
basis. Mr. Runyon, who is the inventor of the Company's patented BioJect system,
assigned his rights to the BioJect system to the Company in October 1991. From
February 1990 to August 1991, he supervised the restoration of the Rancho Santa
Fe Golf Club in San Diego, California. In 1990, Mr. Runyon was also the
architect and designer of the golf course at the San Francisco Golf Club in
Mexico. From September 1988 to September 1989, he was superintendent of the
Mission Country Club in Odessa, Texas. Mr. Runyon has also acted as a consultant
to fertilizer, turf additive and water treatment companies and to other
companies in the golf industry.

KEVIN P. LYONS has served in various capacities with Turf Specialty since
October 1985, culminating in his current position of Senior Vice President and
Co-General Manager. Prior to joining Turf Specialty, he was a Senior Technical
Representative for O.M. Scott & Sons, Inc. from February 1980 until October
1985.

DAVID W. SCHERMERHORN has served in various capacities with Turf Specialty
since October 1987, culminating in his current position of Senior Vice President
and Co-General Manager. Prior to joining Turf Specialty, he was a Technical
Representative for O.M. Scott & Sons, Inc. from October 1985 until October 1987.

WALLY FUCHS founded Turf Products in February 1969 and currently serves as
the Vice President and General Manager of Turf Products. He was an original
member of the Independent Turf and Ornamental Distributors Association (ITODA),
the principal association of golf course and nursery product distributors.

MICHAEL R. SCOTT is the Founder and President of Aspen Consulting, Inc.,
the Company's wholly owned subsidiary that plans and designs complete irrigation
systems for golf courses, residential housing projects and large commercial
developments. Mr. Scott founded Aspen in 1981. Mr. Scott is a Certified
Irrigation Designer for golf courses by the American Irrigation Association, a
Certified Irrigation Designer for large commercial projects by the American
Irrigation Association, a member of the American Society of Irrigation
Consultants, and a member of the Center for Irrigation Technology.

BRADLEY K. EDWARDS has served as a director of the Company since July 1991.
Since January 1993, Mr. Edwards has been a general partner of Heartland Capital.
Heartland Capital is the successor to the NRDA, a state-sponsored venture
capital entity that was an original investor in the Company. From November 1989
to January 1993, Mr. Edwards was employed by the NRDA, initially as a fund
manager and later as its President.

S. BARTLEY OSBORN has served as a director of the Company since November
1991. Mr. Osborn is currently Chairman of the Board of Directors of the Fairway
Foundation, a nonprofit foundation dedicated to teaching and exposing the game
of golf to inner-city children in Minneapolis, Minnesota. From October 1965
through May 1982, Mr. Osborn was Executive Vice President of Ecolab, Inc., a
Fortune 500 specialty chemical manufacturer based in Minneapolis, Minnesota. Mr.
Osborn is a trustee of the IC Koran foundation, which assists employees of
EcoLab through scholarships for its children and through financial hardship
assistance.

WILLIAM S. POTTER has served as a director of the Company since August
1992. Since 1988, Mr. Potter has also been President of Rugged Rigger, Inc., a
personal services corporation. From 1970 to 1988, Mr. Potter worked in various
capacities for H.M. Stevens Incorporated, a national food service and catering
company specializing in sporting events, culminating in the position of
Operational Vice President. Mr. Potter is a founding member of Fairbanks Ranch
Country Club in San Diego.

COMMITTEES OF THE BOARD OF DIRECTORS

COMPENSATION COMMITTEE

The Company has a Compensation Committee consisting of Messrs. Adams,
Edwards, and Potter. The Compensation Committee provides recommendations
concerning salaries and incentive compensation for the Company's officers and
administers the Company's benefit plans, other than the 1992 Stock Option Plan.

AUDIT COMMITTEE

The Company has an Audit Committee consisting of Messrs. Johnson, Edwards
and Osborn. The Audit Committee recommends to the Board of Directors the
engagement of the Company's independent public accountants and reviews the scope
and results of their audits and other services. The Audit Committee meets with
management and with the independent public accountants to review matters
relating to the quality of the Company's financial reporting and internal
accounting control, including the nature, extent and results of the audits,
proposed changes to the Company's accounting principles and otherwise maintains
communications between the independent public accountants and the Board of
Directors.

SCIENTIFIC ADVISORY BOARD, SPORTS FIELD CONSULTANT AND SUPERINTENDENT'S ADVISORY
BOARD

SCIENTIFIC ADVISORY BOARD

The Company maintains a Scientific Advisory Board (the "SAB") that advises
the Company from time to time with respect to its scientific research and
development programs. These individuals are compensated through the grant of
stock options. They will also receive fees for attending scientific advisory
meetings and reimbursement of out-of-pocket expenses. The SAB met in August 1995
and September 1996.

Members of the SAB may be employed by or have consulting agreements with
entities other than the Company, some of which may conflict or compete with
their obligations to the Company and which may limit their availability to the
Company. Most are not expected to participate actively in the Company's
development. Certain of the institutions with which SAB members are affiliated
may have regulations or policies which are unclear with respect to the ability
of such personnel to act as part-time consultants or in other capacities for a
commercial enterprise. Regulations or policies now in effect or adopted in the
future might limit the ability of the SAB members to consult with the Company.
The loss of the services of certain of the SAB members could adversely affect
the Company.

The current members of the SAB are as follows:

DR. DAVID E. CROWLEY is an Assistant Professor of Soil-Plant Relations at
the University of California, Riverside, where he has concentrated his efforts
on rhizosphere biology, the physiological basis for microbial competition in
soils and the activity of microorganisms that degrade soil contaminants. Dr.
Crowley received his Ph.D. from Colorado State University in 1986 and has been
associated with the University of California, Riverside since 1990.

DR. PETER H. DERNOEDEN is a Professor of Agronomy at the University of
Maryland, where he has focused on the impact of mowing, irrigation and fertility
on disease severity and weed encroachment in turf. He has also concentrated on
disease etiology, the effects of fungicides on non-target diseases, plant
parasitic nematodes, molecular techniques for identifying root pathogens, and
the chemical control of diseases and weeds. Dr. Dernoeden received his Ph.D. in
Plant Pathology from the University of Rhode Island in 1980.

DR. ERIC B. NELSON is currently an Associate Professor of Plant Pathology
at Cornell University, where he has focused on spermosphere and rhizosphere
ecology, plant-microbe and microbe-microbe interactions and biological control
of plant pathogens. Dr. Nelson received his Ph.D. from Ohio State University and
has been associated with Cornell University since 1987.

DR. FREDERICK J. SCHENDEL is the Vice President of Research and Development
for Encore Technologies, Inc. ("Encore"). In this capacity, Dr. Schendel is in
charge of all of Encore's research and development activities. Dr. Schendel
received his Ph.D. from the University of Wisconsin in 1986.

DR. JOSEPH M. VARGAS is a Professor of Botany and Plant Pathology at
Michigan State University, where he has concentrated his efforts on disease
management programs for turf. Dr. Vargas received his Ph.D. from the University
of Minnesota in 1968 and has been associated with Michigan State University
since that time. He has served in various capacities in the International
Turfgrass Society, the Turf and Ornamental Disease Committee of the American
Phytopathological Society and the Michigan Turfgrass Foundation Board.

DR. DANIEL I.C. WANG is a Professor of Chemical Engineering and Director of
the Biotechnology Process Engineering Center at the Massachusetts Institute of
Technology ("MIT"), where he has focused on fermentation processes, enzyme
technology and engineering, biopolymer production and protein purification and
refolding. Dr. Wang received his Ph.D. from the University of Pennsylvania in
1963 and has been associated with MIT since 1965. Dr. Wang has served in various
capacities on numerous biotechnology editorial boards, advisory boards and
professional society memberships.

SPORTS FIELD CONSULTANT

The Company has established a relationship with a sports field consultant
to establish contacts between various professional sports teams and the Company
regarding potential sales of the Company's products to these teams and to their
sports stadiums. The sports consultant may, however, be employed by and have
consulting relationships with entities other than the Company, some of which may
conflict or compete with certain obligations to the Company and which may limit
such consultant's availability to the Company.

EDWARD C. (WHITEY) FORD currently serves as the Company's sports field
consultant. Mr. Ford is a private investor and nationally known sports
spokesperson. He was a starting pitcher for the New York Yankees in the 1950's
and 1960's and has been inducted into the Baseball Hall of Fame. He continues to
maintain contacts in the professional sports industry and is involved in many
sports charities and other charitable activities.

SUPERINTENDENT'S ADVISORY BOARD

The Company has also recently established an advisory board that consists
of a rotating committee of five golf course superintendents. This board suggests
improvements to the Company's current products and services and reviews and
critiques the Company's product development strategy. The Superintendent's
Advisory Board meets once each year, and the Company consults with its
individual members on an ad hoc basis.

EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

The Company has not paid any cash compensation to a director in his
capacity solely as a director and has no present plan to pay directors' fees. It
is the Company's current policy to award non-employee directors an option to
purchase 10,000 shares of Common Stock at the then-current market price, vesting
over three years, for each year of service as a director. All directors are
reimbursed for travel and other out-of-pocket expenses incurred in connection
with attendance at meetings of the Board of Directors.

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows for the fiscal year ending December 31, 1996,
compensation awarded, paid to, or earned by the Company's Chief Executive
Officer and to the two other executive officers whose compensation exceeded
$100,000 for that year (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------
COMMISSIONS OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY AND BONUS COMPENSATION
--------------------------------------- ---- -------- ----------- ------------
<S> <C> <C> <C> <C>
William B. Adams
Chief Executive Officer 1996 $ 75,000 $0 $0(1)
Kevin P. Lyons
Senior Vice President and Co-General
Manager, Turf Specialty 1996 122,500(2) 0 0
David W. Schermerhorn
Senior Vice President and Co-General
Manager, Turf Specialty 1996 122,500(2) 0 0
</TABLE>
- -------------------------
(1) Consists of a $500 per month car allowance. Mr. Adams declined to accept
his car allowance in 1996.

(2) Messrs. Lyons and Schermerhorn joined the Company in July 1996 following
the Company's acquisition of Turf Specialty and were paid $122,500 each
for the year ended December 31, 1996.

The following information is furnished as of December 31, 1996 with respect
to stock options then held by the Company's Named Executive Officers.

AGGREGATED OPTION VALUES AT DECEMBER 31, 1996

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
William B. Adams 719,823 0 $1,880,521 0
Kevin P. Lyons 0 0 0 0
David W. Schermerhorn 0 0 0 0
</TABLE>
- ------------------------
(1) The amounts set forth represent the difference between the estimated Price
to Public of $4.25 per Share and the exercise price of the options,
multiplied by the applicable number of shares underlying the options.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with each of the Named
Executive Officers and certain other executive officers. A summary of the
principal terms of such agreements is set forth below.

On May 21, 1991, the Company entered into an employment agreements with
each of William B. Adams, Jeffrey A. Johnson and Douglas M. Gloff, setting forth
each officer's duties, compensation, employee benefits and other terms of
employment. Each agreement, as amended, provides for an initial minimum annual
salary of $75,000 for each officer and terminates in December 1998. The Company
or each officer may terminate the agreement earlier, in which case such officer
will be entitled to severance pay equal to six months' base salary. Within six
months of the occurrence of certain change in control events, each officer may
voluntarily terminate his employment and be entitled to severance pay equal to
six months' base salary.

On October 1, 1995, Aspen entered into an employment agreement with Michael
R. Scott setting forth Mr. Scott's duties, compensation, employee benefits and
other terms of employment. Such agreement provides for a minimum annual salary
of $96,000 and terminates on September 30, 1999, unless earlier terminated by
the Company or Mr. Scott. The employment agreement also provides that Mr. Scott
is eligible to receive certain cash bonuses if Aspen's pre-tax net income
exceeds specified levels. The performance objective was met in 1995, and Mr.
Scott is currently being paid a bonus of $50,000 in equal monthly installments.
In addition, Mr. Scott received a non-qualified option to purchase up to 50,000
shares of the Company's Common Stock at $3.00 per share, vesting in equal annual
installments over the next four years, as long as he continues to be employed by
the Company at the end of each anniversary date of the agreement, and an option
to purchase up to 150,000 shares of Common Stock at $3.00 per share if Aspen's
pre-tax net income exceeds certain levels from 1996 through 1999. In 1995, Mr.
Scott received a total of $96,000 in salary, $28,000 of which was paid by the
Company after the merger of the Company with Aspen in September 1995.

On June 1, 1996, the Company entered into an employment agreement with L.
Jean Dunn, Jr. setting forth Mr. Dunn's duties, compensation, employee benefits
and other terms of employment. Such agreement provides for a minimum annual
salary of $90,000 and terminates on December 1, 1998. The agreement also granted
Mr. Dunn an option to purchase up to 75,000 shares of the Company's Common Stock
at $3.00 per share, with such options vesting in three equal annual installments
beginning on December 1, 1996.

On July 8, 1996, the Company entered in employment agreements with Kevin P.
Lyons and David W. Schermerhorn in connection with the Company's acquisition of
Turf Specialty. Each employment agreement provides for a minimum annual salary
of $165,000 and terminates on July 7, 1999 and July 8, 1999, respectively. See
"Certain Transactions."

On July 10, 1996, the Company entered into an employment agreement with
Wally Fuchs in connection with Company's acquisition of Turf Products. The
employment agreement provides for a minimum annual salary of $155,000 and
terminates on July 10, 1998.

On September 1, 1996, the Company entered into an employment agreement with
Dr. Thomas C. Quick setting forth Dr. Quick's duties, compensation, employee
benefits and other terms of employment. Such agreement provides for a minimum
annual salary of $80,000 and terminates on March 1, 1999. The agreement also
grants Dr. Quick an option to purchase up to 30,000 shares of Common Stock at
$3.00 per share, with such options vesting in three equal annual installments
beginning on March 1, 1997.

STOCK OPTION PLANS

1992 STOCK OPTION PLAN

In 1992, the Company adopted a Stock Option Plan (the "Option Plan"), under
which 125,000 shares of Common Stock were initially reserved for issuance upon
exercise of options granted to officers, employees and directors of, and
advisors and consultants to, the Company. The Option Plan provides for the grant
of both stock options intended to qualify as incentive stock options as defined
in the Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified
stock options. The Option Plan will terminate on February 5, 2002, unless sooner
terminated by the Board of Directors. The Company's shareholders approved an
increase in the number of shares reserved for issuance under the Option Plan to
250,000 shares in August 1993, to 350,000 shares in April 1995, to 450,000
shares in May 1996 and to 2,000,000 shares in November 1996.

Subject to the limitations set forth in the Option Plan, the Board of
Directors or a committee, if administration of the plan is delegated to a
committee of the Board comprised of at least two disinterested directors, has
the authority to select the persons to whom grants are to be made, to designate
the number of shares to be covered by each option, to determine whether an
option is to be an incentive stock option or a nonqualified stock option, to
establish vesting schedules and, subject to certain restrictions, to specify
other terms of the options. The maximum term of options granted under the Option
Plan is ten years. Options granted under the Option Plan generally are
nontransferable and expire three months after the termination of an optionee's
employment or consultancy with the Company. In general, if an optionee dies,
such person's options may be exercised up to one year after his or her death.

The exercise price of options granted under the Option Plan is determined
by the Board of Directors (or its committee) at the time of grant. The exercise
price of incentive stock options must equal at least the fair market value of
the Common Stock on the date of grant. The exercise price of incentive stock
options granted to any person who at the time of grant owns stock possessing
more than 10% of the total combined voting power of all classes of stock must be
at least 110% of the fair market value of such stock on the date of grant, and
the term of these options cannot exceed five years. The exercise price of
nonqualified stock options may be determined by the Board of Directors but must
be at least 85% of the fair market value of the stock on the date of grant. As
of September 30, 1996, the Company had outstanding options to purchase an
aggregate of 555,668 shares (all of which were nonqualified stock options) held
by 60 persons at a weighted average exercise price of $2.93 per share. As of
September 30, 1996, no options granted pursuant to the Option Plan had yet been
exercised.

1996 DIRECTORS' OPTION PLAN

The 1996 Directors' Stock Option Plan (the "Directors' Plan") provides for
the automatic grant of nonstatutory stock options to purchase 10,000 shares of
Common Stock to nonemployee directors at the time of their election as director,
and an option to purchase 3,000 shares of Common Stock on the date of each
subsequent annual shareholder meeting, subject to certain limitations. Options
granted on the date an individual is elected as a director of the Company shall
become vested and thereby exercisable with respect to 33-1/3% on the date of
such election, with respect to 33-1/3% on the twelve month anniversary date
after such election and with respect to 33-1/3% on the date of the second twelve
month anniversary date after such election; provided, however, that an unvested
portion of such option grant shall only vest so long as the nonemployee director
remains a director on the date such portion vests, and that vested options shall
terminate two years after the date a director ceases to be a director of the
Company. Options granted on the date of each annual meeting of shareholders
become exercisable six months after the date of grant. The option price for
nonemployee directors is equal to the fair market value of a share of Common
Stock as of the date of grant. The Company has reserved a total of 60,000 shares
of Common Stock for issuance under the Directors' Plan, all of which are
currently available for future grants.

INDEMNIFICATION

Pursuant to the Company's charter documents and Nebraska law, the Company's
directors, officers and employees may be entitled to indemnification and
advancement of expenses for certain acts or actions made by or on behalf of the
Company. In addition, the Underwriting Agreement entered into between the
Company and the Underwriters in connection with this offering provides that the
Company will indemnify the Underwriters against certain liabilities, including
civil liabilities under the Securities Act, or will contribute to payments the
Underwriters may be required to make in respect thereof. Insofar as
indemnification for liabilities arising under the 1933 Act may be permitted to
directors, officers and controlling persons of the issuer, the issuer has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable.

CERTAIN TRANSACTIONS

In July 1994, the Company entered into a $1,013,000 line of credit with
Peninsula Bank. The line of credit was secured by all of the Company's accounts
receivable and contract rights, as well as a pledge of personal assets by
William B. Adams, Rugged Rigger, Inc. (a company controlled by William S.
Potter), Douglas M. Gloff and Heartland Capital (a limited partnership, of which
Bradley K. Edwards is a general partner).

During the period from December 1994 to February 1995, Mr. Adams converted
$1.2 million of subordinated notes and shareholder advances into 400,000 shares
of Common Stock.

On November 15, 1995, Mr. Gloff and Heartland Capital each purchased
$200,000 and Mr. Adams purchased $300,000 of collateralized subordinated
debentures from the Company. The debentures are secured by the assets of the
Company but are subordinated to any senior indebtedness of the Company. The
debentures bear interest at an 8% annual rate, payable on a quarterly basis, and
the entire principal balance is due on November 15, 1998.

On February 1, 1996, Mr. Adams loaned the Company $250,000 under the terms
of an 8% unsecured subordinated promissory note, with principal and interest due
upon demand.

On January 22 and 23, 1996, Mr. Adams purchased a total of $300,000 of
collateralized subordinated debentures from the Company. The debentures are
secured by the assets of the Company but are subordinated to any senior
indebtedness of the Company. The debentures bear interest at an 8% annual rate,
payable on a quarterly basis, and the entire principal balance is due on
November 15, 1998. In connection with these debentures, warrants were issued to
Mr. Adams to purchase 100,000 shares of Common Stock at an exercise price of
$3.00 per share. These warrants expire on the earlier of January 2003 or one
year after the closing date of the Company's initial public offering of Common
Stock.

On March 1, 1996, Rugged Rigger, Inc. loaned the Company $100,000. The loan
had an annual interest rate of 8%, payable monthly, and the entire principal
balance was due on November 15, 1998. In connection with this subordinated
unsecured note, warrants were issued to Mr. Potter to purchase 15,000 shares of
Common Stock at an exercise price of $3.00 per share. These warrants expire in
March 1, 2001. The loan was repaid in full with the proceeds from the sale of
the Bridge Notes and the Bridge Warrants.

On March 15, 1996, Mr. Adams converted $300,000 of collateral that was
pledged to secure the Company's bank loan at Peninsula Bank into cash and used
the cash to reduce the Company's $1,013,000 principal loan at Peninsula Bank by
this amount. The Company in turn issued Mr. Adams a $300,000 secured
subordinated promissory note, which bears interest at an 8% annual rate, payable
on a quarterly basis, and the entire principal amount is due on March 15, 1998.
In connection with the promissory note, Mr. Adams was granted warrants to
purchase up to 100,000 shares of Common Stock at an exercise price of $3.00 per
share for a period of five years.

On March 15, 1996, Mr. Gloff and Heartland Capital converted $250,000 and
$200,000, respectively, of collateral that was pledged to secure the Company's
bank loan at Peninsula Bank into cash and used the cash to reduce the Company's
$1,013,000 principal loan at Peninsula Bank by this amount. The Company in turn
issued a $250,000 secured subordinated promissory note to Mr. Gloff and a
$200,000 secured subordinated promissory note to Heartland Capital, each bearing
interest at an 8% annual rate, payable on a quarterly basis, and the principal
amount of each note is due on March 15, 1998. In connection with the debentures,
warrants were issued to Mr. Gloff and Heartland Capital to purchase up to 83,333
shares and 66,667 shares, respectively, of Common Stock at an exercise price of
$3.00 per share. These warrants expire upon the earlier of seven years from the
date of issuance or one year after the closing date of the Company's initial
public offering of Common Stock.

On March 26, 1996, the Company entered into a $1,000,000 line of credit
agreement with Imperial Bank, $500,000 of which is a revolving line of credit
that expires on April 1, 1997 and $500,000 of which is a revolving credit line
extended to finance exports based on a guarantee extended the Company by the
California Export Finance Organization ("CEFO"). The entire line of credit has
been personally guaranteed by Mr. Adams. The term loan portion of the line of
credit bears interest at a rate of prime plus 2%. The CEFO portion of the credit
line bears interest at prime plus 1.5%. CEFO's obligations are in turn
guaranteed by Mr. Adams. In connection with the revolving line of credit,
warrants were issued to Imperial Bank to purchase 20,833 shares of Common Stock
at an exercise price of $3.00 per share. These warrants expire in March 2001.

Between March and July 1996, the Company loaned $72,000 to Rugged Rigger,
Inc. to enable it to exercise options to purchase Common Stock. The loan bears
interest at an annual rate of 5%, compounded annually, and is payable at the
earlier of two years from the date of the loan or upon the sale of the
underlying Common Stock. This loan will be repaid by Rugged Rigger upon the
earlier of (i) one year following the effective date of this offering or (ii)
the sale of the underlying Common Stock.

On April 1, 1996, Mr. S. Bartley Osborn loaned the Company $100,000. The
loan had an annual interest rate of 10%, payable upon demand, and the entire
principal balance was due on July 1, 1996. In connection with this unsecured
note, warrants were issued to Mr. Osborn to purchase 15,000 shares of Common
Stock at an exercise price of $3.00 per share. These warrants expire in April
2001. The loan was repaid in full with the proceeds from the sale of the Bridge
Notes and the Bridge Warrants.

On May 15, 1996, Mr. Gloff converted the entire principal balance of his
$100,000 unsecured promissory note into 100,000 shares of Common Stock.

On May 24, 1996, the Company issued three convertible unsecured $50,000
promissory notes for the purpose of providing short-term financing until the
proceeds of this initial public offering can be received, one from each of Mr.
Adams, Mr. Gloff and Heartland Capital. Each note is payable upon demand and
bears interest at an annual rate of 8%. In connection with these promissory
notes, warrants were issued to each of Messrs. Adams and Gloff and Heartland
Capital to purchase 7,500 shares of Common Stock at an exercise price of $3.00
per share. These warrants expire in May 2001.

In May 1996, the Company acquired from Kevin P. Lyons and David W.
Schermerhorn, the only shareholders of Turf Specialty, all of the stock of Turf
Specialty for a total of $500,000 in cash and 647,650 shares of Common Stock. In
addition, the Company agreed to pay to Messrs. Lyons and Schermerhorn a total of
$1,000,000 if Turf Specialty earns a pre-tax profit for the year ending December
31, 1996 of at least $900,000, with lesser payments due if Turf Specialty earns
less than $900,000 in pre-tax profit for the year ending December 31, 1996. The
Company currently expects Turf Specialty to achieve $900,000 in pre-tax profits
for the year ending December 31, 1996.

In connection with the acquisition of Turf Specialty, effective July 8,
1996, the Company entered into employment agreements with each of Messrs. Lyons
and Schermerhorn providing for minimum annual salary levels of $165,000 and the
right to participate in any incentive compensation plans sponsored by Turf
Specialty. The employment agreements for Messrs. Lyons and Schermerhorn expire
on July 7, 1999 and July 8, 1999, respectively. Pursuant to these agreements,
the Company has agreed to loan $250,000 to each of these individuals on or about
December 15, 1996. These loans do not have to be repaid and will be forgiven on
July 1, 1999 if these officers are employed by the Company at that time. If
either officer's employment is terminated by the Company before that date, such
officer will be obligated to repay a portion of the loan prorated to the number
of days worked from July 2, 1996 to the effective date of the termination of his
employment. Compensation expense will be recorded by the Company over the period
of forgiveness.

The Company leases its headquarters facility from Mr. Arthur Arns, who owns
10,000 shares of Common Stock. The Company's lease for this facility provides
for base lease payments of $13,200 per month, plus operating expenses, and
expires in December 1999.

Management of the Company believes that the terms of the transactions
described above were no less favorable to the Company than would have been
obtained from an unaffiliated third party. Any future material transactions and
loans with officers, directors or 5% beneficial shareholders of the Company's
Common Stock, or affiliates of such persons, will be on terms no less favorable
to the Company that could be obtained from unaffiliated third parties and will
be approved by a majority of the outside members of the Company's Board of
Directors who do not have an interest in the transactions.

The Company has agreed with the Minnesota Department of Commerce that so
long as the Company's securities are registered in the State of Minnesota, or
one year from the date of this Prospectus, whichever is longer, the Company will
not make loans to its officers, directors, employees, or principal shareholders,
except for loans made in the ordinary course of business, such as travel
advances, expense account advances, relocation advances, or reasonable salary
advances.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of September 30, 1996 and
as adjusted to reflect the sale of Shares offered hereby (assuming no exercise
of the Underwriters' over-allotment option) by: (i) each director of the
Company, (ii) each Named Executive Officer of the Company, (iii) each person or
entity known by the Company to own beneficially more than five percent of the
Company's Common Stock and (iv) all directors and executive officers of the
Company as a group.

SHARES PERCENT OF OUTSTANDING SHARES(1)
BENEFICALLY --------------------------------
NAME AND ADDRESS OWNED BEFORE OFFERING AFTER OFFERING
- ---------------- ----------- --------------- --------------
<S> <C> <C> <C>
William B. Adams(2) ................ 1,541,763 20.50% 14.24%

Bradley K. Edwards(3)
Heartland Capital Fund, Ltd
11930 Arbor Street, Suite 201
Omaha, NE 68144 ................... 801,433 11.78% 7.93%

Douglas M. Gloff(4) ................ 518,556 7.45% 5.06%

Wally Fuchs(5) ..................... 400,000 6.09% 4.06%

William S. Potter(6)
13875 Old El Camino Real
San Diego, CA 92130 ............... 363,132 5.39% 3.62%

Kevin P. Lyons ..................... 323,750 4.93% 3.28%

David W. Schermerhorn .............. 323,750 4.93% 3.28%

Jeffrey A. Johnson(7) .............. 301,176 4.44% 2.98%

S. Bartley Osborn(8)
360 Orono Orchard Road
Wayzata, MN 55391 ................. 74,166 1.22% *

All executive officers and directors
as a group (14 persons)(9) ........ 4,939,726 56.52% 41.03%
</TABLE>
- ------------------------
*Less than 1%.

(1) Shares of Common Stock subject to options, warrants or convertible debt
securities currently exercisable or exercisable within 60 days after
September 30, 1996, are deemed to be outstanding for purposes of computing
the percentage of shares beneficially owned by the person holding such
options, warrants or convertible debt securities, but are not deemed to be
outstanding for purposes of computing such percentage for any other person.
Except as indicated by footnote, each person or group identified has sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Except as otherwise indicated, the
address of each of the above persons is c/o Eco Soil Systems, Inc., 10890
Thornmint Road, Suite 200, San Diego, California 92127.

(2) Includes 619,823 shares of Common Stock subject to currently exercisable
options and 337,500 shares of Common Stock subject to currently exercisable
warrants.

(3) All shares are owned by Heartland Capital; beneficial ownership of such
shares is attributed to Mr. Edwards because he is a general partner of
Heartland Capital and is therefore deemed to exercise voting power and
investment authority with respect to the shares. Shares listed include
56,666 shares of Common Stock subject to currently exercisable options and
180,834 shares of Common Stock subject to currently exercisable warrants.

(4) Includes 163,556 shares of Common Stock subject to currently exercisable
options and 230,000 shares of Common Stock subject to currently exercisable
warrants.

(5) Includes 20,000 shares of Common Stock held by Mr. Fuchs as Trustee for the
Fuchs Family Charitable Remainder Trust.

(6) Includes 70,132 shares of Common Stock subject to convertible debt
securities, 10,000 shares of Common Stock subject to currently exercisable
options and 90,000 shares of Common Stock subject to currently exercisable
warrants. Also includes shares owned by Rugged Rigger, Inc., a California
corporation that is wholly owned by Mr. Potter.

(7) Includes 225,909 shares of Common Stock subject to currently exercisable
options.

(8) Includes 15,000 shares of Common Stock subject to convertible debt
securities, 3,333 shares of Common Stock subject to currently exercisable
options and 15,000 shares of Common Stock subject to currently exercisable
warrants.

(9) See notes 1-8 above. Also includes 48,333 shares of Common Stock subject
to currently exercisable options held by John M. Doyle.

DESCRIPTION OF SECURITIES

GENERAL

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock. As of September 30, 1996,
there were issued and outstanding 6,564,166 shares of Common Stock, which were
held by 276 shareholders of record, and 4,866,633 shares of Common Stock were
reserved for issuance upon exercise of outstanding options and warrants. No
shares of Preferred Stock were outstanding as of that date.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders other than in the
election of directors, in which event any holder may demand cumulative voting.
In cumulative voting, the holders of Common Stock are entitled to cast for each
share held the number of votes equal to the number of directors to be elected,
which will be six upon the completion of this offering. A holder may cast all of
his or her votes for one nominee or distribute them among any number of nominees
for election. Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor and are entitled to share ratably in all assets of the
Company available for distribution to holders of the Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company. Holders of
Common Stock have no preemptive, subscription or conversion rights, and there
are no redemption or sinking fund provisions applicable thereto. The outstanding
shares of Common Stock are, and the Shares of Common Stock offered hereby will
be, fully paid and nonassessable.

PREFERRED STOCK

The Company's Certificate of Incorporation authorizes the Company's Board
of Directors, without further shareholder action, to issue up to 5,000,000
shares of Preferred Stock in one or more series and to fix the voting rights,
liquidation preferences, dividend rights, repurchase rights, conversion rights,
redemption rights and terms, including sinking fund provisions, and certain
other rights and preferences, of the Preferred Stock. Although there is no
current intention to do so, the Board of Directors of the Company may, without
shareholder approval, issue shares of a class or series of Preferred Stock with
voting and conversion rights which could adversely affect the voting power or
dividend rights of the holders of Common Stock and may have the effect of
delaying, deferring or preventing a change in control of the Company.

BRIDGE FINANCING

In July 1996, the Company completed a bridge financing (the "Bridge
Financing") consisting of the issuance of approximately 74 Units (the "Bridge
Units"). Each Bridge Unit consisted of a $50,000 Bridge Note and Bridge Warrants
to purchase 10,000 shares of the Company's Common Stock. The Bridge Financing
resulted in $3,695,000 of principal amount of Bridge Notes outstanding and the
issuance of Bridge Warrants to purchase 739,000 shares of Common Stock.

BRIDGE NOTES

The Bridge Notes were not issued pursuant to an indenture, and no trustee
was retained to enforce any of the obligations represented by the Bridge Notes.
The Bridge Notes bear interest from the date of issuance at 10% annually,
payable at maturity. The Bridge Notes will be payable in full within 30 days
after the date of this Prospectus. Up to 100% of the principal amount of the
Bridge Notes will be convertible, at the option of the holder thereof, into the
Company's Common Stock for a period of 20 days after the date of this Prospectus
at a conversion price equal to 80% of the initial public offering price.

The Bridge Notes are unsecured debt obligations of the Company. Principal
and interest payments on the Bridge Notes are subordinated to the prior payment
of any obligations of the Company to financial institutions representing
indebtedness for borrowed money.

BRIDGE WARRANTS

Each Bridge Warrant entitles the holders thereof to purchase one share of
Common Stock after December 31, 1996. The Bridge Warrants expire on July 5,
2001. The exercise price of the Bridge Warrants will be equal to 80% of the
initial public offering price.

The Bridge Warrants provide for the automatic adjustment of the number of
shares issuable upon exercise of the Bridge Warrants, and of the exercise price,
in certain events, including stock dividends, stock splits, distributions of
Common Stock, reorganizations, reclassification, subdivisions and combinations
of the Common Stock, and the merger, consolidation or sale of all or
substantially all of the assets of the Company.

REGISTRATION RIGHTS

The Company has agreed to register the stock issued upon exercise of the
Bridge Warrants and conversion of the Bridge Notes under federal and state
securities laws at such time as it becomes eligible to use the Registration
Statement on Form S-3 or 12 months after an initial public offering (whichever
is earlier) upon written request from holders of a majority of the shares of
Common Stock purchasable or purchased at the time of the request upon exercise
of the Bridge Warrants or conversion of the Bridge Notes. The Company is
required to maintain the effectiveness of such registration until the earlier of
12 months after the effective date or until all shares subject to such
registration have been resold. Holders of shares of stock purchased upon
exercise of the Bridge Warrants or conversion of the Bridge Notes will also be
entitled to certain incidental or "piggyback" registration rights. Holders must
convert Bridge Notes and exercise Bridge Warrants prior to any registration of
the sale of the Common Stock subject thereto.

OTHER WARRANTS

As of September 30, 1996, in addition to the Bridge Warrants to acquire
739,000 shares of Common Stock, the Company had outstanding warrants to purchase
a total of 1,721,065 shares of Common Stock of the Company with a weighted
exercise price of $2.70 per share. Such warrants were issued in connection with
prior financing transactions by the Company. The holders of such warrants, as
such, are not entitled to vote, receive dividends or exercise any of the rights
of holders of shares of Common Stock for any purpose until such warrants have
been duly exercised and payment of the purchase price has been made.

NEBRASKA SHAREHOLDERS PROTECTION ACT

The Company is a Nebraska corporation and is therefore subject to the
provisions of the Nebraska Shareholders Protection Act. The Nebraska
Shareholders Protection Act, subject to certain exemptions, prohibits a Nebraska
corporation from engaging in any of a broad range of "business combinations"
involving an "interested" shareholder, or any affiliate or associate of such
interested shareholder, for a period of five years following the date that such
shareholder became an interested shareholder, unless prior to such date, the
Board of Directors of the corporation approved either the business combination
or the transaction that resulted in the shareholder becoming an interested
shareholder. A "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the shareholder. The Nebraska
Shareholders Protection Act also provides that shares acquired in a
control-share acquisition have no voting rights with respect to matters other
than the elections of directors unless approved by a vote of shareholders of the
corporation, and that any such control share acquisition is effective only if
approved by a majority of the corporation's voting shares that are "not
interested" shares. A control-share "acquisition" is an acquisition of voting
stock in a corporation that, when added to the shares the shareholder had prior
to the acquisition, would elevate the shareholder's voting power into one the
three following ranges: (i) between 20% and 33-1/3%, (ii) between 33-1/3% and
50% and (iii) over 50%. For purposes of the Nebraska Shareholders Protection
Act, an "interested shareholder" is a person who owns 10% or more of a
corporation's outstanding voting stock, or an affiliate or associate of the
corporation that owns, or within five years prior, did own, 10% or more of the
corporation's outstanding voting stock. These provisions may have the effect of
discouraging, delaying, deferring or preventing a change in control of the
Company.

TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Company has been appointed as the transfer
agent and registrar for the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common
Stock. Upon closing of this offering, assuming no conversion of Bridge Notes or
the exercise of Bridge Warrants, the Company will have outstanding an aggregate
of 9,864,166 shares of Common Stock. Of these shares, the 3,300,000 Shares sold
in this offering will be freely tradeable without restriction or further
registration under the Securities Act, except for such Shares, if any, which are
purchased by "affiliates" of the Company, as that term is defined in Rule 144
under the Securities Act (whose sales would be subject to certain volume
limitations and other restrictions described below). The remaining 6,564,166
shares were issued and sold by the Company in private transactions in reliance
upon exemptions from registration under the Securities Act and are, therefore,
restricted securities (the "Restricted Shares") that may not be sold publicly
unless the Restricted Shares are registered under the Securities Act or sold
under Rule 144 or 144A under the Securities Act or under similar exemptions. Of
these Restricted Shares, ________________ will be eligible for resale on the
effective date of this offering, _______________ will be eligible for resale 90
days following the effective date of this offering subject to the restrictions
imposed by Rule 144, and the remaining _____________ will be eligible for resale
under Rule 144 after the expiration of the two-year holding periods from the
dates of acquisition, which end in August 1998. Holders of ________________ of
such Restricted Shares have entered into lock-up agreements under which they
have agreed not to offer, sell or otherwise dispose, or directly or indirectly
cause or permit the offer, sale or other disposition, of any Common Stock owned
of record or beneficially and of which such shareholder has the power to control
the disposition for a period of 180 days after the date of this Prospectus
without the prior written consent of the Representative. Certain shareholders
have the right, subject to certain conditions, to participate in future Company
registrations and to cause the Company to register certain shares of Common
Stock owned by them.

In general, under Rule 144, a person (or persons whose sales are
aggregated) who beneficially owns shares last acquired privately from the
Company or an affiliate of the Company at least two years previously, and
affiliates of the Company who beneficially own shares last acquired (whether or
not such shares were acquired privately) from the Company or an affiliate of the
Company at least two years previously, are entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of the Company's Common Stock or the average weekly
reported volume of trading in the Company's Common Stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain manner-of-sale provisions, notice requirements and the availability of
current public information about the Company. A person who has not been an
affiliate of the Company at any time during the three months preceding a sale,
and who beneficially owns shares last acquired from the Company or an affiliate
of the Company at least three years previously, is entitled to sell all such
shares under Rule 144 without regard to any of the limitations of Rule 144.

The Securities and Exchange Commission has proposed reducing the initial
Rule 144 holding period to one year and the Rule 144(k) holding period to two
years. There can be no assurance as to when or whether such rule changes will be
enacted. If enacted, such modifications may have a material effect on the time
when shares of the Company's Common Stock become eligible for resale.

In addition, Rule 144A under the Securities Act generally permits unlimited
resales of certain restricted securities of any issuer provided that the
purchaser is an institution that owns and invests on a discretionary basis at
least $100 million in securities or is a registered broker-dealer that owns and
invests $10 million in securities. Rule 144A allows the existing shareholders of
the Company to sell their shares to such institutions and registered
broker-dealers without regard to any volume or other restrictions. Unlike under
Rule 144, restricted securities sold under Rule 144A to nonaffiliates do not
lose their status as restricted securities.

The Company intends to file a Form S-8 Registration Statement under the
Securities Act to register all shares of Common Stock issuable under the Option
Plan and the Directors' Plan. That registration statement is expected to become
effective immediately upon filing. Shares covered by that registration statement
will be eligible for sale in the public market after the effective date of that
registration statement, subject to Rule 144 limitations applicable to affiliates
and to the lock-up agreements described below.

The Company can make no prediction as to the effect, if any, that sales of
shares of Common Stock or the availability of Common Stock for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the Common Stock in the public markets or the perception
that such sales could occur could adversely affect the market price or the
future ability of the Company to raise capital through an offering of its equity
securities.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, each
Underwriter named below has severally agreed to purchase from the Company, and
the Company has agreed to sell to such Underwriters, the number of shares of
Common Stock set forth opposite the name of such Underwriter below, at the Price
to Public set forth on the cover page of this Prospectus, less the underwriting
discount.

NUMBER
UNDERWRITERS OF SHARES
- ------------ ---------

R. J. Steichen & Company ....

---------
Total ....................... 3,300,000
=========

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares of the Common Stock offered hereby
if any are purchased.

The Company has been advised by the Representative that the Underwriters
propose to offer the Shares to the public at the Price to Public set forth on
the cover page of this Prospectus and to certain selected dealers at such Price
to Public less usual and customary concessions not in excess of $__________ per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $__________ per share to certain other securities dealers. Each
of the concessions allowed will be to members of the National Association of
Securities Dealers, Inc. After the initial public offering, the Price to Public,
concessions and reallowance may be changed by the Underwriters.

The Company has granted to the Underwriters an option, exercisable not
later than 45 days after the date of this Prospectus, to purchase up to an
additional 495,000 shares of Common Stock from the Company at the Price to
Public less the underwriting discount set forth on the cover page of this
Prospectus solely to cover over-allotments. To the extent the Underwriters
exercise the over-allotment option, they will have a firm commitment to purchase
the number of Shares to be purchased by them, and the Company will be obligated,
pursuant to the option, to sell such Shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 3,300,000 Shares are being offered hereby.

The Company has agreed to pay to the Representative a nonaccountable
expense allowance equal to 2.0% of the aggregate offering price of the shares
offered hereby, or $_______________ ($_____________ if the over-allotment option
is exercised in full), of which $10,000 has been paid. Such allowance is
included in the expenses of the offering set forth on the cover page of this
Prospectus.

The Company has agreed to sell to the Representative upon the closing of
this offering, for nominal consideration, the Representative's Warrant to
purchase 330,000 shares of Common Stock at an exercise price per share equal to
120% of the Price to Public. The Representative's Warrant contains anti-dilution
provisions providing for appropriate adjustments upon the occurrence of certain
events and contains a one-time demand and certain "piggyback" registration
rights with respect to the shares of Common Stock issuable upon the exercise of
the Representative's Warrant. The Representative's Warrant will have a "cashless
exercise" feature allowing the holder of the Representative's Warrant to apply
the difference between the exercise price of the Representative's Warrant and
the higher fair market value of the Common Stock underlying the Representative's
Warrant to the payment of the exercise price. The Representative's Warrant will
be exercisable commencing one year from the date of this Prospectus until five
years after such date. The Representative's Warrant is not transferable for a
period of one year after the effective date of the offering, except for
transfers by operation of law, by reason of the reorganization of the Company or
to officers of the Representative. Furthermore, the Representative's Warrant
will not be transferable absent an exemption from applicable state and federal
securities laws. Any profits realized upon the sale of the Representative's
Warrant or the Common Stock issuable upon exercise thereof may be deemed to
constitute additional underwriting compensation.

The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other or provide contribution with respect to certain
liabilities, including liabilities under the Securities Act and liabilities
arising from breaches of representations and warranties contained in the
Underwriting Agreement. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable.

Shareholders of the Company (including its executive officers and
directors) who hold in the aggregate __________ shares outstanding Common Stock
and holders of options and warrants to purchase an additional __________ shares
have agreed not to offer, sell or otherwise dispose, or directly or indirectly
cause or permit the offer, sale or other disposition, of any Common Stock of the
Company owned of record or beneficially and of which such shareholder has the
power to control the disposition for a period of 180 days after the date of this
Prospectus without the prior consent of the Representative. See "Shares Eligible
for Future Sale."

The Underwriters have advised the Company that they do not intend to
confirm sales to any account over which any of them exercises discretionary
authority.

Prior to this offering, there has been no public market for the Common
Stock of the Company. The initial public offering price for the Shares was
determined by negotiation between the Company and the Representative, bears no
relation to the Company's current earnings, book value, net worth or financial
criteria of value, and should not be considered as an indication of the actual
value of the Shares offered hereby. After completion of this offering, the
market price of the Shares is subject to change as a result of market conditions
and other factors.

The foregoing is a summary of the provisions of the Underwriting Agreement,
the Representative's Warrant and related documents and does not purport to be a
complete statement of their terms and conditions. The Underwriting Agreement and
the Representative's Warrant have been filed as an exhibit to the Registration
Statement, of which this Prospectus is a part.

EXPERTS

The consolidated financial statements of Eco Soil Systems, Inc. at December
31, 1995 and for the two years in the period then ended and at June 30, 1996 and
for the six months then ended, appearing in this Prospectus and Registration
Statement, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein and in the Registration
Statement which, as of June 30, 1996 and the six months then ended are based in
part on the report of Bigelow & Company, independent auditors, and are included
in reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

The consolidated financial statements of Turf Specialty, Inc. for the years
ended December 31, 1994 and 1995 included in this Prospectus and Registration
Statement and the financial statements as of and for the one month ended June
30, 1996 of Turf Specialty, Inc., as a consolidated subsidiary of the Company,
not included herein, have been audited by Bigelow & Company, Certified Public
Accountants, P.C., as set forth in their reports thereon appearing elsewhere
herein and in the Registration Statement, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

The financial statements of Turf Products, Ltd. for the years ended
December 31, 1994 and 1995 included in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

LEGAL MATTERS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Dorsey & Whitney LLP, Minneapolis, Minnesota.
Certain legal matters will be passed upon for the Underwriters by Winthrop &
Weinstine, P.A., Minneapolis, Minnesota.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 under the Securities Act
with respect to the Common Stock offered hereby. For further information with
respect to the Company and the Common Stock, reference is made to such
Registration Statement and exhibits filed as a part thereof. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other documents referred to are not necessarily complete. With respect to each
such contract, agreement or document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved. The Registration Statement and exhibits may be inspected
without charge and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at Northwestern Atrium Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661 and 75 Park Place, 14th Floor, New York, New
York 10048. Copies of such material may be obtained at prescribed rates from the
Commission's Public Reference Section at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission also maintains a World Wide Web site which provides
on-line access to registration statements, reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at the address "http://www.sec.gov."

The Company will become a reporting company under the Securities Exchange
Act of 1934, as amended, upon completion of this offering, and intends to
furnish to its shareholders annual reports containing financial statements
audited by independent accountants and quarterly reports containing unaudited
financial information for each of the first three quarters of each year.

ECO SOIL SYSTEMS, INC.
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ECO SOIL SYSTEMS, INC.

Report of Ernst & Young LLP, Independent Auditors F-2

Report of Bigelow & Company, Independent Auditors F-3

Consolidated Balance Sheets as of December 31, 1995, June 30, 1996 and
September 30, 1996 (unaudited) F-4

Consolidated Statements of Operations for the years ended December 31, 1994 and
1995, the six months ended June 30, 1995 (unaudited) and 1996 and the nine
months ended September 30, 1995 (unaudited) and 1996 (unaudited) F-5

Consolidated Statements of Shareholders' Equity (Deficit) for the years ended
December 31, 1994 and 1995, the six months ended June 30, 1996 and the three
months ended September 30, 1996 (unaudited) F-6

Consolidated Statements of Cash Flows for the years ended December 31, 1994 and
1995, the six months ended June 30, 1995 (unaudited) and 1996 and the nine
months ended September 30, 1995 (unaudited) and 1996 (unaudited) F-7

Notes to Consolidated Financial Statements F-8

TURF SPECIALTY, INC.

Report of Bigelow & Company, Independent Auditors F-21

Consolidated Statements of Income and Retained Earnings for the years ended
December 31, 1994 and 1995 F-22

Consolidated Statements of Cash Flows for the years ended December 31, 1994
and 1995 F-23

Notes to Consolidated Financial Statements F-24

TURF PRODUCTS, LTD.

Report of Ernst & Young LLP, Independent Auditors F-27

Statements of Income and Retained Earnings for the years ended
December 31, 1994 and 1995 F-28

Statements of Cash Flows for the years ended December 31, 1994 and 1995 F-29

Notes to Financial Statements F-30

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited Pro Forma Condensed Consolidated Statements of Operations F-33

Notes to Pro Forma Condensed Consolidated Statements of Operations F-34
</TABLE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Eco Soil Systems, Inc.

We have audited the accompanying consolidated balance sheets of Eco Soil
Systems, Inc. as of December 31, 1995 and June 30, 1996, and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for the years ended December 31, 1994 and 1995 and the six months ended
June 30, 1996. 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 did not audit the financial
statements of Turf Specialty, Inc., a wholly-owned subsidiary, which statements
reflect total assets of $3,775,000 as of June 30, 1996, and total revenues,
since its acquisition on May 31, 1996, of $538,000 included in the consolidated
results of operations for the six months ended June 30, 1996. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to data included for Turf Specialty, Inc., is
based solely on the report of the other auditors.

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

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Eco Soil Systems, Inc. at December 31,
1995 and June 30, 1996, and the consolidated results of its operations and its
cash flows for the years ended December 31, 1994 and 1995 and the six months
ended June 30, 1996 in conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the
Company's recurring losses from operations raise substantial doubt about its
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

/s/ ERNST & YOUNG LLP

ERNST & YOUNG LLP

San Diego, California
August 14, 1996
except for Note 10, as to which the date is
September 25, 1996

REPORT OF BIGELOW & COMPANY, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Turf Specialty, Inc.
Londonderry, New Hampshire

We have audited the consolidated balance sheet of Turf Specialty, Inc. (a
wholly-owned subsidiary of Eco Soil Systems, Inc.) as of June 30, 1996 and the
related consolidated statements of income, retained earnings and cash flows for
the one month then ended (not included herein). These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and consolidated 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 that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to in the
first paragraph present fairly, in all material respects, the financial position
of Turf Specialty, Inc. at June 30, 1996, and the results of its operations and
its cash flows for the one month then ended in conformity with generally
accepted accounting principles.

BIGELOW & COMPANY
Certified Public Accountants, P.C.
By:

/s/ MARIE C. MCKAY
Marie C. McKay
Certified Public Accountant

Manchester, New Hampshire
July 30, 1996

ECO SOIL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1995 1996 1996
------------ -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash ......................................... $ -- $ 1,159 $ 437
Accounts receivable, net of allowance for
doubtful accounts of $24 at December 31,
1995 and $83 at June 30 and September 30,
1996, respectively .......................... 1,231 4,130 3,191
Inventories .................................. 592 2,229 2,059
Prepaid expenses and other current assets .... 52 468 638
-------- -------- --------
Total current assets ....................... 1,875 7,986 6,325

Property and equipment, net .................... 1,334 2,170 2,060
Intangible assets, net ......................... 751 5,318 5,367
Other assets ................................... 21 100 227
-------- -------- --------
Total assets ............................... $ 3,981 $ 15,574 $ 13,979
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable ............................. $ 1,111 $ 5,353 $ 3,510
Payments due related to acquired businesses .. -- 1,810 --
Accrued expenses ............................. 96 700 515
Advances from shareholder .................... 190 289 239
Current portion of long-term debt ............ 1,703 3,086 5,884
Current portion of capital lease obligations . 99 74 52
-------- -------- --------
Total current liabilities .................. 3,199 11,312 10,200

Long-term debt, net of current portion ......... 911 2,086 1,994
Capital lease obligations, net of current
portion ....................................... 30 7 --
Advances from shareholder ...................... -- 21 26
Commitments
Shareholders' equity (deficit)
Common stock
$.005 par value; 15,000,000 shares
authorized, 4,968,935, 6,365,166 and
6,564,166 shares issued and outstanding at
December 31, 1995 and June 30 and
September 30, 1996, respectively .......... 25 32 33
Additional paid-in capital ................... 8,510 12,409 12,684
Warrants ..................................... -- 91 239
Note receivable from shareholder ............. -- (72) (72)
Accumulated deficit .......................... (8,694) (10,312) (11,125)
-------- -------- --------
Total shareholders' equity (deficit) ....... (159) 2,148 1,759
-------- -------- --------
Total liabilities and shareholders' equity
(deficit) ................................ $ 3,981 $ 15,574 $ 13,979
======== ======== ========
</TABLE>

SEE ACCOMPANYING NOTES.

ECO SOIL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, JUNE 30, SEPTEMBER 30,
--------------------- ------------------------ -------------------------
1994 1995 1995 1996 1995 1996
------- ------- ----------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales .......... $ 1,979 $ 2,425 $ 1,303 $ 3,145 $ 1,743 $ 7,682
Services ............... 709 1,332 637 994 1,040 1,547
------- ------- ------- ------- ------- -------
Total revenues ....... 2,688 3,757 1,940 4,139 2,783 9,229
Cost of revenues:
Product sales .......... 1,716 1,604 666 2,085 1,324 5,143
Services ............... 282 376 178 244 291 562
------- ------- ------- ------- ------- -------
Total cost of revenues 1,998 1,980 844 2,329 1,615 5,705
------- ------- ------- ------- ------- -------
Gross profit ....... 690 1,777 1,096 1,810 1,168 3,524
Operating expenses:
Selling, general and
administrative ........ 2,996 2,938 1,373 2,961 1,929 5,079
Research and development 286 413 160 275 264 353
------- ------- ------- ------- ------- -------
Total operating
expenses ............ 3,282 3,351 1,533 3,236 2,193 5,432
------- ------- ------- ------- ------- -------
Loss from operations ..... (2,592) (1,574) (437) (1,426) (1,025) (1,908)
Interest expense ......... (224) (262) (131) (192) (172) (523)
------- ------- ------- ------- ------- -------
Net loss ............... $(2,816) $(1,836) $ (568) $(1,618) $(1,197) $(2,431)
======= ======= ======= ======= ======= =======
Net loss per share ..... $ (.62) $ (.35) $ (.11) $ (.27) $ (.23) $ (.40)
======= ======= ======= ======= ======= =======
Shares used in
calculating net loss per
share ................... 4,557 5,207 5,184 5,980 5,304 6,050
======= ======= ======= ======= ======= =======
</TABLE>

SEE ACCOMPANYING NOTES.

ECO SOIL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>

COMMON STOCK ADDITIONAL
------------------------ PAID-IN
SHARES AMOUNT CAPITAL WARRANTS
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 ................. 3,225,268 $ 16 $ 4,075 $ --
Issuance of common stock, net of issuance
costs of $336 ............................. 629,500 3 1,235 --
Conversion of debenture .................... 20,000 -- 50 --
Conversion of advances from shareholder .... 166,667 1 499 --
Exercise of employee stock options ......... 2,500 -- 4 --
Repurchase of common stock under rescission
offer ..................................... (75,833) -- (120) --
Net loss ................................... -- -- -- --
---------- ---------- ---------- ----------
Balance at December 31, 1994 ................. 3,968,102 20 5,743 --
Issuance of common stock, net of issuance
costs of $256 ............................. 606,333 3 1,629 --
Conversion of promissory note .............. 233,333 1 699 --
Issuance of common stock for purchase of
Aspen Consulting, Inc. .................... 133,667 1 400 --
Exercise of stock options .................. 27,500 -- 39 --
Net loss ................................... -- -- -- --
---------- ---------- ---------- ----------
Balance at December 31, 1995 ................. 4,968,935 25 8,510 --
Issuance of common stock ................... 130,583 1 387 --
Conversion of debt and shareholder advances 171,998 1 282 --
Exercise of stock options .................. 46,000 -- 92 --
Issuance of common stock for purchase of
Turf Specialty, Inc. ...................... 647,650 3 1,940 --
Issuance of common stock for purchase of
Turf Products, Ltd. ....................... 400,000 2 1,198 --
Issuance of warrants in connection with debt -- -- -- 91
Net loss ................................... -- -- -- --
---------- ---------- ---------- ----------
Balance at June 30, 1996 ..................... 6,365,166 32 12,409 91
Exercise of stock options (unaudited) ...... 133,000 1 176 --
Conversion of debt (unaudited) ............. 66,000 -- 99 --
Issuance of warrants in connection with
bridge financing (unaudited) .............. -- -- -- 148
Net loss (unaudited) ....................... -- -- -- --
---------- ---------- ---------- ----------
Balance at September 30, 1996 (unaudited) .... 6,564,166 $ 33 $ 12,684 $ 239
========== ========== ========== ==========
</TABLE>

[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
NOTE
RECEIVABLE
FROM ACCUMULATED
SHAREHOLDER DEFICIT TOTAL
----------- ----------- --------
<S> <C> <C> <C>
Balance at December 31, 1993 ................. $ -- $ (4,042) $ 49
Issuance of common stock, net of issuance
costs of $336 ............................. -- -- 1,238
Conversion of debenture .................... -- -- 50
Conversion of advances from shareholder .... -- -- 500
Exercise of employee stock options ......... -- -- 4
Repurchase of common stock under rescission
offer ..................................... -- -- (120)
Net loss ................................... -- (2,816) (2,816)
-------- -------- --------
Balance at December 31, 1994 ................. -- (6,858) (1,095)
Issuance of common stock, net of issuance
costs of $256 ............................. -- -- 1,632
Conversion of promissory note .............. -- -- 700
Issuance of common stock for purchase of
Aspen Consulting, Inc. .................... -- -- 401
Exercise of stock options .................. -- -- 39
Net loss ................................... -- (1,836) (1,836)
-------- -------- --------
Balance at December 31, 1995 ................. -- (8,694) (159)
Issuance of common stock ................... -- -- 388
Conversion of debt and shareholder advances -- -- 283
Exercise of stock options .................. (72) -- 20
Issuance of common stock for purchase of
Turf Specialty, Inc. ...................... -- -- 1,943
Issuance of common stock for purchase of
Turf Products, Ltd. ....................... -- -- 1,200
Issuance of warrants in connection with debt -- -- 91
Net loss ................................... -- (1,618) (1,618)
-------- -------- --------
Balance at June 30, 1996 ..................... (72) (10,312) 2,148
Exercise of stock options (unaudited) ...... -- -- 177
Conversion of debt (unaudited) ............. -- -- 99
Issuance of warrants in connection with
bridge financing (unaudited) .............. -- -- 148
Net loss (unaudited) ....................... -- (813) (813)
-------- -------- --------
Balance at September 30, 1996 (unaudited) .... $ (72) $(11,125) $ 1,759
======== ======== ========
</TABLE>

SEE ACCOMPANYING NOTES.

ECO SOIL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------- --------------------
1994 1995 1995 1996
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ....................................... $(2,816) $(1,836) $ (568) $(1,618)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ................ 306 354 158 290
Changes in operating assets and liabilities,
net of effect of acquired businesses:
Accounts receivable ......................... (50) (652) (612) 21
Inventories ................................. (225) (35) 161 (67)
Prepaid expenses and other assets ........... 71 2 (17) (176)
Accounts payable ............................ 367 139 158 (497)
Accrued liabilities ......................... 75 (3) (63) (326)
------- ------- ------- -------
Net cash used in operating activities .......... (2,272) (2,031) (783) (2,373)

INVESTING ACTIVITIES
Cash received in acquisitions .................. -- -- -- 1,656
Payments related to acquired businesses ........ -- -- -- --
Purchase of property and equipment ............. (507) (569) (216) (714)
Proceeds from note receivable .................. -- -- -- 595
------- ------- ------- -------
Net cash (used in) provided by
investing activities .......................... (507) (569) (216) 1,537

FINANCING ACTIVITIES
Advances from shareholder ...................... 1,435 1,000 390 120
Repayment of advances from shareholder ......... (807) (80) -- --
Proceeds from long-term debt ................... 1,613 858 550 1,717
Repayments of long-term debt ................... (973) (751) (414) (202)
Proceeds from capital lease obligations ........ 49 -- -- --
Payments on capital lease obligations .......... (67) (98) (50) (48)
Repurchase of common stock ..................... (120) -- -- --
Net proceeds from issuance of common stock ..... 1,242 1,671 523 408
------- ------- ------- -------
Net cash provided by financing activities ...... 2,372 2,600 999 1,995
------- ------- ------- -------
Net (decrease) increase in cash ................ (407) -- -- 1,159
Cash at beginning of period .................... 407 -- -- --
------- ------- ------- -------
Cash at end of period .......................... $ -- $ -- $ -- $ 1,159
======= ======= ======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Subordinated debentures issued upon conversion
of shareholder advances ....................... $ -- $ 300 $ -- $ --
======= ======= ======= =======
Common stock issued upon conversion of debt and
shareholder advances .......................... $ 550 $ 700 $ 700 $ 283
======= ======= ======= =======
Long-term debt issued for marketing rights ..... $ 264 $ -- $ -- $ --
======= ======= ======= =======
Long-term debt issued for purchase of furniture
and equipment ................................. $ 45 $ -- $ -- $ --
======= ======= ======= =======
Payments due related to acquired businesses .... $ -- $ -- $ -- $ 1,810
======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid .................................. $ 224 $ 262 $ 131 $ 168
======= ======= ======= =======
</TABLE>

[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1996
---------- -----------
UNAUDITED) (UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ....................................... $(1,197) $(2,431)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ................ 266 538
Changes in operating assets and liabilities,
net of effect of acquired businesses:
Accounts receivable ......................... (545) 961
Inventories ................................. 277 103
Prepaid expenses and other assets ........... (68) (634)
Accounts payable ............................ (203) (2,340)
Accrued liabilities ......................... (68) (511)
------- -------
Net cash used in operating activities .......... (1,538) (4,314)

INVESTING ACTIVITIES
Cash received in acquisitions .................. -- 1,656
Payments related to acquired businesses ........ -- (1,810)
Purchase of property and equipment ............. (385) (741)
Proceeds from note receivable .................. -- 595
------- -------
Net cash (used in) provided by
investing activities .......................... (385) (300)

FINANCING ACTIVITIES
Advances from shareholder ...................... 390 74
Repayment of advances from shareholder ......... -- --
Proceeds from long-term debt ................... 550 5,416
Repayments of long-term debt ................... (267) (948)
Proceeds from capital lease obligations ........ -- --
Payments on capital lease obligations .......... (74) (76)
Repurchase of common stock ..................... -- --
Net proceeds from issuance of common stock ..... 1,563 585
------- -------
Net cash provided by financing activities ...... 2,162 5,051
------- -------
Net (decrease) increase in cash ................ 239 437
Cash at beginning of period .................... -- --
------- -------
Cash at end of period .......................... $ 239 $ 437
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Subordinated debentures issued upon conversion
of shareholder advances ....................... $ -- $ --
======= =======
Common stock issued upon conversion of debt and
shareholder advances .......................... $ 700 $ 382
======= =======
Long-term debt issued for marketing rights ..... $ -- $ --
======= =======
Long-term debt issued for purchase of furniture
and equipment ................................. $ -- $ --
======= =======
Payments due related to acquired businesses .... $ -- $ --
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid .................................. $ 172 $ 243
======= =======
</TABLE>

SEE ACCOMPANYING NOTES.

ECO SOIL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND AS OF
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Eco Soil Systems, Inc. (the "Company") develops, markets, sells and
supports a proprietary line of biologically-produced, environmentally-safe
products designed to address a variety of problems in the turf maintenance,
agricultural crop, soil redemption and water quality management industries. The
Company has developed two patented delivery systems that enable the Company to
ferment microorganisms at the customer's site and then dispense the appropriate
amount of cultured product directly into the customer's irrigation system, pond
or lake. The Company operates primarily in California, Florida, and South
Africa.

ECO Turf Products, Inc. (d.b.a. Turf Products, Ltd. ("TPL")) and Turf
Specialty, Inc. ("TSI"), wholly-owned subsidiaries of the Company, are
wholesalers/distributors of golf course supplies and turfgrass supplies and
operate in the Greater Chicago area and New England, respectively.

BASIS OF CONSOLIDATION

The accompanying financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the early stages of
introducing its products into the marketplace and has incurred and sustained
significant losses from operations. The Company's growth and investments for
additional anticipated growth have required more cash than operations have
generated. In response to the need for additional cash, the Company has taken
several steps. In July 1996, the Company obtained approximately $3.7 million by
issuing term debt to investors. The Company is also actively seeking additional
equity financing, including the offering contemplated by this Prospectus, to
finance operations beyond this point. The Company is dependent upon improvements
in the profitability of its operations and the availability of additional
financing; management's plans are to obtain such financing until operations
begin generating cash. However, there can be no assurance that the required
improvements in profitability can be attained or that additional financing will
be available in levels to allow the Company to continue as a going concern.
These issues discussed above raise substantial doubt about the Company's ability
to continue as a going concern.

The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to attain profitability, obtain additional
financing or continue as a going concern.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

The accompanying financial statements and related notes at September 30,
1996, for the six months ended June 30, 1995 and the nine months ended September
30, 1995 and 1996 are unaudited but include all adjustments (consisting only of
normal recurring adjustments) which, in the opinion of management, are necessary
for a fair statement of the financial position and the operating results and
cash flows for the interim date and periods presented. Results for the interim
periods are not necessarily indicative of results for the entire year or future
periods.

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,
including the allocation of the purchase price relating to acquired businesses,
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 the estimates.

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMER AND SUPPLIER

Financial instruments which potentially expose the Company to
concentrations of credit risk are primarily cash and accounts receivable. The
Company deposits its cash in financial institutions. At times, such investments
may be in excess of insured limits. To date, the Company has not experienced any
losses on its cash investments. A substantial portion of the Company's accounts
receivable are from distributors and country clubs. The Company generally does
not require collateral and provides for estimated losses on uncollectible
accounts at the time of the sale. Such losses have historically been minimal and
within management's expectations.

During 1994 and 1995, the Company sold a substantial portion of its product
to one customer. Sales to this customer were approximately $1,200,000, $507,000,
$349,000 and $369,000, representing 45%, 13%, 18% and 13% of net sales in 1994
and 1995, in the six months ended June 30, 1995, and in the nine months ended
September 30, 1995, respectively. No customer accounted for more than 10% of net
sales during the six months ended June 30, 1996 or the nine months ended
September 30, 1996.

Accounts receivable from this customer were $118,000 and $99,000,
representing 26% and 8% of total accounts receivable, at December 31, 1994 and
1995, respectively.

In 1994, TSI entered into a distributor agreement with a major supplier. At
June 30, 1996 and September 30, 1996, amounts due to that supplier included in
accounts payable were $825,000 and $935,000, respectively. This agreement has
been terminated effective December 31, 1996.

INVENTORIES

Inventories consist primarily of finished goods and are stated at the lower
of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided using
the straight-line and accelerated (double declining balance) methods over the
estimated service lives of depreciable property and equipment ranging from 3 to
7 years. Equipment under capital leases is amortized over the shorter of the
estimated useful life of the assets or the lease term and such amortization is
included in depreciation in the accompanying financial statements.

INTANGIBLE ASSETS

Intangible assets represent acquired marketing rights and the excess of the
purchase price over the fair market value of the assets acquired. Intangible
assets are being amortized over a period of 3 years for acquired marketing
rights and 15 years for the excess of the purchase price over the fair market
value of the assets acquired. Amortization of intangible assets amounted to
$37,000, $45,000, $16,000, $65,000, $29,000 and $173,000 in 1994, 1995, in the
six months ended June 30, 1995 and 1996, and in the nine months ended September
30, 1995 and 1996, respectively.

IMPAIRMENT OF ASSETS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of", which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the estimated
undiscounted cash flows to be generated by those assets are less than the
assets' carrying amount. SFAS No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company adopted the
provisions of SFAS No. 121 effective January 1, 1996. There was no effect of
such adoption on the Company's financial position or results of operations.

REVENUE AND EXPORT SALES

Revenue from product sales is recognized upon shipment of the product. The
Company accepts returned products in the normal course of business, and has
established an allowance for estimated returns. Service revenues are derived
from month to month agreements that provide for the use of certain equipment and
related monthly services and are recognized when the services are performed.
Cost of services includes depreciation on such equipment and the cost of the
related monthly service. The Company's export sales totaled $530,000, $598,000,
$129,000, $179,000, $253,000 and $201,000 in 1994, 1995, in the six months ended
June 30, 1995 and 1996 and in the nine months ended September 30, 1995 and 1996,
respectively.

NET LOSS PER SHARE

Net loss per share is computed using the weighted average number of shares
of common stock outstanding during each period. Common stock equivalents were
not included in computing net loss per share since the effect would have been
antidilutive. Pursuant to the requirements of the Securities and Exchange
Commission, shares of common stock issued during the twelve months immediately
preceding the initial filing of the registration statement relating to the
Company's initial public offering, plus the number of common equivalent shares
under stock options granted or warrants issued during such period, have been
included in the calculation of the shares used in computing net loss per share
as if they were outstanding for all periods presented (using the treasury stock
method and the estimated public offering price).

Supplemental earnings per share have been computed as described above and
also give effect to the repayment of approximately $6.5 million of the Company's
outstanding indebtedness and resulting reduction of interest expense, as if a
portion of the proceeds from this initial public offering had been used to repay
the debt at the original dates of issuance and the number of shares of common
stock, whose proceeds are to be used to retire the debt, were outstanding from
the same dates.

<TABLE>
<CAPTION>
NINE
YEAR ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Supplemental net loss per share .................. $ (.29) $ (.31)
=========
Shares used in computing supplemental net loss per
share (in thousands) ............................ 5,654 6,845
=========
</TABLE>

STOCK OPTIONS

The Company has elected to follow Accounting Principles Board Opinion No.
25 ("APB 25") and related Interpretations in accounting for its employee stock
options because, as discussed below, the alternative fair value accounting
provided for under SFAS No. 123, "Accounting for Stock-Based Compensation,"
requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

Pro forma information regarding net loss and net loss per share is required
by SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method prescribed by that Statement.
The fair value for these options was estimated at the date of grant using a
minimum value pricing model with the following weighted-average assumptions for
December 31, 1995 and June 30, 1996, respectively: risk-free interest rates of
7%; no dividend yields expected; and an expected life of the option of 3 years.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The effect of
amortization on adjusted pro forma disclosures for the year ended December 31,
1995 and the six months ended June 30, 1996 are not indicative of the effects to
be disclosed in subsequent periods. The Company's adjusted pro forma information
follows:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- -------------
<S> <C> <C>
Pro forma net loss (IN THOUSANDS)... $(1,853) $(1,632)
Pro forma net loss per share ....... $ (.37) $ (.28)
</TABLE>

GOVERNMENT REGULATIONS

Substantially all of the Company's facilities are subject to federal, state
and local regulations relating to the discharge of materials into the
environment. Compliance with these provisions has not had, nor does the Company
expect such compliance to have, any material effect upon the operations,
financial condition, capital expenditures, or competitive position of the
Company; however, there can be no assurance that compliance with such
regulations would not have a material effect upon the Company's results of
operations or financial condition. Management believes that its current
practices and procedures for the control and disposition of such materials
comply with applicable federal and state requirements.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to current
year classifications.

2. ACQUISITIONS

In September 1995, the Company acquired all of the outstanding stock of
Aspen Consulting, Inc. ("Aspen") for 133,667 shares of the Company's common
stock valued at $3.00 per share.

Effective May 31, 1996, the Company acquired all of the outstanding stock
of Turf Specialty, Inc. for $500,000 cash, two promissory notes totalling
$1,000,000 (See Note 3) and 647,650 shares of the Company's common stock valued
at $3.00 per share. The $500,000 cash payment was paid subsequent to June 30,
1996 and is included in the account "payments due related to acquired
businesses" in the accompanying balance sheet. The acquisition consideration
will be reduced or increased to the extent that pre-tax profits of TSI for the
year ending December 31, 1996 are less than or exceed $900,000. Reductions in
the purchase price will be effected by the return of the Company's shares at one
share for every $4.44 of pre-tax income less than $900,000, and increases in the
purchase price will be paid in cash at one dollar for each dollar of pre-tax
income in excess of $900,000. The adjustments to the purchase price will be
recorded as adjustments to goodwill, which is being amortized over a period of
15 years.

Effective May 31, 1996, the Company acquired all of the outstanding stock
of Turf Products, Ltd. for $1,310,000 cash and 400,000 shares of the Company's
common stock valued at $3.00 per share. The $1,310,000 cash payment was paid
subsequent to June 30, 1996 and is included in the account "payments due related
to acquired businesses" in the accompanying balance sheet.

The results of operations of Aspen, TSI and TPL from the respective dates
of acquisition are included in the consolidated financial statements.

Each of the acquisitions was accounted for as a purchase and, accordingly,
the purchase price has been allocated to the assets acquired and the liabilities
assumed based on the estimated fair market values at the date of the acquisition
(IN THOUSANDS).

<TABLE>
<CAPTION>
ASPEN TURF TURF
CONSULTING, SPECIALTY, PRODUCTS,
INC. INC. LTD.
---------- ---------- ---------
<S> <C> <C> <C>
Assets acquired:
Cash ..................................... $ -- $1,471 $ 185
Accounts receivable ...................... 134 1,900 1,021
Inventories .............................. -- 675 894
Prepaid expenses and other current assets 7 31 336
Property and equipment ................... 31 164 182
Note receivable from stockholders ........ -- 595 --
Excess of purchase price over net tangible
assets acquired ........................ 553 2,764 1,859
------ ------ ------
Total assets acquired ..................... $ 725 $7,600 $4,477
====== ====== ======
Liabilities assumed:
Accounts payable ......................... $ 35 $3,261 $1,492
Accrued expenses ......................... 31 895 35
Notes payable ............................ 258 -- 440
------ ------ ------
Total liabilities assumed ................. 324 4,156 1,967
------ ------ ------
Net assets acquired ....................... $ 401 $3,444 $2,510
====== ====== ======
</TABLE>

The following unaudited pro forma results assume the TSI and TPL
acquisitions discussed above occurred on January 1, 1995. The results of
operations of Aspen were not material prior to its acquisition and are not
included in the following unaudited pro forma results. The unaudited pro forma
results have been prepared utilizing the historical financial statements of the
Company and the acquired businesses.

PRO FORMA RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(UNAUDITED)

Net sales .......... $ 17,557 $ 15,749
Net loss ........... (1,596) (2,776)
Net loss per share.. $ (.29) $ (.44)

The unaudited pro forma results above give effect to pro forma adjustments
related to the amortization of the excess of the purchase price over the fair
market value of the assets acquired, the increase in interest expense to reflect
the notes payable issued to effect the acquisitions, and related income tax
adjustments.

This pro forma information is not necessarily indicative of the actual
results that would have been achieved had the above businesses been acquired on
January 1, 1995, nor is it necessarily indicative of future results.

3. BALANCE SHEET INFORMATION

Property and equipment consist of the following (IN THOUSANDS):

DECEMBER 31, JUNE 30, SEPTEMBER 30,
1995 1996 1996
------------ -------- -------------

Machinery and equipment ......... $ 2,130 $ 3,007 $ 3,045
Furniture and fixtures .......... 109 293 295
------- ------- -------
2,239 3,300 3,340
Less accumulated depreciation and
amortization ................... (905) (1,130) (1,280)
------- ------- -------
$ 1,334 $ 2,170 $ 2,060
======= ======= =======

Intangible assets consist of the following (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS):

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1995 1996 1996
------------ --------- -------------
<S> <C> <C> <C>
Excess of purchase price over fair market
value of assets acquired (NOTE 2)....... $ 524 $ 5,156 $ 5,317
Marketing rights ........................ 310 310 310
Accumulated amortization ................ (83) (148) (260)
------- ------- -------
$ 751 $ 5,318 $ 5,367
======= ======= =======
</TABLE>

4. LONG-TERM DEBT

Long-term debt consists of the following (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS):

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1995 1996 1996
------------- -------- -------------
<S> <C> <C> <C>
8% secured promissory notes issued in
connection with the acquisition of Turf Specialty,
Inc., to its officers; interest payable monthly,
principal due the earlier of February 1997 or 10
days after the effective date of an initial public
offering; collateralized by the capital stock of
Turf Specialty, Inc.................................. $ -- $1,000 $1,000

8% secured subordinated notes to an officer and
shareholders, net of unamortized discount of $60;
interest payable quarterly, principal due $706 in
March 1998 and $284 in November 1998 ................ -- 990 990

8% secured subordinated debentures; interest
payable quarterly, principal due November 1998 ...... 700 700 700

Revolving line of credit with bank for $500;
interest payable monthly at the bank's prime rate
plus 2% (10.25% at June 30, 1996) per annum,
expiring April 1997; secured by personal assets of
an officer/shareholder and substantially all
assets of the Company ............................... -- 500 500

9.5% promissory note; interest payable annually,
principal due December 1996 ......................... -- 300 --

8% note payable to a bank; interest payable
monthly, principal due July 1996; secured by
personal assets of a shareholder and substantially
all assets of the Company ........................... 1,013 263 263

8% unsecured subordinated promissory note to an
officer; interest and principal due upon demand ..... -- 250 350

8% convertible unsecured promissory notes to
shareholders; interest and principal due upon
demand; convertible into common stock at the
option of the holders at $1.00 per share ............ -- 150 150

California Export Financing Office (CEFO)
revolving line of credit with bank for $500,
interest payable monthly at the bank's prime rate
plus 1.5% per annum (9.75% at June 30, 1996),
expiring April 1997; secured by personal assets of
an officer/shareholder and substantially all
assets of the Company ............................... -- 129 --

10% convertible subordinated promissory notes, net
of unamortized discount of $111; interest and
principal due at the earlier of December 31, 1996
or within 30 days after the effective date of an
initial public offering (IPO) -- -- 3,584

Non-interest bearing unsecured note payable net of
imputed interest of $21; due in monthly
installments of $7 through February 1998 with a
final payment of $9 due March 1998 .................. 180 128 112

10% unsecured subordinated notes; interest payable
quarterly, principal due upon demand; convertible,
at the option of the note holder, into common
stock at 80% of an IPO price if the IPO is
completed prior to July 1997 at the option of the
holder .............................................. -- 120 120

8% unsecured subordinated note to a shareholder;
interest payable monthly, principal due November
1998 ................................................ -- 100 --

10% unsecured note payable to a shareholder;
principal and interest due upon demand;
convertible into common stock at the option of the
holder at $1.00 per share ........................... -- 100 --

9.5% promissory notes to a former shareholder of
TPL; interest payable annually, principal due
March 1997 .......................................... -- 100 --

10% convertible unsecured subordinated debentures
issued to shareholders; interest payable monthly,
principal due July 1996; convertible into common
stock at the option of the holders at $1.50 per
share ............................................... 132 99 --

10% unsecured subordinated debentures; interest
payable monthly, principal due July 1998 ............ 290 90 90

9.5% promissory note; interest payable annually,
principal due March 1997 ............................ -- 40 --

Non-interest bearing note payable to purchase
marketing rights; due in monthly installments of
$9 through October 1996 ............................. 86 32 6

8% unsecured note payable to a shareholder,
converted into common stock in 1996 ................. 100 -- --

Other ................................................ 113 81 13
------ ------ ------
2,614 5,172 7,878

Less amount due within one year ...................... 1,703 3,086 5,884
------ ------ ------

Long-term debt due after one year .................... $ 911 $2,086 $1,994
====== ====== ======
</TABLE>

Aggregate maturities of long-term debt are as follows:

Three months ending December 31, 1996 ... $4,093
Year ending December 31, 1997 .......... 1,870
Year ending December 31, 1998 .......... 1,911
Year ending December 31, 1999 .......... 4
-------
$7,878
=======

Substantially all of the assets of the Company are pledged as collateral as
a result of the debt agreements described above.

In July 1996, several debt transactions occurred. The Company converted
$99,000 in 10% unsecured subordinated convertible debentures issued to
shareholders in June 1992 to common stock at $1.50 per share. The Company repaid
$100,000 of 10% unsecured notes to shareholders and $100,000 of 8% unsecured
notes to shareholders. The Company also issued a $100,000 10% subordinated
demand note to an officer of the Company. In addition, $45,000 of the CEFO
guaranteed line of credit was repaid in July 1996. In September 1996, the
outstanding balance of $84,000 in the CEFO line of credit was repaid.

In August 1996, a $30,000, three-year, non-interest-bearing loan was made
to an employee of the Company. Also in August 1996, the Company repaid a $50,000
shareholder advance.

The Company's revolving line of credit agreements ("Agreements") contain
certain restrictions and limitations on the Company's operations, including
restrictions on capital expenditures, sale of assets, lease liabilities,
mergers, or other forms of business combinations, as well as the prohibition on
the payments of cash dividends. The Agreements also contain certain covenants
which require the Company to maintain minimum levels of net worth, working
capital, and other financial ratios, as defined therein.

In connection with the acquisition of TSI, the Company acquired a line of
credit with a bank for $900,000 at the bank's prime rate plus 1.5% (9.75% at
June 30, 1996 and September 30, 1996) that expires December 31, 1996. The line
of credit is unsecured and is personally guaranteed by two officers of TSI. At
the acquisition date, June 30, 1996 and September 30, 1996, there were no
outstanding borrowings under this line of credit.

5. SHAREHOLDERS' EQUITY

PREFERRED STOCK

The Board of Directors is authorized, without any action by the Company's
shareholders, to issue up to 5,000,000 shares of authorized but undesignated
preferred stock and to fix the powers, preferences, rights and limitations of
any such preferred shares or any class or series thereof. Persons acquiring
preferred stock could have preferential rights with respect to voting,
liquidation, dissolution or dividends over existing shareholders.

STOCK OPTION PLAN

In February 1992, the Company established a Qualified Stock Option Plan
(the "Plan") for employees and consultants which, as amended, provides for the
grant of options to purchase up to 450,000 shares of common stock, which was
increased to 900,000 shares in November 1996. Options granted under the Plan
have a five-year term and vest ratably over a three-year period. At June 30,
1996, options exercisable and available for future grants totaled 245,403 and
75,832, respectively.

Information with respect to the Company's Plan is as follows:

WEIGHTED
NUMBER OF AVERAGE
OPTION PRICE PER
SHARES SHARE
--------- ---------

Outstanding at December 31, 1993 162,500 $ 2.00
Granted ........................ 50,000 $ 2.50
Exercised ...................... (2,500) $ 1.50
-------
Outstanding at December 31, 1994 210,000 $ 2.00
Granted ........................ 126,668 $ 3.00
Exercised ...................... (2,500) $ 3.00
-------
Outstanding at December 31, 1995 334,168 $ 2.25
Granted ........................ 35,000 $ 3.00
Canceled ....................... (10,000) $ 2.00
-------
Outstanding at June 30, 1996 .... 359,168 $ 2.25
Granted (unaudited) ............ 196,500 $ 4.00
-------
Outstanding at September 30, 1996
(unaudited) .................... 555,668
=======

OPTIONS AND WARRANTS

Under separate non-qualified stock option agreements in 1992 and 1993, the
Company granted options to purchase 270,000 shares of common stock at prices
ranging from $1.50 to $2.00 per share to several consultants and employees which
have vesting and exercise provisions consistent with those issued pursuant to
the Plan and expire on various dates through March 1998. In 1995, 25,000 options
were exercised at $1.50 per share. In 1996, 26,000 options were exercised at
$2.00 per share. As of June 30, 1996 all remaining options were exercisable.

In 1991 and 1992, the Company also granted to four individuals options to
purchase 812,458 shares of the Company's common stock at prices ranging from
$.34 to $2.00 per share. As of June 30, 1996, all of these options were
exercisable and expire on various dates through May 2001.

In connection with the issuance of the 10% subordinated debentures in 1992
and 1993, the Company issued to the holders of the debentures options to
purchase 88,000 shares at $1.50 per share and warrants to purchase 78,000 shares
at $3.00 per share. All options and warrants were outstanding and exercisable at
December 31, 1995 and expire on various dates through February 1998. In 1996,
22,000 options were exercised at $1.50 per share and related debt of $33,000 was
canceled.

In connection with the 1994 repurchase of exclusive marketing rights for
certain products, the Company issued warrants to purchase 30,000 shares of
common stock at $2.50 per share. All warrants were outstanding and exercisable
as of June 30, 1996 and expire in June 1999.

During 1994, warrants to purchase 350,000 shares at $2.50 per share were
issued to an officer of the Company. Warrants for the purchase of 100,000 shares
of common stock vested ratably through January 1996 and warrants for the
purchase of 250,000 shares of common stock may not be exercised until the
issuance price of common stock exceeds certain prices. Compensation expense
relating to the contingent shares will be recorded when the options vest based
upon the difference between the then fair market value and the exercise price.
At June 30, 1996, 100,000 of these warrants were exercisable.

In accordance with the Company's purchase of Aspen, the previous owner of
Aspen was granted an option to purchase 50,000 shares of the Company's common
stock at $3.00 per share. The option vests over four years if the previous owner
continues employment with the Company and will expire in December 2001. An
additional 150,000 options to purchase the Company's common stock at $3.00 per
share will be granted in equal amounts over the next four years provided
employment continues and contingent upon the level of the pre-tax contribution
margin of Aspen over the next four years. Compensation expense relating to this
option will be recorded when the shares vest based upon the difference between
the then fair market value and the exercise price.

In connection with a new stock option compensation plan for the board of
directors, 30,000 options were granted in January 1996 at $3.00 per share. As of
June 30, 1996, 10,000 options were exercisable with the remaining options
vesting over the next two years. These options expire in January 2001.

In connection with various long-term debt financing transactions, the
Company has issued warrants to purchase 1,036,815 shares of common stock at
$3.00 per share. The warrants are generally exercisable through 2001. All
warrants were outstanding and exercisable at June 30, 1996.

Options have also been issued to various investment banking firms,
debenture holders and shareholders to purchase 1,069,398 shares of common stock.
These warrants are exercisable through February 2001 at prices between $1.50 and
$3.00 per share. In 1996, warrants were exercised for the purchase of 10,000
shares of common stock and options were exercised for the purchase of 10,000
shares of common stock.

In connection with the bridge financing in July 1996, warrants were issued
to purchase 739,000 shares of the Company's common stock at $3.00 per share or
80% of the IPO price if an IPO occurs on or before December 31, 1996. The
warrants are exercisable on the earlier of the completion of an IPO or December
31, 1996 and expire five years after the date of issuance.

As of June 30, 1996, an aggregate of 5,000,000 shares of common stock are
reserved for issuance under options and warrants, exclusive of options granted
under the Plan.

6. EMPLOYEE BENEFIT PLANS

TPL DEFINED CONTRIBUTION PLAN

Substantially all employees of TPL are covered by a defined contribution
plan sponsored by TPL. TPL makes discretionary contributions up to 15% of
eligible employee compensation on an annual basis. No contributions are made by
the participants. No contributions have been made for the nine months ended
September 30, 1996. Costs of administering the plan are paid by the Company.

TSI PROFIT SHARING PLAN

TSI has a noncontributory profit sharing plan covering substantially all of
its employees. Annual employer contributions to the plan are set by the Board of
Directors. No contributions have been made for the nine months ended September
30, 1996. This plan will be terminated by May 31, 1998.

7. INCOME TAXES

At December 31, 1995, the Company had federal and California tax net
operating loss carryforwards of approximately $8.3 million and $3.0 million,
respectively. The difference between the federal and California tax loss
carryforwards is primarily attributable to the fifty percent limitation on
California loss carryforwards. The federal and California tax loss carryforwards
begin expiring in 2003 and 1998, respectively, unless previously utilized.

Pursuant to Internal Revenue Code Sections 382 and 383, use of the
Company's net operating loss carryforwards may be limited if a cumulative change
in ownership of more than 50% occurs within any three-year period. The Company's
use of a portion of its income tax net operating loss carryforwards will be
limited since the Company has undergone ownership changes of greater than 50%.

Significant components of the Company's deferred tax assets as of December
31, 1995 are shown below. A valuation allowance of $3,153 has been recognized to
offset the deferred tax assets as realization of such assets is uncertain.

DECEMBER 31,
1995
--------------
(IN THOUSANDS)

Deferred tax assets:
Net operating loss carryforwards ......... $ 3,093
Other .................................... 60
-------
Total deferred tax assets ................. 3,153
Valuation allowance for deferred tax assets (3,153)
-------
Net deferred tax assets ................... $ --
=======

8. COMMITMENTS

In 1995, the Company entered into a thirty-year consulting/licensing
agreement for BioJect Product (as defined therein). The license calls for
royalties of 13% on all product which was evaluated, developed, supplied, or
improved by the licensor. The license calls for minimum royalty payments of
$100,000 in each of 1996 and 1997. The Company granted the licensor a fully
exercisable warrant to purchase 50,000 shares of the Company's common stock of
$3.00 per share which expires in January 2002. Royalty expense for the year
ended December 31, 1995, the six months ended June 30, 1995 and 1996 and the
nine months ended September 30, 1995 and 1996 was $100,000, $50,000, $79,000
$75,000 and $127,000, respectively.

Annual future minimum lease payments, including equipment under capital
leases as of June 30, 1996 are as follows:

CAPITAL OPERATING
LEASES LEASES
-------- ---------

Six months ending December 31, 1996 ............. $ 63 $ 198
Year ending December 31, 1997 ................... 22 366
Year ending December 31, 1998 ................... -- 337
Year ending December 31, 1999 ................... -- 247
Year ending December 31, 2000 ................... -- 83
Year ending December 31, 2001 ................... -- 74
------ ------
Total minimum lease payments .................... 85 $1,305
======
Less amount representing interest ............... (4)
------
Present value of remaining capital lease payments
(including current portion of $74) ............. $ 81
======

Rental expense for the years ended December 31, 1994, 1995, the six months
ended June 30, 1995 and 1996, and the nine months ended September 30, 1995 and
1996 was approximately $102,000, $107,000, $55,000, $70,000, $96,000 and
$185,000, respectively, including $89,000, $78,000, $42,000, $46,000, $65,000
and $65,000 respectively, to a shareholder. The lease with the shareholder
expires in November 1999.

TSI has entered into employment agreements expiring July 9, 1999 with two
executive officers. The agreements provide for minimum salary levels, adjusted
annually for cost-of-living changes, as well as participation in any incentive
compensation plans sponsored by TSI. It also offers each officer a non-interest
bearing loan of $250,000 to be issued on or about December 15, 1996. This loan
need not be repaid and will be forgiven on July 1, 1999 if the officers continue
to be employed by TSI. If employment is terminated by the Company prior to that
date, the officers will be obligated to repay a portion of the loan pro-rated to
the number of days worked from July 2, 1996 to the effective date of the
termination of employment. Compensation expense will be recorded ratably over
the period of forgiveness. The agreement contains other provisions including
some intended to prevent the employee from entering into any form of competition
with TSI.

The merger agreement related to the acquisition of TSI provides for
contingent payments to the former owners of TSI if actual income, as defined in
the merger agreement, exceeds targeted net income. If the actual net income is
below targeted net income, the purchase price may be reduced.

9. RELATED PARTY TRANSACTIONS

As more fully described in Note 8, the Company leases its facility under an
operating lease which it assumed from two officers of the Company.

10. BRIDGE FINANCING

In July 1996, the Company issued approximately $3.7 million of 10%
convertible promissory notes under a private placement memorandum. Repayment of
the promissory notes is due at the earlier of December 31, 1996 or within 30
days after the effective date of an IPO. If an IPO does not occur prior to
December 31, 1996, the Company may extend the due date until June 30, 1997. The
promissory notes are convertible at the option of the holder for a period of 20
days after the effective date of an IPO at a price equal to 80% of the IPO
price. In connection with this financing, warrants were issued to purchase
739,000 shares of common stock at $3.00 per share or 80% of the IPO price if an
IPO occurs on or before December 31, 1996. The warrants are exercisable on the
earlier of the completion of an IPO or December 31, 1996 and expire five years
after the date of issuance. Additionally, the holder will have the right to
convert to common stock up to 100% of the principal amount of the notes, at a
price equal to 80% of the IPO price.

REPORT OF BIGELOW & COMPANY, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
Turf Specialty, Inc.
Londonderry, New Hampshire

We have audited the accompanying consolidated statements of income and
retained earnings and cash flows of Turf Specialty, Inc. for the years ended
December 31, 1994 and 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and consolidated 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 that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to in the
first paragraph present fairly, in all material respects, the results of
operations and cash flows of Turf Specialty, Inc. for the years ended December
31, 1994 and 1995, in conformity with generally accepted accounting principles.

BIGELOW & COMPANY
Certified Public Accountants, P.C.
By:

/s/ Marie C. McKay
Marie C. McKay
Certified Public Accountant

Manchester, New Hampshire
July 19, 1996

TURF SPECIALTY, INC.
Consolidated Statements of Income and Retained Earnings
(IN THOUSANDS)

YEARS ENDED
DECEMBER 31,
---------------------
1994 1995
------- -------

Net sales .............................. $ 4,557 $ 6,886
Cost of sales .......................... 3,101 4,929
------- -------
Gross profit ......................... 1,456 1,957
Operating expenses ..................... 1,463 1,347
------- -------
Income (loss) from operations .......... (7) 610
Other income ........................... 43 4
------- -------
Income before provision for income taxes 36 614
Provision for income taxes ............. 9 240
------- -------
Net income ............................. 27 374
Retained earnings at beginning of year . 573 600
------- -------
Retained earnings at end of year ....... $ 600 $ 974
======= =======

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

TURF SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1994 1995
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................. $ 27 $ 374
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ........................ 31 51
Loss on sale of property and equipment ............... 8 4
Change in operating assets and liabilities:
Accounts receivable ................................ (109) (940)
Inventory .......................................... 32 (652)
Income taxes ....................................... (7) 240
Prepaid expenses ................................... (3) --
Accounts payable ................................... 63 1,530
Accrued expenses ................................... 7 (8)
Customer deposits .................................. 29 11
------- -------
Net cash provided by operating activities ........ 78 610

INVESTING ACTIVITIES:
Purchase of property and equipment ..................... (69) (78)
Advances (repayments) on notes receivable from
stockholders .......................................... 75 (90)
Proceeds from sale of property and equipment ........... 19 6
------- -------
Net cash provided by (used in) investing activities .... 25 (162)
------- -------
FINANCING ACTIVITIES:
Principal payments on notes payable .................... (29) (35)
Repurchase of common stock ............................. (75) (75)
Proceeds (repayments) of note payable to stockholder ... 79 (78)
------- -------
Net cash used in financing activities .................. (25) (188)

Net increase in cash ................................... 78 260
Cash at beginning of year .............................. 49 128
------- -------
Cash at end of year .................................... $ 127 $ 388
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes ............................. $ 16 $ 2
======= =======
Cash paid for interest ................................. $ 13 $ 9
======= =======
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

TURF SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Substantially all gross revenues are derived from the purchase and resale
of turfgrass supplies. Most of the Company's business activity is with golf
courses located in New England.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of Turf
Specialty, Inc. (the Company) and its wholly-owned subsidiary, 3MT, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company considers its accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is provided.

INVENTORIES

Inventories consist primarily of finished goods and are valued at the lower
of cost (first-in, first-out) or market value.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is calculated using
accelerated methods based on the estimated useful lives of the assets.
Maintenance and repairs are charged to expense when incurred.

ADVERTISING COSTS

Advertising costs are charged to the expense as incurred. Advertising costs
were $8,683 and $9,191 for the years ended December 31, 1994 and 1995,
respectively.

GOVERNMENTAL REGULATIONS

Substantially all of the Company's facilities are subject to federal, state
and local regulations relating to the discharge of materials into the
environment. Compliance with these provisions has not had, nor does the Company
expect such compliance to have, any material effect upon the net income,
financial condition, capital expenditures, or competitive position of the
Company. Management believes that its current practices and procedures for the
control and disposition of such wastes comply with applicable federal and state
requirements.

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.

2. CONCENTRATION OF CREDIT RISK

3. MAJOR SUPPLIER

Beginning in 1994, the Company has a distributor agreement with a major
supplier. At December 31, 1995, amounts due to that supplier included in
accounts payable were $1,745,381. This agreement has been terminated effective
December 31, 1996.

4. LINE OF CREDIT

The Company has available a $900,000 line of credit at the bank's prime
rate plus 1.5% (10% at December 31, 1995). The line is unsecured and is
personally guaranteed by the stockholders. There were no borrowings outstanding
under this agreement at December 31, 1994 and 1995.

5. RELATED PARTY TRANSACTIONS

The stockholders have personally guaranteed all of the bank debt of the
Company (SEE NOTE 4).

As more fully described in Note 6, the Company leases its facility under an
operating lease which it assumed from its stockholders.

6. OPERATING LEASES

The Company leases its facility under a five-year operating lease which
expires February 1997. The lease agreement was entered into by the stockholders
of the Company. The Company utilizes the premises and has assumed the obligation
and liability under the lease. The lease payment is $3,467 per month and
includes property tax and common area charges which are subject to change. The
Company is also party to a number of operating leases for office equipment.
Rental expense under these leases for the years ended December 31, 1994 and 1995
was $44,789 and $57,688, respectively.

The following is a schedule of minimum future rental payments to be made
under these leases as of December 31, 1995 (IN THOUSANDS):

Year ending December 31, 1996 ..... $51
Year ending December 31, 1997 ..... 5
---
$56
===

7. REPURCHASED STOCK

The Company has repurchased shares of the Company's common stock, as
follows:

NUMBER OF COST OF
SHARES REPURCHASED
REPURCHASED SHARES
------------ --------------
(IN THOUSANDS)

Year ended December 31, 1994 ...... 23.82 $ 75
Year ended December 31, 1995 ...... 23.84 75
----- ----
47.66 $150
===== ====

8. INCOME TAXES

A reconciliation of federal and state income taxes computed at current
rates to the amounts provided in the financial statements is as follows (IN
THOUSANDS):

YEARS ENDED
DECEMBER 31,
---------------
1994 1995
------ ------

Federal ..... $6 $196
State ....... 3 44
------ ------
$9 $240
====== ======

9. PROFIT SHARING PLAN

The Company has a non-contributory profit sharing plan covering
substantially all of its employees. Annual employer contributions to the plan
are set by the Board of Directors. Contributions for the years ended December
31, 1994 and 1995 amounted to $103,275 and $109,155, respectively.

10. SUBSEQUENT EVENT

Effective May 31, 1996, the Company was merged into Eco Specialty, Inc., a
Delaware corporation. Eco Specialty, Inc. was the surviving corporation which
changed its name to Turf Specialty, Inc.

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Stockholder
Turf Products, Ltd.

We have audited the accompanying statements of income and retained earnings
and cash flows of Turf Products, Ltd. for each of the two years in the period
ended December 31, 1995. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.

/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP

San Diego, California
October 3, 1996

TURF PRODUCTS, LTD.
STATEMENTS OF INCOME AND RETAINED EARNINGS
(IN THOUSANDS)

YEARS ENDED
DECEMBER 31,
---------------------
1994 1995
-------- -------

Net sales ............................ $ 5,219 $ 6,914
Cost of sales ........................ 3,584 4,946
------- -------
Gross profit ....................... 1,635 1,968
Operating expenses:
Selling expenses ................... 442 523
General and administrative expenses 1,031 1,224
------- -------
1,473 1,747
------- -------
Operating income ..................... 162 221
Other income (expense):
Interest expense ................... (23) (28)
Interest income .................... 1 1
Other, net ......................... (1) --
------- -------
(23) (27)
------- -------
Income before income taxes ........... 139 194
Provision for income taxes ........... 71 94
------- -------
Net income ........................... 68 100
Cash dividends ....................... (50) (25)
Retained earnings at beginning of year 543 561
------- -------
Retained earnings at end of year ..... $ 561 $ 636
======= =======

SEE ACCOMPANYING NOTES.

TURF PRODUCTS, LTD.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEARS ENDED
DECEMBER 31,
-----------------
1994 1995
-----------------

OPERATING ACTIVITIES
Net income ............................................. $ 68 $ 100
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ........................ 52 65
Provision for doubtful accounts ...................... -- 11
Deferred income taxes ................................ 6 (27)
Changes in operating assets and liabilities:
Accounts receivable ................................ (24) 85
Inventories ........................................ (165) (185)
Prepaids and other assets .......................... (5) 89
Accounts payable and accrued expenses .............. 102 57
Income taxes payable ............................... 50 31
----- -----
Net cash provided by operating activities .............. 84 226

INVESTING ACTIVITIES
Purchase of property and equipment ..................... (45) (133)
Premium receivable ..................................... (21) (30)
----- -----
Net cash used by investing activities .................. (66) (163)

FINANCING ACTIVITIES
Advances from stockholder .............................. 50 --
Cash dividends paid .................................... (50) (25)
----- -----
Net cash used by financing activities .................. -- (25)
----- -----
Increase in cash ....................................... 18 38
Cash at beginning of year .............................. 77 95
----- -----
Cash at end of year .................................... $ 95 $ 133
===== =====
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes ......................................... $ 20 $ 91
===== =====
Interest ............................................. $ 17 $ 28
===== =====

SEE ACCOMPANYING NOTES.

TURF PRODUCTS, LTD.
NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Turf Products, Ltd. is a wholesaler/distributor of golf course and
turfgrass supplies. The Company is privately owned and operates in the Greater
Chicago area.

CONCENTRATION OF CREDIT RISK

No single customer is large enough to pose a significant financial risk to
the Company. To the extent the Company's customers become delinquent, collection
activities commence. The Company maintains an allowance for losses based on the
expected collectability of accounts receivable. Credit losses historically have
been insignificant and within management's expectations.

INVENTORIES

Inventories consist primarily of finished goods and are stated at the lower
of cost (principally first in, first out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed by
applying an accelerated method for transportation equipment and a straight-line
method for all other property and equipment based on the estimated useful lives
of the assets. Repairs and maintenance costs are expensed as incurred.

GOODWILL

Goodwill resulted from the buyout of certain partners of the original
partnership (the Company was incorporated from a partnership in 1971). The
goodwill is being amortized over 40 years. Amortization of goodwill amounted to
approximately $1,000 for each of the years ended December 31, 1994 and 1995.

ADVERTISING COSTS

The Company expenses advertising costs as incurred. Advertising costs were
$18,938 and $22,690 for the years ended December 31, 1994 and 1995,
respectively.

GOVERNMENT REGULATIONS

Substantially all of the Company's facilities are subject to federal, state
and local regulations relating to the discharge of materials into the
environment. Compliance with these provisions has not had, nor does the Company
expect such compliance to have, any material effect upon the net income,
financial condition, capital expenditures, or competitive position of the
Company. Management believes that its current practices and procedures for the
control and disposition of such wastes comply with applicable federal and state
requirements.

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.

2. RELATED PARTY TRANSACTIONS

The Company pays life insurance premiums on behalf of the stockholder. For
the years ended December 31, 1994 and 1995, the Company paid $37,696 and $37,336
in life insurance premiums. In the event of the death of the stockholder or
termination of a related collateral assignment agreement, the Company is
entitled to reimbursement of these premiums or ownership of the policies. The
premium receivable recorded in the balance sheet reflects the cash surrender
value of the policies which represents the collateralized portion of the
premiums. Premiums paid since inception of the policies in excess of the cash
surrender values totaled $52,192 at December 31, 1995.

The Company sells Eco Soil Systems, Inc. products to their customers. The
effect on cost of sales, net of commissions, of these transactions for the years
ended December 31, 1994 and 1995 was $0 and $9,500, respectively.

In addition to facilities leased as noted above, the Company occupies a
building owned by a stockholder on which no rent is charged.

3. INCOME TAXES

The components of income tax expense were as follows for the years ended
December 31 (IN THOUSANDS):

1994 1995
------ ------

Current income tax expense:
Federal ............................. $ 51 $ 98
State ............................... 14 23
Deferred income tax expense (benefit):
Federal ............................. 7 (24)
State ............................... (1) (3)
---- ----
Total income tax expense ............. $ 71 $ 94
==== ====

A reconciliation from the U.S. federal statutory income tax rate (34
percent) to the effective income tax rate (income tax expense divided by income
before income taxes) is as follows for the years ended December 31 (IN
THOUSANDS):

1994 1995
------ ------

Income tax expense at the statutory rate .................. $ 47 $ 66
Effect of:
State income tax expense, net of federal income tax effect 9 12
Non-deductible expenses .................................. 15 16
Change in tax rates on deferred taxes .................... 7 1
Change in tax due to graduated tax rates ................. (8) (1)
Other, net ............................................... 1 --
----
Income tax expense ........................................ $ 71 $ 94
====
Effective income tax rate ................................. 51% 48%
==== ====

For the years ended December 31, 1994 and 1995, income tax expense was
affected by the difference between the statutory tax rate of 34% and the
graduated tax rate based on the Company's level of taxable income.

Deferred income taxes are provided for temporary differences between the
carrying amounts of the Company's assets and liabilities for financial statement
purposes and their tax bases. The sources of the differences that gave rise to
the deferred income tax assets and liabilities as of December 31, 1995, along
with the income tax effect of each, were as follows (IN THOUSANDS):

1995 DEFERRED
INCOME TAX
----------------------
ASSETS LIABILITIES
------- -----------

Property and equipment ....................... $-- $ 5
Bad debts .................................... 4 --
Contributions ................................ 9 --
Differences in revenue and expense recognition 28 --
Life insurance ............................... -- 25
----- -----
$41 $30
===== =====

4. COMMITMENTS

Annual future payments under the Company's operating leases as of
December 31, 1995 are as follows (IN THOUSANDS):

Year ending December 31, 1996.... $54
Year ending December 31, 1997.... 23
Year ending December 31, 1998.... 3
Year ending December 31, 1999.... 2
---
$82
===

Rental expense for the years ended December 31, 1994 and 1995 was
approximately $200 and $28,500, respectively.

5. DEFINED CONTRIBUTION PLAN

Substantially all employees of the Company were covered by a defined
contribution plan sponsored by Turf Products, Ltd. No contributions are made by
the participants. The Company's contributions aggregated $62,000 for each of the
years ended December 31, 1994 and 1995 and were determined at the Company's
discretion. Costs of administrating the Plan are paid by the Company.

6. SUBSEQUENT EVENT

Effective May 31, 1996, the Company merged with ECO Turf Products, Inc., a
subsidiary of Eco Soil Systems, Inc. The subsidiary is the surviving
corporation. Prior to the closing of this merger, the Company terminated the
defined contribution plan (See Note 5).

ECO SOIL SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996

The following unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1995 and the nine months ended
September 30, 1996 give effect to the acquisitions of Turf Specialty, Inc. (TSI)
and Turf Products, Ltd. (TPL) as if they were acquired on January 1, 1995.

The pro forma condensed consolidated statements of operations are based on
historical financial statements of Eco Soil Systems, Inc., TSI and TPL, giving
effect to the acquisitions applying the purchase method of accounting and the
assumptions and adjustments as discussed in the accompanying notes to the pro
forma condensed consolidated statements of operations. The unaudited pro forma
condensed consolidated statements of operations should be read in conjunction
with the historical financial statements and notes thereto of Eco Soil Systems,
Inc., TSI and TPL, and narrative sections included elsewhere herein. The pro
forma condensed consolidated statements of operations are presented for
illustrative purposes and are not necessarily indicative of what actual results
of operations would have been for the periods presented had the transactions
occurred on the date indicated and do not purport to indicate the results of
future operations.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
HISTORICAL
-----------------------------------------------------
TURF PRO FORMA PRO FORMA
ECO SOIL SPECIALTY, TURF ADJUSTMENTS REFLECTING
SYSTEMS, INC. INC. PRODUCTS, LTD. (NOTE 2) ACQUISITIONS
----------------------------------------------------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales ........................... $ 3,757 $ 6,886 $ 6,914 $ -- $ 17,557
Operating expenses .............. 5,331 6,263 6,692 307 (a) 18,593
-------- -------- -------- -------- ---------
Operating income (loss) ......... (1,574) 623 222 (307) (1,036)
Interest expense, net ........... (262) (9) (28) (261)(b) (560)
-------- -------- -------- -------- ---------
Income (loss) before income taxes (1,836) 614 194 (568) (1,596)
Provision for income taxes ...... -- 240 94 (334)(c) --
-------- -------- -------- -------- ---------
Net income (loss) ............... $ (1,836) $ 374 $ 100 $ (234) $ (1,596)
======== ======== ======== ======== =========
Net loss per share .............. $ (0.29)
=========
Shares used in computing net loss
per share ...................... 5,516,000
=========
</TABLE>

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
HISTORICAL
--------------------------------------------------
TURF PRO FORMA PRO FORMA
ECO SOIL SPECIALTY, TURF ADJUSTMENTS REFLECTING
SYSTEMS, INC. INC. PRODUCTS, LTD. (NOTE 2) ACQUISITION
-------------------------------------------------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales .................... $ 9,229 $ 3,837 $ 2,683 $ -- $ 15,749
Operating expenses ....... 11,137 3,911 2,698 127 (a) 17,873
-------- -------- -------- -------- ---------
Operating loss ........... (1,908) (74) (15) (127) (2,124)
Interest expense, net .... (523) -- (20) (109)(b) (652)
-------- -------- -------- -------- ---------
Loss before income taxes . (2,431) (74) (35) (236) (2,776)
Provision for income taxes -- -- 20 (20)(c) --
-------- -------- -------- -------- ---------
Net loss ................. $ (2,431) $ (74) $ (55) $ (216) $ (2,776)
=========
Net loss per share ....... $ (0.44)
=========
Shares used in computing net loss
per share ............... 6,359,000
=========
</TABLE>

SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS.

ECO SOIL SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)

NOTE 1.

On May 31, 1996, Eco Soil Systems, Inc. (the "Company") acquired all of the
outstanding common stock of Turf Specialty, Inc. ("TSI") and Turf Products, Inc.
("TPL") in separate transactions. To effect the purchase of TSI, the Company
issued 647,650 shares of its common stock and $1,000,000 in debt and paid
$500,000 in cash. To effect the purchase of TPL, the Company issued 400,000
shares of its common stock and paid $1,013,000 in cash. The stock issued in each
of these transactions was valued at $3.00 per share. Each transaction was
accounted for as a purchase.

The purchase price has been allocated to the tangible and intangible assets
acquired and liabilities assumed based on their respective fair values on the
date of acquisition as follows:

<TABLE>
<CAPTION>
TURF TURF
SPECIALTY, INC. PRODUCTS, LTD.
--------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Assets acquired:
Cash ............................................ $1,471 $ 185
Accounts receivable ............................. 1,900 1,021
Inventories ..................................... 675 894
Prepaid expenses and other current assets ....... 31 336
Property and equipment .......................... 164 182
Note receivable from stockholders ............... 595 --
Excess of purchase price over net tangible assets
acquired ....................................... 2,764 1,859
------ ------
Total assets acquired ......................... $7,600 $4,477
====== ======
Liabilities assumed:
Accounts payable ................................ $3,261 $1,492
Accrued expenses ................................ 895 35
Notes payable ................................... -- 440
------ ------
Total liabilities assumed ..................... 4,156 1,967
------ ------
Net assets acquired ............................. $3,444 $2,510
====== ======
</TABLE>

NOTE 2.

The accompanying unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1995 and the nine months ended
September 30, 1996 gives effect to the acquisitions of TSI and TPL as if they
had occurred as of January 1, 1995. For the periods presented, transactions
between these entities were not material.

The pro forma adjustments are summarized as follows:

(a) Increased amortization expense of intangibles for goodwill related to
the acquisitions using the straight line method and a 15 year life.

(b) Increased interest expense on the acquisition debt of $1 million and
$1.8 million of the bridge notes utilized to complete the
acquisitions. The acquisition debt bears interest at 8% and is due in
February 1997, and the bridge financing bears interest at 10% and is
due within 30 days of the date of this Prospectus.

NOTE 3.

Pro forma net loss per share is computed using the weighted average number
of shares of common stock outstanding during each period. Common stock
equivalents were not included in computing pro forma net loss per share since
the effect would have been antidilutive. Pursuant to the requirements of the
Securities and Exchange Commission, shares of common stock issued during the
twelve months immediately preceding the initial filing of the registration
statement relating to the Company's initial public offering, plus the number of
common equivalent shares under stock options granted or warrants issued during
such period, have been included in the calculation of the shares used in
computing pro forma net loss per share as if they were outstanding for all
periods presented (using the treasury stock method and the estimated public
offering price), except that the shares utilized to effect the purchase of TSI
and TPL were not reduced utilizing the treasury stock method.

The shares used in the pro forma calculation are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Shares used in historical calculation ............... 5,207 6,050
Effect of treasury stock assumptions on shares issued
in acquisitions (1) ................................ 309 309
----- -----
Shares used in pro forma calculation ................ 5,516 6,359
===== =====
</TABLE>
- ------------------------
(1) Such shares represent the effect of the assumed treasury stock repurchase,
which was utilized in the historical calculation for the shares issued in
connection with the acquisitions. For pro forma purposes, the total of the
shares issued in connection with the acquisitions are treated as
outstanding since January 1, 1995, without any treasury stock repurchase.

[PHOTO OF CORONADO COUNTRY CLUB]
Coronado Country Club

[PHOTO OF SPYGLASS HILL GOLF COURSE HOLE #1]
Spyglass Hill(R) Golf Course hole #1 reproduced by permission of Pebble Beach
Company.

[PHOTO OF BIOJECT SYSTEM]
The BioJect System is currently being used by a wide variety of golf courses
throughout the world.

[PHOTO OF TOMATO FIELD]
[PHOTO OF AVOCADOS]
[PHOTO OF STRAWBERRY FIELD]
The BioJect System is also used with a wide variety of irrigated crops such as
tomatoes, avocados and strawberries.

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE UNDERWRITERS OR ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY A SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.

Page
----
Prospectus Summary 3
Risk Factors 6
Use of Proceeds 14
Capitalization 16
Dilution 17
Dividend Policy 17
Selected Consolidated Financial Data 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 19
Business 26
Management 39
Certain Transactions 46
Principal Shareholders 49
Description of Securities 50
Shares Eligible for Future Sale 52
Underwriting 53
Experts 55
Legal Matters 55
Additional Information 56
Index to Consolidated Financial Statements F-1

Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock offered hereby, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as an underwriter and with respect to their unsold allotments to
subscriptions.

3,300,000 SHARES

[LOGO] ECO SOIL SYSTEMS

COMMON STOCK

PROSPECTUS

[LOGO] RJ Steichen & Company

, 1997

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 21-2004(15) of the Nebraska Business Corporation Act provides, in
summary, that the directors and officers of the Company may, under certain
circumstances, be indemnified by the Company against all expenses incurred by or
imposed upon them as a result of actions, suits or proceedings brought against
them as such directors and officers, or as directors or officers of any other
organization at the request of the Company, if they act in good faith and in a
manner they reasonably believe to be in or not opposed to the best interests of
the Company, and with respect to any criminal action or proceeding, have no
reasonable cause to believe their conduct was unlawful, except that no
indemnification shall be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the Company
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, they are fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper. Section 21-2004(15) of the Nebraska Business Corporation Act also
provides that directors and officers of the Company are entitled to such
indemnification by the Company to the extent that such persons are successful on
the merits or otherwise in defending any such action, suit or proceeding.

Pursuant to the terms of the Underwriting Agreement filed as Exhibit 1.1
hereto, the directors and officers of the Company are indemnified against
certain civil liabilities that they may incur under the Securities Act of 1933,
as amended, in connection with this Registration Statement and the related
Prospectus.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses incurred by the Company
in connection with the sale and distribution of the Common Stock being offered
hereby, other than the underwriting discount. All amounts shown are estimates
except the Securities and Exchange Commission registration fee, the NASD filing
fee, and the Nasdaq application fee.

SEC registration fee ................... $ 5,175
NASD filing fee ........................ 2,208
Nasdaq application fee ................. 10,000
Printing expenses ...................... 40,000
Fees and expenses of Company counsel ... 150,000
Fees and expenses of Company accountants 160,000
Underwriters' expense allowance ........ 280,500
Fees and expenses of Underwriters'
counsel ............................... 40,000
Transfer agent and registrar fees ...... 2,500
Blue Sky fees and expenses ............. 40,000
Miscellaneous .......................... 6,117
--------
Total ................................ $736,500
========

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

Since September 30, 1993, the Company has issued and sold the following
securities, which were not registered under the Securities Act of 1933, as
amended (the "Securities Act"):

1. From October 11, 1993 to December 22, 1993, the Company issued and
sold 404,000 shares of Common Stock at $2.50 per share to various
accredited investors for a total consideration of $1,010,000. The
Company paid $101,000 to the Representative of the Underwriters, R.J.
Steichen & Company ( "Steichen"), in connection with this offering.

2. From May 17, 1994 to July 26, 1994, the Company issued and sold
583,500 shares of Common Stock at $2.50 per share to various
accredited investors in a private placement for a total consideration
of $1,458,750. The Company paid $145,875 to Steichen in connection
with this offering.

3. During the period from December 1994 to February 1995, Mr. Adams
converted $1,200,000 of subordinated notes and shareholder advances
into 400,000 shares of Common Stock.

4. In March 1995, Mr. Adams, Mr. Gloff and Heartland Capital, in
conjunction with a credit facility the Company obtained from Imperial
Bank, used collateral they had pledged against the Company's bank loan
at Peninsula Bank to repay the outstanding indebtedness under this
credit line, and in turn the Company issued $750,000 of unsecured
subordinated debentures to Mr. Adams, Mr. Gloff and Heartland Capital.
These debentures have a two-year term, include a warrant to purchase
up to 250,000 shares of Common Stock at $3.00 per share and bear
interest at the rate of 8% annually.

5. In March and April 1995, the Company secured $400,000 of bridge loan
financing from certain shareholders. Investors in the bridge loan
financing also received warrants to purchase an aggregate of 60,000
shares of Common Stock, exercisable at $3.00 per share.

6. In July 1995 and in connection with the entering into of a
consulting/licensing agreement, the Company granted to Encore
Technologies, Inc. a fully exercisable warrant to purchase 50,000
shares of Common Stock at $3.00 per share, which expires in January
2002.

7. During the period from August 1995 to December 1995, the Company sold
720,666 shares of Common Stock at $3.00 per share to various
accredited investors for a total consideration of $2,161,998. The
Company paid $216,199 to Steichen in connection with this offering and
issued warrants to Steichen to purchase up to 53,600 shares of Common
Stock at $3.00 per share.

8. On November 15, 1995, Mr. Gloff and Heartland Capital each purchased
$200,000 of collateralized subordinated debentures from the Company.
The debentures are secured by the assets of the Company but are
subordinated to any senior indebtedness of the Company. The debentures
bear interest at an 8% annual rate, payable on a quarterly basis, and
the entire principal balance is due on November 15, 1998. On May 15,
1996, Mr. Gloff converted the entire principal balance of his $200,000
of subordinated debentures into 100,000 shares of Common Stock.

9. On March 1, 1996, Rugged Rigger, Inc. loaned the Company $100,000. The
loan had an annual interest rate of 8%, payable monthly, and the
entire principal balance was due on March 1, 1997. In connection with
this subordinated unsecured note, warrants were issued to Mr. Potter
to purchase 15,000 shares of Common Stock at an exercise price of
$3.00 per share. These warrants expire in March 1, 2001. The loan was
prepaid in full with the proceeds from the sale of the Bridge Notes
and the Bridge Warrants.

10. On March 15, 1996, Mr. Adams converted $300,000 of collateral that was
pledged to secure the Company's bank loan at Peninsula Bank into cash
and used the cash to reduce the Company's $1,013,000 principal loan at
Peninsula Bank by this amount. The Company in turn issued Mr. Adams a
total of $300,000 of unsecured debentures, which bear interest at an
8% annual rate, payable on a quarterly basis, and the entire principal
amount is due on March 15, 1998. In connection with the debentures,
Mr. Adams was granted options to purchase up to 100,000 shares of
Common Stock at an exercise price of $3.00 per share for a period of
five years.

11. On March 15, 1996, Mr. Gloff and Heartland Capital converted $250,000
and $200,000, respectively, of collateral that was pledged to secure
the Company's bank loan at Peninsula Bank into cash and used the cash
to reduce the Company's $1,013,000 principal loan at Peninsula Bank by
this amount. The Company in turn issued a $250,000 unsecured debenture
to Mr. Gloff and a $200,000 unsecured debenture to Heartland Capital,
each bearing interest at an 10% annual rate, payable on a quarterly
basis, and the principal amount of each note is due on March 15, 1998.
In connection with the debentures, warrants were issued to Mr. Gloff
and Heartland Capital to purchase up to 83,333 shares and 66,667
shares, respectively, of Common Stock at an exercise price of $3.00
per share. These warrants expire upon the earlier of seven years from
the date of issuance or one year after the closing date of this
initial public offering.

12. On March 26, 1996, the Company entered into a $1,000,000 line of
credit agreement with Imperial Bank, $500,000 of which is a revolving
line of credit that expires on April 1, 1997 and $500,000 of which is
a revolving credit line extended to finance exports based on a
guarantee extended the Company by the California Export Finance
Organization ("CEFO"). The entire line of credit has been personally
guaranteed by Mr. Adams. The term loan portion of the line of credit
bears interest at a rate of prime plus 2%. The CEFO portion of the
credit line bears interest at prime plus 1.5%. CEFO's obligations are
in turn guaranteed by Mr. Adams. In connection with the revolving line
of credit, warrants were issued to Imperial Bank to purchase 20,833
shares of Common Stock at an exercise price of $3.00 per share. These
warrants expire in March 2001.

13. Between March and July 1996, the Company loaned $72,000 to Rugged
Rigger, Inc. to enable it to exercise options to purchase Common
Stock. The loan bears interest at an annual rate of 5%, compounded
annually, and is payable at the earlier of two years or the sale of
the underlying Common Stock.

14. On April 1, 1996, Mr. S. Bartley Osborn loaned the Company $100,000.
The loan had an annual interest rate of 8%, payable monthly, and the
entire principal balance was due on July 1, 1996. In connection with
this note, warrants were issued to Mr. Osborn to purchase 15,000
shares of Common Stock at an exercise price of $3.00 per share. These
warrants expire in April 2001. The loan was prepaid in full with the
proceeds from the sale of the Bridge Notes and the Bridge Warrants.

15. On May 24, 1996, the Company issued three $50,000 promissory notes for
the purpose of providing short-term financing until the proceeds of
this initial public offering can be received, one from each of Mr.
Adams, Mr. Gloff and Heartland Capital. Each note is payable upon
demand and bears interest at an annual rate of 8%. In connection with
these promissory notes, warrants were issued to each of Messrs. Adams
and Gloff and Heartland Capital to purchase 7,500 shares of Common
Stock at an exercise price of $3.00 per share. These warrants expire
in May 2001.

16. In July 1996, the Company secured $3,695,000 in bridge loan financing
through a private placement to accredited investors of the Bridge
Notes and the Bridge Warrants. The Bridge Notes and Bridge Warrants
were offered in Units, each Unit consisting of $50,000 principal
amount of Bridge Notes with Bridge Warrants to purchase 10,000 shares
of Common Stock. The Company issued 739,000 Bridge Warrants in
connection with the bridge loan financing. The Bridge Notes bear
interest at 10% per annum and will be repayable, with interest, at the
earlier of December 31, 1996, or 30 days after completion of this
offering. The Bridge Warrants may be exercised to purchase Common
Stock at the earlier of the completion of this offering or December
31, 1996, at 80% of the Price to Public obtained by the Company if
this offering is effective on or before December 31, 1996, or at $3.00
per share if such an offering is not effective on or before December
31, 1996. The Company paid $225,700 to Steichen in connection with the
bridge loan financing.

The sales of securities above were made in reliance upon Section 4(2) and
Regulation D of the Securities Act, which provide exemption for transactions not
involving a public offering. The purchasers of securities described above
represented that they acquired them for their own account and not with a view to
any distribution thereof to the public. The Company made inquiries of purchasers
of securities in these transactions and obtained representations from such
purchasers to establish that such issuances qualified for an exemption from the
registration requirements. The certificates evidencing the securities bear
legend stating that the shares are not to be offered, sold or transferred other
than pursuant to an effective registration statement under the Securities Act,
or an exemption from such registration requirements.

ITEM 27. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------
<S> <C>
** 1.1 Form of Underwriting Agreement

** 1.2 Form of Representative's Warrant

** 1.3 Selected Dealers' Agreement

** 1.4 Agreement Among Underwriters

** 3.1 Articles of Incorporation

** 3.2 Bylaws, as amended

* 4.1 Specimen Form of the Common Stock Certificate

** 5.1 Opinion of Dorsey & Whitney LLP

* 10.1 1992 Stock Option Plan

* 10.2 1996 Directors' Stock Option Plan

* 10.3 Agreement and Plan of Merger, dated as of May 31, 1996, as amended on
October 28, 1996, by and among the Company, a wholly owned subsidiary of the
Company and Turf Specialty, Inc.

* 10.4 Agreement and Plan of Merger, dated as of May 31, 1996, by and among the
Company, a wholly owned subsidiary of the Company and Turf Products, Ltd.

* 10.5 Employment Agreement, dated May 21, 1991, between the Company and William B.
Adams

* 10.6 Employment Agreement, dated May 21, 1991, between the Company and Jeffrey A.
Johnson

* 10.7 Employment Agreement, dated May 21, 1991, between the Company and Douglas M.
Gloff

* 10.8 Employment Agreement, dated October 1, 1995, between Aspen Consulting, Inc.
and Michael R. Scott

* 10.9 Employment Agreement, dated June 1, 1996, between the Company and
L. Jean Dunn, Jr.

* 10.10 Employment Agreement, dated July 8, 1996, between the Company and
Kevin P. Lyons

* 10.11 Employment Agreement, dated July 8, 1996, between the Company and
David W. Schermerhorn

** 10.12 Employment Agreement, dated July 10, 1996, between the Company and Wally
Fuchs

* 10.13 Employment Agreement, dated September 1, 1996, between the Company and Dr.
Thomas C. Quick

* 10.14 Distribution Agreement, dated August 2, 1996, between the Company and Abbott
Laboratories, Chemical and Agricultural Products Division

* 10.15 Supply Agreement, dated October 7, 1996, between the Company and CCT
Corporation

* 10.16 Exclusive Consulting Agreement, dated January 1, 1995, between the Company
and Encore Technologies, Inc.

* 10.17 License Agreement, dated April 20, 1992, between the Company and Westbridge
Agricultural Products

* 10.18 Product Supply Agreement, dated November 2, 1993, between the Company and
V.I.T. Products, Inc.

* 10.19 Marketing Agreement, dated July 26, 1995, between the Company and
Wilbur-Ellis Company/Western Division

* 10.20 Credit Agreement, dated March 6, 1996, between the Company and Imperial Bank
of San Diego

* 10.21 Lease Agreement, dated September 1, 1996, between the Company and Arthur P.
Arns

* 11.1 Statement Regarding Computation of Per Share Earnings (Losses)

** 23.1 Consent of Dorsey & Whitney LLP (included in Exhibit 5)

** 23.2 Consent of Ernst & Young LLP, Independent Auditors

** 23.3 Consent of Bigelow & Company Certified Public Accountants, P.C.

** 23.4 Consent of Ernst & Young LLP, Independent Auditors

** 23.5 Consent of Bigelow & Company Certified Public Accountants, P.C.

* 23.6 Consent of Brown, Martin, Haller & McClain LLP

* 24 Powers of Attorney (set forth on the Signature Page hereof)

* 27 Financial Data Schedule
</TABLE>
- ------------------------------
* Previously filed.
** Filed herewith.

ITEM 28. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(a) To provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.

(b) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(c) That (1) for determining any liability under the Securities Act, the
Registrant will treat the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant under Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this Registration Statement as of the
time the Commission declared it effective, and (2) for determining any liability
under the Securities Act, the Registrant will treat each post-effective
amendment that contains a form of prospectus as a new registration statement for
the securities offered in such registration statement, and the offering of the
securities at that time shall be deemed to be the initial bona fide offering
thereof.

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Diego, State of California, on
January 16, 1997.

ECO SOIL SYSTEMS, INC.

By /s/ WILLIAM B. ADAMS
-----------------------------------
/s/ WILLIAM B. ADAMS
William B. Adams
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
indicated on January 16, 1997.

SIGNATURE TITLE
--------- -----

/s/ WILLIAM B. ADAMS William Chairman of the Board and Chief Executive
- -------------------------- Officer (principal executive officer)
William B. Adams

/s/ L. JEAN DUNN, JR. Chief Financial Officer (principal financial
- -------------------------- and accounting officer)
L. Jean Dunn, Jr.

* President, Chief Operating Officer, Secretary
- -------------------------- and Director
Jeffrey A. Johnson

* Executive Vice President and Director
- --------------------------
Douglas M. Gloff

* Director
- --------------------------
Bradley K. Edwards

* Director
- --------------------------
S. Bartley Osborn

* Director
- --------------------------
William S. Potter

By: /s/ L. JEAN DUNN, JR.
------------------------
L. Jean Dunn, Jr.
As Attorney-in-Fact

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<S> <C> <C>
** 1.1 Form of Underwriting Agreement

** 1.2 Form of Representative's Warrant

** 1.3 Selected Dealers' Agreement

** 1.4 Agreement Among Underwriters

** 3.1 Articles of Incorporation

** 3.2 Bylaws, as amended

* 4.1 Specimen Form of the Common Stock Certificate

** 5.1 Opinion of Dorsey & Whitney LLP (to be filed by amendment)

* 10.1 1992 Stock Option Plan

* 10.2 1996 Directors' Stock Option Plan

* 10.3 Agreement and Plan of Merger, dated as of May 31, 1996, as amended
on October 28, 1996, by and among the Company, a wholly owned
subsidiary of the Company and Turf Specialty, Inc.

* 10.4 Agreement and Plan of Merger, dated as of May 31, 1996, by and
among the Company, a wholly owned subsidiary of the Company and
Turf Products, Ltd.

* 10.5 Employment Agreement, dated May 21, 1991, between the Company and
William B. Adams

* 10.6 Employment Agreement, dated May 21, 1991, between the Company and
Jeffrey A. Johnson

* 10.7 Employment Agreement, dated May 21, 1991, between the Company and
Douglas M. Gloff

* 10.8 Employment Agreement, dated October 1, 1995, between Aspen
Consulting, Inc. and Michael R. Scott

* 10.9 Employment Agreement, dated June 1, 1996, between the Company and
L. Jean Dunn, Jr.

* 10.10 Employment Agreement, dated July 8, 1996, between the Company and
Kevin P. Lyons

* 10.11 Employment Agreement, dated July 8, 1996, between the Company and
David W. Schermerhorn

** 10.12 Employment Agreement, dated July 10, 1996, between the Company and
Wally Fuchs

* 10.13 Employment Agreement, dated September 1, 1996, between the Company
and Dr. Thomas C. Quick

* 10.14 Distribution Agreement, dated August 2, 1996, between the Company
and Abbott Laboratories, Chemical and Agricultural Products
Division

* 10.15 Supply Agreement, dated October 7, 1996, between the Company and
CCT Corporation

* 10.16 Exclusive Consulting Agreement, dated January 1, 1995, between the
Company and Encore Technologies, Inc.

* 10.17 License Agreement, dated April 20, 1992, between the Company and
Westbridge Agricultural Products

* 10.18 Product Supply Agreement, dated November 2, 1993, between the
Company and V.I.T. Products, Inc.

* 10.19 Marketing Agreement, dated July 26, 1995, between the Company and
Wilbur-Ellis Company/Western Division

* 10.20 Credit Agreement, dated March 6, 1996, between the Company and
Imperial Bank of San Diego

* 10.21 Lease Agreement, dated September 1, 1996, between the Company and
Arthur P. Arns

* 11.1 Statement Regarding Computation of Per Share Earnings (Losses)

** 23.1 Consent of Dorsey & Whitney LLP (included in Exhibit 5)

** 23.2 Consent of Ernst & Young LLP, Independent Auditors

** 23.3 Consent of Bigelow & Company Certified Public Accountants, P.C.

** 23.4 Consent of Ernst & Young LLP, Independent Auditors

** 23.5 Consent of Bigelow & Company Certified Public Accountants, P.C.

* 23.6 Consent of Brown, Martin, Haller & McClain LLP

* 24 Powers of Attorney (set forth on the Signature Page hereof)

* 27 Financial Data Schedule
</TABLE>
- --------------------------
* Previously filed.
** Filed herewith.

ECO SOIL SYSTEMS, INC.

3,300,000 SHARES OF COMMON STOCK1

UNDERWRITING AGREEMENT

____________, 1997

R. J. Steichen & Company
Midwest Plaza
Suite 1100
801 Nicollet Mall
Minneapolis, MN 55402

Ladies/Gentlemen:

Eco Soil Systems, Inc., a Nebraska corporation (the "Company"),
addressing you as the representative (the "Representative") of each of the
underwriters, including the Representative, named in Schedule I hereto (the
"Underwriters"), hereby confirms its agreement to sell to the Underwriters an
aggregate of 3,300,000 authorized and unissued shares (the "Firm Shares") of
common stock, $0.005 par value ("Common Stock"), of the Company. The Company
also hereby confirms its agreement to grant to the Underwriters an option to
purchase up to 495,000 additional authorized and unissued shares of Common Stock
(the "Option Shares") on the terms and for the purposes set forth in Section
2(b) hereof. As used in this Agreement, the term "Shares" shall consist of the
Firm Shares and the Option Shares. The Company also hereby confirms its
agreement to issue to the Representative warrants for the purchase of a total of
330,000 shares of Common Stock as described in Section 6 hereof (the
"Representative's Warrants"), assuming purchase by the Underwriters of the Firm
Shares. The shares issuable upon exercise of the Representative's Warrants are
referred to in this Agreement as the "Warrant Shares."

1. Representations, Warranties and Agreements of the Company.

(a) The Company represents and warrants to and agrees with each of the
Underwriters as follows:

(i) A registration statement on Form SB-2 (File No. 333-15883)
with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations
(the "Rules and

- --------

1 Plus an option to purchase up to 495,000 additional shares to cover
over-allotments.

Regulations") of the Securities and Exchange Commission (the
"SEC") thereunder and has been filed with the SEC under the
Securities Act; one or more amendments to such registration
statement have also been so prepared and have been, or will
be, so filed. Copies of the registration statement and
amendments and each related preliminary prospectus to date
have been delivered by the Company to the Underwriters, and,
to the extent applicable, were identical to the electronically
transmitted copies thereof filed with the SEC pursuant to the
SEC's Electronic Data Gathering Analysis and Retrieval System
("EDGAR"), except to the extent permitted by Regulation S-T
under the Securities Act. If the Company has elected not to
rely upon Rule 430A of the Rules and Regulations, the Company
has prepared and will promptly file an amendment to the
registration statement and an amended prospectus. If the
Company has elected to rely upon Rule 430A of the Rules and
Regulations, it will prepare and file a prospectus pursuant to
Rule 424(b) that discloses the information previously omitted
from the prospectus in reliance upon Rule 430A. Such
registration statement as amended at the time it is or was
declared effective by the SEC and, in the event of any
amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the
effectiveness of such amendment), including the information
deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A(b), if applicable, is
hereinafter called the "Registration Statement." The
prospectus included in the Registration Statement at the time
it is or was declared effective by the SEC is hereinafter
called the "Prospectus," except that if any prospectus filed
by the Company with the SEC pursuant to Rule 424(b) of the
Rules and Regulations or any other prospectus provided to the
Underwriters by the Company for use in connection with the
offering of the Shares (whether or not required to be filed by
the Company with the SEC pursuant to Rule 424(b) of the Rules
and Regulations) differs from the prospectus on file at the
time the Registration Statement is or was declared effective
by the SEC, the term "Prospectus" shall refer to such
differing prospectus from and after the time such prospectus
is filed with the SEC or transmitted to the SEC for filing
pursuant to such Rule 424(b) or from and after the time it is
first provided to the Underwriters by the Company for such
use. The term "Preliminary Prospectus" as used herein means
any preliminary prospectus included in the Registration
Statement prior to the time it becomes or became effective
under the Securities Act and any prospectus subject to
completion as described in Rule 430A of the Rules and
Regulations. For purposes of this Agreement, all references to
the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement to any of the
foregoing, shall be deemed to include the respective copies
thereof filed with the SEC pursuant to EDGAR.

(ii) At the time the Registration Statement is or was declared
effective by the SEC and at all times subsequent thereto up to
the "First Closing Date" and the "Second Closing Date" (as
such terms are hereinafter defined), the Registration
Statement and Prospectus, and all amendments thereof and
supplements thereto, will comply or complied with the
provisions and requirements of the Securities Act and the
Rules and Regulations. Neither the SEC nor any state
securities authority has issued any order preventing or
suspending the use of any Preliminary Prospectus or requiring
the recirculation of a Preliminary Prospectus, or issued a
stop order with respect to the offering of the Shares (if the
Registration Statement has been declared effective), or
instituted or, to the Company's knowledge, threatened the
institution of, proceedings for any of such purposes. When the
Registration Statement shall become effective and when any
post-effective amendment thereto shall become effective, the
Registration Statement (as amended, if the Company shall have
filed with the SEC any post-effective amendments thereto) will
not or did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. When
the Registration Statement is or was declared effective by the
SEC and at all times subsequent thereto up to the First
Closing Date and the Second Closing Date, the Prospectus (as
amended or supplemented, if the Company shall have filed with
the SEC any amendment thereof or supplement thereto) will not
or did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
When any Preliminary Prospectus was first filed with the SEC
and when any amendment thereof or supplement thereto was first
filed with the SEC, such Preliminary Prospectus and any
amendment thereof and supplement thereto complied in all
material respects with the applicable provisions of the
Securities Act and the Rules and Regulations and did not
contain an untrue statement of a material fact and did not
omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not
misleading. None of the representations and warranties in this
Subsection 1(a) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, which are based upon
and conform to written information relating to any Underwriter
furnished to the Company by such Underwriter specifically for
use in the preparation of the Registration Statement or the
Prospectus, or any such amendment or supplement.

(iii) The Company has no subsidiaries other than Turf
Products, Ltd., Aspen Consulting, Inc. and Turf Specialty,
Inc. (each one a "Subsidiary" and collectively the
"Subsidiaries") and is not affiliated with any other company
or business entity, except as disclosed in the Prospectus. The
Company and each Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with full power
and authority (corporate and other) to own, lease and operate
its properties and conduct its business as described in the
Registration Statement and Prospectus; the Company owns all of
the outstanding capital stock of each of the Subsidiaries free
and clear of any pledge, lien, security interest, incumbrance,
claim or equitable interest; the Company and each Subsidiary
is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the
ownership or lease of its properties or the conduct of its
business requires such qualification and in which the failure
to be qualified or in good standing would have a material
adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company; and no
proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.

(iv) The Company and each Subsidiary has and is operating in
material compliance with all authorizations, licenses,
certificates, consents, permits, approvals and orders of and
from all state, federal and other governmental regulatory
officials and bodies necessary to own its properties and to
conduct its business as described in the Registration
Statement and Prospectus, all of which are, to the Company's
knowledge, valid and in full force and effect; the Company and
each Subsidiary is conducting its business in substantial
compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business; and
neither the Company nor any Subsidiary is in material
violation of any applicable law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government
or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or over their
respective properties, except as would not materially and
adversely affect the condition (financial or otherwise),
earnings, operations, business or business prospects of the
Company. Except as set forth in the Registration Statement and
Prospectus, (A) the Company is in material compliance with all
material rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and
protection of health or the environment (the "Environmental
Laws") which are applicable to its business, (B) the Company
has received no notice from any governmental authority or
third party of an asserted claim under Environmental Laws,
which claim is required to be disclosed in the Registration
Statement and the Prospectus, (C) the Company will not be
required to make any future material capital expenditures to
comply with Environmental Laws, and (D) no property which is
owned, leased or occupied by the Company has been designated
as a Superfund site pursuant to the Comprehensive Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
ss. 9601, et seq.), or otherwise designated as a contaminated
site under applicable state or local law.

(v) Neither the Company nor any Subsidiary is in violation of
its respective articles of incorporation or bylaws or in
default in the performance or observance of any obligation,
agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any
contract, lease, indenture, mortgage, loan agreement, joint
venture or other agreement or instrument to which it is a
party or by which it or its respective properties are bound,
which default is material to the business of the Company and
its Subsidiaries.

(vi) The Company has full requisite power and authority to
enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement on the part of the Company, enforceable
against the Company in accordance with its terms, except as
enforceability may be limited by the application of
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by judicial limitations on the right of specific performance,
and except as the enforceability of the indemnification or
contribution provisions hereof may be affected by applicable
federal or state securities laws. The performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a material breach or violation
of any of the terms and provisions of, or constitute a
material default under, (A) any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note, agreement or
other evidence of indebtedness, any lease, contract,
indenture, mortgage, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or their
respective properties may be bound, (B) the respective
articles of incorporation or bylaws of the Company or any
Subsidiary, or (C) any material applicable law, order, rule,
regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any
Subsidiary or over their respective properties. No consent,
approval, authorization or order of or qualification with any
court, governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or over
their respective properties is required for the execution and
delivery of this Agreement and the consummation by the Company
of the transactions herein contemplated, except such as may be
required under the Securities Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or under state or
other securities or Blue Sky laws, all of which requirements
have been satisfied.

(vii) Except as is otherwise expressly described in the
Registration Statement or Prospectus, there is not any pending
or, to the best of the Company's knowledge, threatened, any
action, suit, claim or proceeding against the Company, any
Subsidiary, or any of their respective officers or any of
their respective properties, assets or rights before any
court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any
Subsidiary or over their respective officers or properties or
otherwise which (i) might result in any material adverse
change in the condition (financial or otherwise), earnings,
operations or business of the Company or a Subsidiary or might
materially and adversely affect their properties, assets or
rights, or (ii) might prevent consummation of the transactions
contemplated hereby.

(viii) The Company has, and at the First Closing Date and
Second Closing Date (collectively, the "Closing Dates") will
have, the duly authorized and outstanding capitalization set
forth in the Prospectus. All outstanding shares of capital
stock of the Company are duly authorized and validly issued,
fully paid and non-assessable, have been issued in compliance
with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company
conforms in all material respects with the statements relating
thereto contained in the Registration Statement and the
Prospectus; the Shares to be sold hereunder by the Company
have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and
validly issued and fully paid and nonassessable and will be
sold free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest; and no preemptive
right, co-sale right, registration right, right of first
refusal or other similar right of shareholders exists with
respect to any of the Shares to be sold hereunder by the
Company or the issuance and sale thereof, or the issuance and
sale or exercise of the Representative's Warrants, other than
those that have been expressly waived prior to the date
hereof. Except as disclosed in the Prospectus, the Company has
no outstanding options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock
or any such options, rights, convertible securities or
obligations.

(ix) The Representative's Warrants and the Warrant Shares have
been duly authorized. The Representative's Warrants, when
issued and delivered to the Representative, will constitute
valid and binding obligations of the Company in accordance
with their terms, except as enforceability may be limited by
the application of bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and by judicial limitations on the right
of specific performance. The Warrant Shares, when issued in
accordance with the terms of this Agreement and pursuant to
the Representative's Warrants, will be fully paid and
non-assessable and subject to no preemptive rights or similar
rights on the part of any person or entity. A sufficient
number of shares of Common Stock of the Company has been
reserved for issuance by the Company upon exercise of the
Representative's Warrants.

(x) Ernst & Young LLP, which has expressed its opinion with
respect to the financial statements filed as part of the
Registration Statement and included in the Registration
Statement and Prospectus, are independent accountants within
the meaning of the Securities Act and the Rules and
Regulations. The financial statements of the Company set forth
in the Registration Statement and Prospectus comply in all
material respects with the requirements of the Securities Act
and fairly present the financial position and the results of
operations of the Company and the Subsidiaries at the
respective dates and for the respective periods to which they
apply in accordance with generally accepted accounting
principles consistently applied throughout the periods
involved (subject, in the case of unaudited financial
statements, to normal year-end adjustments which in the
opinion of management of the Company are not material, and
except as otherwise stated therein); and the supporting
schedules included in the Registration Statement present
fairly the information required to be stated therein. The
selected and summary financial and statistical data included
in the Registration Statement present fairly the information
shown therein and have been compiled on a basis consistent
with the audited financial statements presented therein. No
other financial statements or schedules are required by the
Securities Act or the Rules and Regulations to be included in
the Registration Statement.

(xi) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and at each Closing Date, except as is otherwise
disclosed in the Registration Statement or Prospectus, there
has not been: (A) any change in the capital stock or long-term
debt (including any capitalized lease obligation) or material
increase in the short-term debt of the Company or a
Subsidiary; (B) any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock of
the Company; (C) any material adverse change, or any
development involving a material adverse change, in or
affecting the condition (financial or otherwise), earnings,
operations, business, or business prospects, management,
financial position, shareholders' equity, results of
operations or general condition of the Company; (D) any
material transaction entered into by the Company or a
Subsidiary; (E) any material obligation, direct or contingent,
incurred by the Company or a Subsidiary, except obligations
incurred in the ordinary course of business that, in the
aggregate, are not material; (F) any dividend or distribution
of any kind declared, paid or made on the capital stock of the
Company or a Subsidiary; or (G) any loss or damage (whether or
not insured) to the property of the Company or a Subsidiary
which has been sustained which has a material adverse effect
on the condition (financial or otherwise), earnings,
operations or business of the Company or a Subsidiary.

(xii) Except as is otherwise expressly disclosed in the
Registration Statement or Prospectus, (A) the Company and each
Subsidiary has good and marketable title to all of the
property, real and personal, and assets described in the
Registration Statement or Prospectus as being owned by it,
free and clear of any and all pledges, liens, security
interests, encumbrances, equities, charges or claims, other
than such as would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations or
business of the Company, (B) the agreements to which the
Company is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable by the Company
and the Subsidiary (as applicable), except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by judicial
limitations on the right of specific performance, and (C) each
of the Company and the Subsidiaries has valid and enforceable
leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as is
otherwise disclosed in the Registration Statement and
Prospectus and except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditors' rights generally or by judicial limitations on the
right of specific performance. Except as set forth in the
Registration Statement and Prospectus, the Company owns or
leases all such properties as are necessary to its operations
as now conducted.

(xiii) The Company and each Subsidiary has timely filed (or
has timely requested an extension of time to file) all
necessary federal and state income and franchise tax returns
and has paid all taxes shown thereon as due, other than any
which the Company is contesting in good faith; there is no tax
deficiency that has been or, to the best of the Company's
knowledge, could be asserted against the Company or a
Subsidiary that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations,
business or properties of the Company or a Subsidiary; and all
tax liabilities are adequately provided for in the books of
the Company and each Subsidiary.

(xiv) No labor disturbance by the employees of the Company or
a Subsidiary exists or, to the best of the Company's
knowledge, is imminent. Except as disclosed in the
Registration Statement and the Prospectus, no collective
bargaining agreement exists with any of the employees of the
Company or any Subsidiary and, to the best of the Company's
knowledge, no such agreement is imminent.

(xv) The Company and each Subsidiary owns, or possesses
adequate rights to use, all patents, patent applications,
patent rights, inventions, trademarks, trade secrets,
know-how, technology, trademarks, service marks, trade names,
trademark registrations, service mark registrations,
copyrights, licenses and proprietary rights or information
(collectively, the "Proprietary Rights") which are necessary
for the conduct of its present or intended business as
described in the Registration Statement or Prospectus; the
expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not
have a material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company or
any Subsidiary; and the Company has not received any notice
of, and has no knowledge of, any infringement of or conflict
with the asserted rights of others with respect to any
Proprietary Rights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business
prospects of the Company or any Subsidiary. Except as
disclosed in the Registration Statement or Prospectus, the
Company is not obligated or under any liability whatsoever to
make any payments by way of royalties, fees or otherwise to
any owner of, licensor of, or other claimant to, any
Proprietary Rights or other intangible assets, with respect to
the use thereof or in connection with the conduct of its
business or otherwise.

(xvi) The Shares have been approved for quotation on The
Nasdaq SmallCap Market.

(xvii) The Company has no defined benefit pension plan or
other pension benefit plan which is intended to comply with
the provisions of the Employee Retirement Income Security Act
of 1974 as amended from time to time, except as disclosed in
the Registration Statement.

(xviii) The Company has not taken and will not take, directly
or indirectly, any action (and does not know of any action by
its directors, officers, shareholders or others) which has
constituted or is designed to, or which might reasonably be
expected to, cause or result in stabilization or manipulation,
as defined in the Exchange Act or otherwise, of the price of
any security of the Company to facilitate the sale or resale
of the Shares. The Company has not distributed and will not
distribute prior to the later of (A) the First Closing Date or
the Second Closing Date, as the case may be, and (B)
completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the
Shares other than any Preliminary Prospectus, the Prospectus,
the Registration Statement and other materials, if any,
permitted by the Securities Act. Except as is otherwise
disclosed in the Registration Statement or Prospectus, and to
the best of the Company's knowledge, no person is entitled,
directly or indirectly, to compensation from the Company or
the Underwriters for services as a "finder" or otherwise in
connection with the transactions contemplated by this
Agreement.

(xix) The Company and each Subsidiary maintains insurance,
which is in full force and effect, with insurers of recognized
financial responsibility of the types and in the amounts
generally deemed adequate for their respective businesses; and
neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not
materially and adversely affect the condition (financial or
otherwise), earnings, operations, business or business
prospects of the Company.

(xx) Each officer and director of the Company, and each of
such shareholders of the Company as the Representative shall
identify in its discretion, has agreed pursuant to the form of
Lock-up Agreement attached hereto as Appendix A (the "Lock-up
Agreement") that such person will not, for a period of 180
days from the date (the "Effective Date") that the
Registration Statement is declared effective by the SEC (the
"Lock-up Period"), without the prior written consent of the
Representative, offer to sell, contract to sell, sell, pledge,
hypothecate, transfer or otherwise dispose of, or grant any
rights with respect to (collectively, a "Disposition"), any
shares of Common Stock and options, warrants and other rights
to purchase any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for shares of
Common Stock now owned or hereafter acquired by such person
(collectively, "Securities") or with respect to which such
person has or hereafter acquires the power of Disposition,
other than as permitted by the Lock-Up Agreement. The Company
has provided to counsel for the Underwriters ("Underwriters'
Counsel") true, accurate and complete copies of all of the
Lock-up Agreements. The Company has provided to Underwriters'
Counsel a complete and accurate list of all security holders
of the Company and the number and type of securities held by
each security holder.

(xxi) Neither the Company nor any Subsidiary has at any time
during the last five (5) years made any unlawful contribution
to any candidate for an office or failed to disclose fully any
contribution in violation of law, or made any payment to any
federal or state governmental officer or official, domestic or
foreign, or other person charged with similar public or
quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that transactions are executed in accordance with
management's general or specific authorizations, transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, access
to assets is permitted only in accordance with management's
general or specific authorization, and the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.

(xxii) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with
any person or affiliate located in Cuba.

(b) Any certificate signed by any officer of the Company and delivered
to you or to Underwriters' Counsel shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered
thereby.

2. Purchase, Sale, Delivery and Payment.

(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of $__________ per Share, the Firm Shares.
The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of Firm Shares (to be adjusted by the
Representative to avoid fractional shares) which represents the same
proportion of the number of Firm Shares to be sold by the Company
pursuant to this Agreement as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto represents
to the total number of Firm Shares to be purchased by all Underwriters
pursuant to this Agreement; and except as provided in Section 2(c), the
agreement of each Underwriter is to purchase only the respective number
of Firm Shares specified in Schedule I. The Underwriters will purchase
all of the Firm Shares if any are purchased.

The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase
price therefor by certified or official bank check or checks or other
next-day funds payable to the order of the Company at the offices of R.
J. Steichen & Company, Midwest Plaza, Suite 1100, 801 Nicollet Mall,
Minneapolis, Minnesota 55402 (or at such other place as may be agreed
upon by the Representative and the Company), at 9:00 a.m., Minneapolis,
Minnesota time, on (i) the third (3rd) full business day following the
date hereof if the price of the Firm Shares is determined before 3:30
p.m. Minneapolis, Minnesota time, (ii) the fourth (4th) full business
day following the date hereof if the price of the Firm Shares hereunder
is determined after 3:30 p.m. Minneapolis, Minnesota time, or (iii)
such other time and date as the Representative and the Company may
determine, such time and date of payment and delivery being herein
called the "First Closing Date." The Firm Shares, in definitive form
and in such denominations and registered in such names as the
Representative may request upon at least two (2) business days' prior
notice to the Company, will be made available to the Representative at
the offices of R. J. Steichen & Company, Midwest Plaza, Suite 1100, 801
Nicollet Mall, Minneapolis, Minnesota 55402 (or at such other place as
may be agreed upon by the Representative and the Company). If the
Representative so elects, delivery of the Firm Shares may be made by
credit to "full fast" transfer to the accounts at The Depository Trust
Company designated by the Representative.

(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters
to purchase an aggregate of up to 495,000 Option Shares, all at the
same purchase price as the Firm Shares, for use solely in covering any
over-allotments made by the Underwriters in the sale and distribution
of the Firm Shares. The option granted hereunder may be exercised by
the Representative on behalf of the several Underwriters at any time
(but not more than once), in whole or in part, during the period of
forty-five (45) days after the date of this Agreement by giving written
notice to the Company, which notice shall set forth the aggregate
number of Option Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for the
Option Shares are to be registered, and the date and time, as
determined by the Representative, when the Option Shares are to be
delivered, such time and date being herein referred to as the "Second
Closing Date"; provided, however, that the Second Closing Date shall
not be earlier than the First Closing Date nor earlier than the second
business day after the date on which the option shall have been
exercised. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage of the total number of Option
Shares to be purchased by the Underwriters as the number of Firm Shares
to be purchased by such Underwriter bears to the total number of Firm
Shares to be purchased by the Underwriters, as adjusted by the
Representative in its sole discretion in such manner as it shall deem
advisable to avoid fractional shares. No Option Shares shall be sold
and delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.

The Option Shares will be delivered by the Company, as appropriate, to
the Representative for the accounts of the Underwriters against payment
of the purchase price therefor by certified or official bank check or
other next-day funds payable to the order of the Company at the offices
of R. J. Steichen & Company, Midwest Plaza, Suite 1100, 801 Nicollet
Mall, Minneapolis, Minnesota 55402 (or at such other place as may be
agreed upon by the Representative and the Company) at 9:00 a.m.,
Minneapolis, Minnesota time, on the Second Closing Date. The Option
Shares, in definitive form and in such denominations and registered in
such names as the Representative has set forth in its notice of option
exercise, will be made available to you at the offices of R. J.
Steichen & Company, Midwest Plaza, Suite 1100, 801 Nicollet Mall,
Minneapolis, Minnesota 55402, or such other place as may be agreed upon
by the Representative and the Company at least one business day prior
to the Second Closing Date. If the Representative so elects, delivery
of the Option Shares may be made by credit to "full fast" transfer to
the accounts at The Depository Trust Company designated by the
Representative.

(c) It is understood that any of the Underwriters, may (but shall not
be obligated to) make payment to the Company, on behalf of any
Underwriter, for the Shares to be purchased by such Underwriter. Any
such payment shall not relieve any such Underwriter of any of its
obligations hereunder. Nothing herein contained shall constitute any of
the Underwriters an unincorporated association or partner with the
Company.

3. Covenants of the Company. The Company hereby covenants and agrees with
each of the Underwriters as follows:

(a) If the Registration Statement has not already been declared
effective by the SEC, the Company will use its best efforts to cause
the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify the
Representative promptly of the time when the Registration Statement or
any post-effective amendment to the Registration Statement has become
effective or any supplement to the Prospectus has been filed and of any
request by the SEC for any amendment or supplement to the Registration
Statement or Prospectus or additional information; if the Company has
elected to rely on Rule 430A of the Rules and Regulations, the Company
will file a Prospectus containing the information omitted therefrom
pursuant to such Rule 430A with the SEC within the time period required
by, and otherwise in accordance with the provisions of, Rules 424(b)
and 430A of the Rules and Regulations; the Company will prepare and
file with the SEC, promptly upon your request, any amendments or
supplements to the Registration Statement or Prospectus that, in your
opinion, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; and the Company will
not file any amendment or supplement to the Registration Statement or
Prospectus to which the Representative shall reasonably object by
notice to the Company after having been furnished a copy a reasonable
time prior to the filing.

(b) The Company will advise the Representative, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the SEC
of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceeding for any such purpose; and the Company
will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such a stop order should be
issued.

(c) Within the time during which a prospectus relating to the Shares is
required to be delivered under the Securities Act, the Company will
comply as far as it is able with all requirements imposed upon it by
the Securities Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares as
contemplated by the provisions hereof and the Prospectus. If, during
such period, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if, during such
period, it is necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representative and will amend the
Registration Statement or supplement the Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.

(d) The Company will use its best efforts to arrange for the
qualification of the Shares for offering and sale under the securities
laws of such jurisdictions as the Representative may designate and to
continue such qualifications in effect for so long as may be required
for purposes of the distribution of the Shares; provided, however, that
in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action
which would subject it to the service of process in suits, other than
those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject. In each jurisdiction in
which the Shares shall have been qualified as herein provided, the
Company will make and file such statements and reports in each year as
are or may be reasonably required by the laws of such jurisdiction.

(e) The Company will furnish to the Underwriters copies of the
Registration Statement (one of which will be signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus, and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative may from time to
time reasonably request.

(f) For a period of five years from the Effective Date, the Company
will furnish directly to the Representative as soon as the same shall
be sent to its shareholders generally copies of all annual or interim
shareholder reports of the Company and will, for the same period, also
furnish the Representative with the following:

(i) Two copies of any report, application or document (other
than exhibits, which, however, will be furnished on your
request) filed by the Company with the SEC, Nasdaq, the NASD
or any securities exchange;

(ii) As soon as the same shall be sent to shareholders
generally, copies of each communication sent to shareholders;
and

(iii) From time to time, such other information concerning the
Company as the Representative may reasonably request.

The Company will, for a period of five (5) years from the Effective
Date, and as soon as practicable following the close of each applicable
period, furnish directly to the Representative detailed quarterly and
annual profit and loss statements, reports of the Company's cash flow,
other financial statements, and statements of application of the
proceeds of the offering of the Shares by the Company.

(g) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the fifteen
(15) months after the end of the Company's current fiscal quarter, an
earnings statement (which will be in reasonable detail but need not be
audited) complying with the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Rules and Regulations and covering a
twelve (12)- month period beginning after the Effective Date of the
Registration Statement.

(h) If required by the Securities Act or the Rules and Regulations
thereunder, the Company will prepare and file with the SEC reports on
Form SR in accordance with the Securities Act and the Rules and
Regulations.

(i) After completion of the offering of the Shares, the Company will
make all filings required to maintain the quotation of the Common Stock
on The Nasdaq SmallCap Market or any national stock exchange.

(j) The Company will apply the net proceeds from the sale of the Shares
being sold by it substantially in the manner set forth under the
caption "Use of Proceeds" in the Prospectus.

(k) During the Lock-Up Period, and except for the sale of Shares by the
Company pursuant to this Agreement, the Company will not, without the
prior written consent of the Representative, effect the Disposition of,
directly or indirectly, any Securities including, without limitation,
any Securities that are convertible into or exchangeable or exercisable
for Common Stock, and shall not accelerate the exercisability of any
Securities that are convertible into or exchangeable or exercisable for
Common Stock.

(l) The Company will not take, and will use its best efforts to cause
each of its officers and directors not to take, directly or indirectly,
any action designed to or which might reasonably be expected to cause
or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.

(m) The Company will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution of
the Shares by the Underwriters if it commences engaging in business
with the government of Cuba or with any person or affiliate located in
Cuba. Such information shall be provided within 90 days after the
commencement thereof or after a change occurs with respect to
previously reported information.

4. Expenses.

(a) The Company agrees with each Underwriter that:

(i) Whether or not this Agreement becomes effective or is
terminated or cancelled or the sale of the Shares hereunder is
consummated, and regardless of the reason for or cause of any
such termination, cancellation, or failure to consummate, the
Company will pay or cause to be paid its costs and expenses
related to the Offering, including, but not limited to, the
following: (A) all expenses (including any transfer taxes)
incurred in connection with the delivery to the Underwriters
of the Shares, (B) all expenses and fees (including, without
limitation, fees and expenses of the Company's accountants and
of counsel to the Company, excluding, however, fees of
Underwriters' Counsel) in connection with the preparation,
printing, filing, delivery, and shipping of the Registration
Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and any amendment thereof or
supplement thereto, in such quantities as the Representative
shall reasonably request, including filing any such documents
on EDGAR, (C) all fees and reasonable expenses, including all
reasonable counsel fees of counsel to the Company, incurred in
connection with the qualification of the Shares for offering
and sale by the Underwriters or by dealers under the
securities or Blue Sky laws of the states and other
jurisdictions which the Representative may designate in
accordance with Section 3(d) hereof, (D) all costs and
expenses incident to qualification with The Nasdaq SmallCap
Market, (E) postage and express mail charges and any other
expenses in connection with delivery to the Underwriters and
potential investors of the Preliminary Prospectus and
Prospectus, (F) all travel, lodging and entertainment expenses
associated with investor meetings, marketing "roadshows," and
otherwise marketing and selling the Shares, and (G) all other
costs and expenses incident to the performance of the
Company's obligations hereunder that are not otherwise
specifically described herein. In addition to the foregoing,
the Company shall pay to the Representative on each Closing
Date for out-of-pocket expenses (including fees of
Underwriters' Counsel) a nonaccountable expense allowance
equal to two percent (2.0%) of the aggregate Price to Public
for all the Shares sold to the Underwriters on each Closing
Date, including Shares sold pursuant to orders received
through the Company. The Representative acknowledges receipt
of a total of $10,000.00 from the Company as an advance (the
"Advance") against such nonaccountable expense allowance. If
the Underwriters withdraw from the sale of the Shares as
herein proposed for any reason beyond their control, or if the
sale of the Shares as herein proposed is abandoned by the
Company, the Company will pay to the Representative an amount
equal to (AA) the lesser of $20,000.00 or the amount of the
Representative's accountable expenses including, but not
limited to, its travel expenses and the fees and expenses of
Underwriters' Counsel, less (BB) the amount of the Advance;
and, upon any such termination of the sale of the Shares, the
Representative shall refund to the Company any amount of the
Advance that exceeds the amount of the Representative's
Accountable Expenses. The provisions of this Section 4(a)(i)
are intended to relieve the Underwriters from the payment of
the expenses and costs which the Company hereby agrees to pay
and shall not impair the obligations of the Company hereunder
to the several Underwriters.

(ii) In addition to its other obligations under Sections 7(a)
and 8 hereof, the Company agrees that, as an interim measure
during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 7(a), it will
reimburse the Underwriters on a monthly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety
and enforceability of the Company's obligation to reimburse
the Underwriters for such expenses and the possibility that
such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been
improper, the Underwriters shall promptly return such payment
to the Company together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing)
listed from time to time in The Wall Street Journal which
represents the base rate on corporate loans posted by a
substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments
which are not made to the Underwriters within thirty (30) days
of a request for reimbursement shall bear interest at the
Prime Rate from the date of such request.

(b) It is agreed that any controversy rising out of the operation of
the interim reimbursement arrangements set forth in Section 4(a)(ii)
hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts, and the basis on which such
amounts shall be apportioned among the reimbursing parties, shall be
settled by arbitration conducted pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. If
the party demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim
reimbursement provisions contained in Section 4(a)(ii) hereof and will
not resolve the ultimate propriety or enforceability of the obligation
to indemnify for expenses which is created by the provisions of
Sections 7(a) and 7(b) hereof or the obligation to contribute to
expenses which is created by the provisions of Section 8(a) hereof.

5. Conditions of the Underwriters' Obligations. The obligation of the
Underwriters to purchase and pay for the Shares as provided herein shall be
subject to the accuracy of the representations and warranties of the Company, in
the case of the Firm Shares, as of the date hereof and the First Closing Date
(as if made on and as of the First Closing Date), and in the case of the Option
Shares, as of the date hereof and the Second Closing Date (as if made on and as
of the Second Closing Date); to the performance by the Company of its
obligations hereunder; and to the satisfaction of the following additional
conditions on or before the First Closing Date in the case of the Firm Shares
and on or before the Second Closing Date in the case of the Option Shares:

(a) The Registration Statement shall have become effective not later
than 4:00 p.m. Minneapolis, Minnesota time on the date of this
Agreement, or such later date or time as shall be consented to in
writing by you (the "Effective Date"); and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for
that purpose shall have been initiated or, to the knowledge of the
Company, or any of the Underwriters, threatened by the SEC or any state
securities commission or similar regulatory body; and any request of
the SEC for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the satisfaction of the Underwriters and Underwriters' Counsel.

(b) The Underwriters shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains any untrue statement of a fact which is
material or omits to state a fact which is material and is required to
be stated therein or is necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this Section 5(b) shall not apply
to statements in, or omissions from, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto, which are
based upon and conform to written information furnished to the Company
by the Underwriters specifically for use in the preparation of the
Registration Statement or the Prospectus, or any such amendment or
supplement.

(c) Subsequent to the Effective Date and prior to each Closing Date,
there shall not have occurred any change, or any development involving
a prospective change, which materially and adversely affects the
Company's condition (financial or otherwise), earnings, operations,
properties, business or business prospects from that set forth in the
Registration Statement or Prospectus, and which, in the
Representative's sole judgment, is material and adverse and that makes
it, in the Representative's sole judgment, impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by
the Prospectus and this Agreement.

(d) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to
Underwriters' Counsel, and such counsel shall have been furnished with
such papers and information as it may reasonably have requested to
enable it to pass upon the matters referred to in this Section.

(e) On each Closing Date, the Underwriters shall have received the
opinion of Dorsey & Whitney LLP, counsel for the Company, dated as of
such Closing Date, satisfactory in form and substance to the
Underwriters and Underwriters' Counsel, to the effect that:

(i) Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to
own, lease and operate its properties and to conduct its
business as currently being carried on and as described in the
Registration Statement and Prospectus.

(ii) Each of the Company and the Subsidiaries is duly
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction, if any, in which the
ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure
to be so qualified or be in good standing would not have a
material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company
and the Subsidiaries considered as one enterprise. To the best
of such counsel's knowledge, the Company does not own or
control, directly or indirectly, any corporation, association
or other entity other than the Subsidiaries.

(iii) The capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus
under the caption "Description of Securities." The issued and
outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and nonassessable,
and the holders thereof are not subject to any personal
liability by reason of being such holders.

(iv) The Shares to be issued by the Company pursuant to the
terms of this Agreement have been duly authorized and, upon
issuance and delivery against payment therefor in accordance
with the terms hereof, will be duly and validly issued and
fully paid and nonassessable, and the holders thereof will not
be subject to personal liability by reason of being such
holders. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company's articles of
incorporation, by-laws or any agreement or other instrument
known to such counsel to which the Company is a party or by
which the Company is bound. To the best of such counsel's
knowledge, except as set forth in the Prospectus, neither the
filing of the Registration Statement nor the offering or sale
of the Shares as contemplated by this Agreement gives rise to
any rights for or relating to the registration of any shares
of Common Stock or other securities of the Company and no such
rights exist, other than those rights that have been waived
prior to the date hereof. To the best of such counsel's
knowledge, except as described in the Registration Statement
and Prospectus, there are no options, warrants, agreements,
contracts or rights in existence to purchase or acquire from
the Company any shares of capital stock of the Company.

(v) The Company has the requisite corporate power and
authority to enter into this Agreement and to issue, sell and
deliver to the Underwriters the Shares to be issued and sold
by it hereunder. This Agreement has been duly authorized by
all necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the
Representative on behalf of the Underwriters, is a valid,
legal and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification
and contribution provisions may be limited by applicable law
and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights
generally or by general equitable principles.

(vi) The Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
has been instituted or is pending or threatened under the
Securities Act.

(vii) The Registration Statement and the Prospectus, and each
amendment thereof or supplement thereto, (other than the
financial statements, including the notes thereto and the
supporting schedules, and other financial, numerical,
statistical and accounting data derived therefrom, as to which
such counsel need express no opinion), comply as to form in
all material respects with the requirements of the Securities
Act and the Rules and Regulations.

(viii) The form of certificates evidencing the Common Stock
and filed as an exhibit to the Registration Statement complies
with Nebraska law.

(ix) The description in the Registration Statement and the
Prospectus of the Company's articles of incorporation and
bylaws and of statutes, legal and governmental proceedings,
contracts and other documents are accurate in all material
respects and fairly present the information required to be
presented by the Securities Act and the applicable Rules and
Regulations; and such counsel does not know of any statutes or
legal or governmental proceedings required to be described in
the Prospectus that are not described as required, or of any
agreements, contracts, leases or documents of a character
required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which are not described or referred to
therein or filed as required.

(x) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated
do not result in any violation of the Company's articles of
incorporation or bylaws or, to the best of such counsel's
knowledge, result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any bond,
debenture, note or other evidence of indebtedness, or any
material lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other material agreement or
instrument known to such counsel to which the Company is a
party or by which its properties are bound, or any applicable
statute, rule or regulation known to such counsel or, to the
best of such counsel's knowledge, any order, writ or decree of
any court, government or governmental agency or body having
jurisdiction over the Company or the Subsidiaries or other any
of their material properties or operations.

(xi) To the best of such counsel's knowledge, no consent,
approval, authorization or order of, or filing with, or
qualification with, any court, government or governmental
agency or body is necessary in connection with the execution,
delivery and performance of this Agreement or for the
execution, delivery and performance of this Agreement or for
the consummation of the transactions herein contemplated,
except such as have been obtained under the Securities Act or
such as may be required under state or other securities or
Blue Sky laws in connection with the purchase and the
distribution of the Shares by the Underwriters.

(xii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries of a character
required to be disclosed in the Registration Statement or the
Prospectus by the Securities Act or the Rules and Regulations,
other than those described therein.

(xiii) To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is presently (A) in
material violation of its respective articles of incorporation
or bylaws, (B) in breach or violation of any applicable
statute, rule or regulation known to such counsel or any
order, writ or decree of any court or governmental agency or
body, or (C) in breach of or otherwise in default in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note, loan agreement or any
other material contract, lease or other instrument to which
the Company is subject or by which it may be bound, or to
which any of the material assets or property of the Company is
subject.

(xiv) To the best of such counsel's knowledge, the Company
holds, and is operating in compliance in all material respects
with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any
government or self-regulatory body required for the conduct of
its business, and all such franchises, grants, authorizations,
licenses, permits, easements, consents, certifications and
orders are valid and in full force and effect.

(xv) On the basis of information obtained as a result of
discussions and meetings with officers and other
representatives of the Company, discussions with
representatives of the independent public accountants for the
Company in connection with the preparation of the Registration
Statement and the Prospectus, and the examination of other
information and documents requested by such counsel, nothing
has come to such counsel's attention that has caused them to
believe that the Registration Statement and any amendment
thereof, at the time it became effective and at all times
subsequent thereto up to and on that Closing Date, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that
the Prospectus, and any amendment or supplement thereto, at
the first date of its issuance and up to and at all times
subsequent thereto up to and on that Closing Date, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Such
counsel may further state that in making the foregoing
comments, such counsel does not intend them to include or
cover the financial statements and notes thereto and related
schedules and other financial, numerical, statistical and
accounting data contained or omitted from the Registration
Statement and any amendment or supplement thereto and the
Prospectus.

Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the States of Minnesota
and Nebraska, upon opinions of local counsel, and, as to questions of
fact, upon representations or certificates of officers of the Company
or its Subsidiaries and of government officials, in which case their
opinion is to state the extent of such reliance. Copies of any opinion,
representation or certificate so relied upon shall be delivered to the
Representative and to Underwriters' Counsel.

(f) On each Closing Date, the Underwriters shall have received the
opinion of Brown, Martin, Haller and McClain LLP, intellectual property
and patent counsel for the Company, dated as of such Closing Date,
satisfactory in form and substance to the Underwriters and
Underwriters' Counsel, to the effect that:

(i) To the best of such counsel's knowledge, neither the
Company nor any Subsidiary requires any United States or
foreign patent for the conduct of its business as presently
conducted, except as may be disclosed in the Registration
Statement and Prospectus;

(ii) The Company has not received any notice of claim by a
third party asserting infringement or violation of its
Proprietary Rights, and such counsel is not aware that the
Company or any Subsidiary is infringing or otherwise violating
the Proprietary Rights of others; and

(iii) Such counsel has reviewed the Registration Statement and
Prospectus and each amendment and supplement thereto filed by
the Company prior to such Closing Date, and such counsel has
no reason to believe that insofar as concerns Proprietary
Rights owned by or affecting the business or operations of the
Company and any Subsidiary, either the Registration Statement
or the Prospectus or any amendment or supplement thereto
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein
not misleading.

(g) The Underwriters shall have received from Winthrop & Weinstine,
P.A., Underwriters' Counsel, such opinion or opinions as the
Underwriters may reasonably require, dated as of the First Closing Date
and the Second Closing Date, which are satisfactory in form and
substance to the Underwriters, with respect to the sufficiency of
corporate proceedings and other legal matters relating to this
Agreement and the transactions contemplated hereby, and the Company
shall have furnished to Underwriters' Counsel such documents as it may
have requested for the purpose of enabling it to pass upon such
matters. In connection with such opinion, as to matters of fact
relevant to conclusions of law, Underwriters' Counsel may rely, to the
extent that it deems proper, upon representations or certificates of
public officials and of responsible officers of the Company.

(h) At the time of execution of this Agreement, the Underwriters shall
have received from Ernst & Young LLP a letter dated the date of such
execution, in form and substance satisfactory to the Representative, to
the effect that they are independent accountants with respect to the
Company within the meaning of the Securities Act and the applicable
published instructions, and the Rules and Regulations thereunder, and
further stating in effect that:

(i) In their opinion, the audited financial statements
included in the Registration Statement and Prospectus covered
by their report included therein comply as to form in all
material respects with the applicable requirements of the
Securities Act, the published instructions and the Rules and
Regulations.

(ii) On the basis of (A) a reading of the minutes of the
shareholders' and directors' meetings of the Company since
_____________, (B) inquiries of certain officials of the
Company responsible for financial and accounting matters, (C)
a reading of the Company's monthly operating statements
subsequent to _____________, and (D) other specified
procedures and inquiries (but not an audit in accordance with
generally accepted accounting principles), nothing came to
their attention causing them to believe that:

(1) the unaudited consolidated financial statements
of the Company and its Subsidiaries contained in the
Prospectus and any amendment thereof or supplement
thereto do not comply as to form, in all material
respects, with the applicable accounting requirements
of the Securities Act and the published Rules and
Regulations or were not prepared in conformity with
generally accepted accounting principles and
practices applied on a basis consistent in all
material respects with those followed in the
preparation of the audited consolidated financial
statements of the Company and its Subsidiaries
included therein; or

(2) the unaudited consolidated amounts of revenues,
income before provision for income taxes, net income
and ratio of earnings to fixed charges of the Company
and its Subsidiaries, if any, contained in the
Prospectus, or any amendment thereof or supplement
thereto, were not derived from consolidated financial
statements prepared in conformity with generally
accepted accounting principles and practices applied
on a basis consistent in all material respects with
those followed in the preparation of the audited
consolidated financial statements of the Company and
its Subsidiaries included therein; or

(3) the unaudited pro forma consolidated financial
statements of the Company and its Subsidiaries and
recently-acquired companies, if any, contained in the
Prospectus or any amendment thereof or supplement
thereto, were not properly compiled in accordance
with generally accepted accounting principles or did
not provide for all adjustments necessary for a fair
presentation of the information purported to be shown
thereby; or

(4) with respect to the period subsequent to
___________, there were, at a specified date, not
more than five (5) business days prior to the date of
the letter, any changes or any material increases or
decreases in capital stock, long-term or short-term
debt or shareholders' equity, decreases in net
assets, net current assets, or net worth or any
material decrease, as compared with the corresponding
period of the prior year, in revenues or net income
of the Company as compared with the amounts shown in
the consolidated balance sheet included in the
Registration Statement, except as disclosed or
referred to in the Prospectus and Registration
Statement.

(iii) Certain information set forth on the cover of the
Prospectus and page ____ of the Prospectus and in the
Prospectus under the headings ___________________ and that are
expressed in dollars (or percentages derived from dollar
amounts) or numbers have been compared to accounting records
of the Company which were subject to the internal accounting
controls of the Company and are in agreement with such records
or computations made therefrom, excluding any questions of
legal interpretation.

(i) The Underwriters shall have received from Ernst & Young LLP a
letter dated as of each Closing Date to the effect that such
accountants reaffirm, as of such Closing Date, and as though made on
such Closing Date, the statements made in the letter furnished by such
accountants pursuant to Section 5(g), except that the specified date
referred to in such letter will be a date not more than five (5)
business days prior to such Closing Date.

(j) The Underwriters shall have received from the Company a
certificate, dated as of the First Closing Date and the Second Closing
Date, of the principal executive officer and the principal financial or
accounting officer of the Company, to the effect that:

(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of such
Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at, or prior to, such Closing Date;

(ii) No stop order or other order suspending the effectiveness
of the Registration Statement or any amendment thereof or the
qualification of the Shares for offering or sale has been
issued, and no proceedings for that purpose has been
instituted or, to the best of their knowledge, is contemplated
by the SEC or any state or regulatory body; and

(iii) The signers of said certificate have carefully examined
the Registration Statement and the Prospectus and any
amendments thereof or supplements thereto, and (A) such
documents contain all statements and information required to
be included therein; the Registration Statement, or any
amendment thereof, does not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading; and the Prospectus, as amended or
supplemented, does not include any untrue statement of
material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; (B) since the
Effective Date of the Registration Statement, there has
occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; (C)
subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or material
obligations, direct or contingent, or entered into any
material transactions, not in the ordinary course of business
consistent with past practice, or declared or paid any
dividends or made any distribution of any kind with respect to
its capital stock, or entered into any agreement, arrangement
or understanding (whether written or oral) whereby the
consummation of a merger, exchange or similar business
combination with any other person or entity or the purchase of
the assets, securities, or business of any other person or
entity has become likely or probable, and except as disclosed
in the Prospectus, there has not been any change in the
capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants or
pursuant to employee benefit plans described to in the
Registration Statement), or any material increase in the
short-term debt or long-term debt, or in the issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company, or any material
adverse change or any development involving a prospective
material adverse change (whether or not arising in the
ordinary course of business) in the general affairs, condition
(financial or otherwise), business, key personnel, property,
prospects, net worth or results of operations of the Company;
and (D) except as stated in the Registration Statement and
Prospectus, there is not pending or, to their knowledge,
threatened or contemplated, any action, suit or proceeding to
which the Company is a party before or by any court or
governmental agency, authority or body, or any arbitrator,
which might result in any material adverse change of the
condition (financial or otherwise), business, prospects, or
results of operations of the Company.

(k) On each Closing Date, there shall have been furnished to you a
certificate of Secretary of the Company, dated as of such Closing Date,
with the documents listed herein attached, and to the effect and
certifying as follows:

(i) Attached thereto are true and correct copies of the
articles of incorporation of the Company, as amended to the
date of the certificate, and stating that there have been no
changes or amendments to the attached articles of
incorporation of the Company, and no resolutions have been
adopted by the Board of Directors or shareholders of the
Company relating to (A) the amendment of said articles of
incorporation, (B) the merger, consolidation or dissolution of
the Company, or (C) the sale of all or substantially all of
the assets or business of the Company, and that the Company is
in good standing in the State of Nebraska and has paid all of
its corporate franchise taxes due as of the date of such
certificate.

(ii) Attached thereto is a true and correct copy of the bylaws
of the Company as in effect as of the date of such certificate
and no resolutions have been adopted by the Board of Directors
or shareholders of the Company relating to changes or
amendments to the attached Bylaws.

(iii) Attached thereto are true and correct copies of the
resolutions of the Board of Directors of the Company relating
to the preparation and signing of the Registration Statement
and this Agreement, the issuance and sale of the Shares and
other related matters, and such resolutions have not been
amended, modified or rescinded and are in full force and
effect as of the date of such certificate and are the only
resolutions adopted by the Board of Directors of the Company
with respect to the offering contemplated by the Registration
Statement.

(iv) Attached thereto are true and correct copies of all
material correspondence with respect to the Registration
Statement and Prospectus and related matters between the
Company, its counsel, and/or Ernst & Young LLP, on the one
hand and the SEC on the other.

(v) This Agreement, as executed and delivered by the Company,
is in the form presented to and approved by officers
authorized to do so by the Board of Directors of the Company.

(vi) Attached thereto is a specimen of the certificate for the
Common Stock in the form authorized and approved for use by
the Board of Directors of the Company.

(vii) The persons who have signed the Registration Statement
and all amendments thereto were duly elected at the respective
times of such signing and duly acting as officers and
directors of the Company or as an attorney-in-fact therefor,
as set forth in the Registration Statement.

(l) The Underwriters shall have received from each of the officers and
directors of the Company, and each of such shareholders of the Company
as the Representative shall identify in its discretion, a written
agreement in the form of Appendix A hereto whereby each such person
agrees that during the Lock-up Period such person will not, without the
Representative's prior written consent, effect the Disposition of any
Securities now owned or hereafter acquired directly or indirectly by
such person other than by gift to donees who agree to be bound by the
same restriction or by will or the laws of descent.

(m) The Common Stock of the Company shall be included and quoted on The
Nasdaq SmallCap Market.

(n) Dorsey & Whitney LLP shall deliver to the Representative a Blue Sky
Memorandum reasonably satisfactory to the Representative confirming
that all requisite actions for the offer and sale of the Shares in all
jurisdictions requested by the Representative have been taken.

(o) The Company shall have furnished to the Representative and to
Underwriters' Counsel such additional certificates, documents and
evidence as the Representative shall reasonably request.

All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to the Representative and Underwriters' Counsel. All statements
contained in any certificate, letter or other document delivered pursuant hereto
by, or on behalf of, the Company shall be deemed to constitute representations
and warranties of the Company.

The Representative may waive in writing the performance of any
one or more of the conditions specified in this Section 5 or extend the time for
their performance.

If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled and
if the fulfillment of said condition has not been waived by the Representative,
this Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, each Closing Date by the Representative on behalf
of the Underwriters. Any such cancellation shall be without liability of the
Underwriters to the Company and shall not relieve the Company of its obligations
under Section 4(a) hereof. Notice of such cancellation shall be given to the
Company at the address specified in Section 12 hereof in writing, or by
telegraph or telephone confirmed in writing.

6. Representative's Warrants. In consideration of the agreement of the
Representative to act as an Underwriter and as Representative of the
Underwriters, and upon payment of a purchase price of $______, on the First
Closing Date the Company will issue and deliver to the Representative, for its
account, the Representative's Warrants to purchase Shares in an amount equal to
ten percent (10%) of the number of Firm Shares purchased by the Underwriters in
the offering. The Representative's Warrants shall be issued on the First Closing
Date and shall be dated as of the Effective Date. The Representative's Warrants
shall be exercisable commencing one year after the Effective Date and for a
period of five years after the Effective Date at a price equal to 120% of the
Price to Public per Share set forth on the cover page of the Prospectus. As to
other terms, the Representative's Warrants shall be in form and substance
substantially the same as Appendix B hereto. The Company represents and warrants
that the Representative's Warrants have been duly authorized and, when granted
and delivered in accordance with the terms hereof, will be valid, binding and
enforceable obligations of the Company; the securities issuable upon exercise of
the Representative's Warrants have been duly authorized and reserved for
issuance upon exercise; and upon receipt by the Company of the consideration for
such securities in accordance with the terms of the Representative's Warrants,
the Warrant Shares shall have been duly and validly issued, fully paid and
nonassessable.

7. Indemnification.

(a) The Company hereby agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or each such controlling person may become subject under
the Securities Act, the Exchange Act, the common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of, or are based upon, (i) any breach of any
representation, warranty, agreement or covenant of the Company
contained in this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or supplement thereto, or the
omission or alleged omission to state in the Registration Statement or
any amendment thereof or supplement thereto a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; (iii)
any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, if used prior to the Effective
Date of the Registration Statement, or in the Prospectus (as amended or
as supplemented, if the Company shall have filed with the SEC any
amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iv) any
untrue statement or alleged untrue statement of a material fact
contained in any application or other statement executed by the Company
or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Shares under, or exempt the Shares
or the sale thereof from qualification under, the securities laws of
such jurisdiction, or the omission or alleged omission to state in such
application or statement a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or
controlling person in connection with investigating or defending
against any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with written information relating to any Underwriter furnished to the
Company by such Underwriter or through you specifically for use in the
preparation of the Registration Statement or any such post-effective
amendment thereof, any such Preliminary Prospectus, or the Prospectus,
or any such amendment thereof or supplement thereto, or in any
application or other statement executed by the Company or the
Underwriters filed in any jurisdiction in order to qualify the Shares
under, or exempt the Shares or the sale thereof from qualification
under, the securities laws of such jurisdiction; and provided further
that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary
Prospectus but eliminated or remedied in the Prospectus, such indemnity
agreement shall not inure to the benefit of an Underwriter if the
person asserting any loss, claim, damage or liability purchased the
Shares from such Underwriter which is the subject thereof (or to the
benefit of any person who controls such Underwriter), if a copy of the
Prospectus was not sent or given to such person with, or prior to, the
written confirmation of the sale of such Shares to such person. This
indemnity agreement is in addition to any liability which the Company
may otherwise have.

(b) Each Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the
Registration Statement, and each person who controls the Company within
the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject under the
Securities Act, the Exchange Act, the common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof or supplement thereto,
or the omission or alleged omission to state in the Registration
Statement or any amendment thereof or supplement thereto, a material
fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus,
if used prior to the Effective Date of the Registration Statement, or
in the Prospectus (as amended or as supplemented, if the Company shall
have filed with the SEC any amendment thereof or supplement thereto),
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; or (iii) any untrue statement or alleged untrue
statement of a material fact contained in any application or other
statement executed by the Company or by the Underwriters and filed in
any jurisdiction in order to qualify the Shares under, or exempt the
Shares or the sale thereof from qualification under, the securities
laws of such jurisdiction, or the omission or alleged omission to state
in such application or statement a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company by, or on behalf of, the Underwriters specifically for use
in the preparation of the Registration Statement or any such
post-effective amendment thereof, any such Preliminary Prospectus, or
the Prospectus or any such amendment thereof or supplement thereto, or
in any application or other statement executed by the Company or by the
Underwriters and filed in any jurisdiction; and the Underwriters will
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, or controlling person in
connection with investigating or defending against any such loss,
claim, damage, liability or action. This indemnity agreement is in
addition to any liability which the Underwriters may otherwise have.

(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7, notify in writing the
indemnifying party of the commencement thereof. The omission so to
notify the indemnifying party will relieve it from any liability under
this Section 7 as to the particular item for which indemnification is
then being sought, but not from any other liability which it may have
to any indemnified party. In case any such action is brought against
any indemnified party, and the indemnified party notifies an
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel who shall be reasonably
satisfactory to such indemnified party; and after notice from the
indemnifying party to such indemnified party of the indemnifying
party's election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section 7
for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that if the
defendants in any such action include both the indemnified party and
the indemnifying party, and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties, in which event the fees
and expenses of such separate counsel shall be borne by the
indemnifying party. Any such indemnifying party shall not be liable to
any such indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party.

8. Contribution.

(a) In order to provide for just and equitable contribution in any
action in which the Underwriters or the Company (or any person who
controls the Underwriters or the Company within the meaning of Section
15 of the Securities Act) makes claim for indemnification pursuant to
Section 7 hereof, but such indemnification is unavailable or
insufficient to hold harmless and indemnify a party under Section 7,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in Section 7 above (i) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from
the offering of the Shares hereunder or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in such clause (i) but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the
Shares (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8 were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to in the first sentence of this Section 8. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the
subject of this Section 8. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 8 to contribute are several
in proportion to the respective underwriting obligations and not joint.

(b) Promptly after receipt by a party to this Agreement of notice of
the commencement of any action, suit or proceeding, such person will,
if a claim for contribution in respect thereof is to be made against
another party (the "Contributing Party"), notify the Contributing Party
of the commencement thereof; but the omission so to notify the
Contributing Party will not relieve the Contributing Party from any
liability which it may have to any party other than under this Section
8. Any notice given pursuant to Section 7 hereof shall be deemed to be
like notice hereunder. In case any such action, suit or proceeding is
brought against any party, and such person notifies a Contributing
Party of the commencement thereof, the Contributing Party will be
entitled to participate therein with the notifying party and any other
Contributing Party similarly notified.

9. Effective Date of this Agreement and Termination.

(a) This Agreement shall become effective immediately after the time at
which the Registration Statement shall become effective under the
Securities Act.

(b) Until the First Closing Date, this Agreement may be terminated by
the Representative on behalf of the Underwriters, at its option, by
giving notice to the Company, and the option referred to in Section
2(b), if exercised, may be cancelled at any time prior to the Second
Closing Date, if (i) the Company shall have failed, refused, or been
unable, at or prior to such Closing Date, to perform any agreement on
its part to be performed hereunder, (ii) any other condition of the
Underwriters' obligations hereunder is not fulfilled or waived by the
Representative, (iii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or in the over-the-counter
market shall have been suspended, (iv) minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for
securities shall be required, on the New York Stock Exchange, Nasdaq,
the American Stock Exchange, or in the over-the-counter market, by such
Exchange or by Nasdaq or by order of the SEC or any other governmental
authority having jurisdiction, (v) a banking moratorium shall have been
declared by federal, New York, or Minnesota authorities, (vi) there
shall have been such a serious, unusual and material change in general
economic, monetary, political or financial conditions, or the effect of
international conditions on the financial markets in the United States
shall be such as, in the judgment of the Representative, makes it
inadvisable to proceed with the delivery of the Shares, (vii) the
enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of any court or other
governmental authority which, in the judgment of the Representative,
materially and adversely affects or will materially and adversely
affect the business or operations of the Company, or (viii) there shall
be a material outbreak of hostilities or material escalation and
deterioration in the political and military situation between the
United States and any foreign power, or a formal declaration of war by
the United States of America shall have occurred. Any such termination
shall be without liability of any party to any other party, except as
provided in Sections 7 and 8 hereof; provided, however, that the
Company shall remain obligated to pay costs and expenses to the extent
provided in Section 4 hereof.

(c) If the Representative elects to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this
Section 9, it shall notify the Company promptly by telegram or
telephone, confirmed by letter sent to the address specified in Section
12 hereof. If the Company shall elect to prevent this Agreement from
becoming effective, it shall notify the Underwriters promptly by
telegram or telephone, confirmed by letter sent to the addresses
specified in Section 12 hereof.

10. Default by the Company. If the Company shall fail at the First Closing Date
to sell and deliver the number of Shares which it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.

11. Survival of Indemnities, Contribution Agreements, Warranties and
Representations. The respective indemnity and contribution agreements of the
Company and the Underwriters contained in Sections 7 and 8; the representations
and warranties of the Company set forth in Section 1 hereof; and the covenants
and agreements of the Company set forth in Section 3 hereof, shall remain
operative and in full force and effect, regardless of any investigation made by,
or on behalf of, the Underwriters, the Company, any of its officers and
directors, or any controlling person referred to in Sections 7 and 8, and shall
survive the delivery of and payment for the Shares. The aforesaid indemnity and
contribution agreements shall also survive any termination or cancellation of
this Agreement. Any successor of any party or of any such controlling person, or
any legal representative of such controlling person, as the case may be, shall
be entitled to the benefit of the respective indemnity and contribution
agreements.

12. Notices. All notices or communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telegraphed, and confirmed, as follows:

If to the Representative or
the Underwriters, to: R. J. Steichen & Company
Midwest Plaza, Suite 1100
801 Nicollet Mall
Minneapolis, Minnesota 55402
Attention: Patrick M. Sidders

with a copy to: Winthrop & Weinstine, P.A.
3000 Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Michele D. Vaillancourt

If to the Company, to: Eco Soil Systems, Inc.
10890 Thornmint Road, Suite 200
San Diego, California 92127
Attention: William B. Adams

with a copy to: Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Kenneth L. Cutler

13. Information Furnished by the Underwriters. The statements relating to the
stabilization activities of the Underwriters and the statements under the
caption "Underwriting" in any Preliminary Prospectus and in the Prospectus
constitute the written information furnished by, or on behalf of, the
Underwriters specifically for use with reference to the Underwriters referred to
in Section 1(a)(ii) and Section 7(a) hereof.

14. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors
and assigns, and the officers, directors and controlling persons referred to in
Sections 7 and 8. Nothing expressed in this Agreement is intended or shall be
construed to give any person or corporation, other than the parties hereto,
their respective successors and assigns, and the controlling persons, officers
and directors referred to in Sections 7 and 8 any legal or equitable right,
remedy or claim under, or in respect of, this Agreement or any provision herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective executors, administrators, successors, assigns and
such controlling persons, officers and directors, and for the benefit of no
other person or corporation. No purchaser of any Shares from the Underwriters
shall be construed a successor or assign merely by reason of such purchase.

15. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota.

If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed counterpart of this
Agreement, whereupon it will become a binding agreement among the Company and
the Underwriters in accordance with its terms.

Very truly yours,

ECO SOIL SYSTEMS, INC.

By__________________________________
Signature

____________________________________
Name Typed or Printed
Its ________________________________
Title Typed or Printed
ACCEPTANCE

The foregoing Underwriting Agreement is hereby confirmed and accepted by us, on
behalf of ourselves and the other several Underwriters named in Schedule I
hereto, as of the date first above written.

R. J. Steichen & Company
As Representative

By ____________________________________
Signature

_______________________________________
Name Type or Printed
Its____________________________________
Title Typed or Printed

SCHEDULE I

Number of
Underwriters Firm Shares (1)

R. J. Steichen & Company

----------
Total..........................................3,300,000
==========
- ------------------

(1) The Underwriters may purchase up to an additional 495,000 Option
Shares, to the extent the option described in Section 2(b) of the
Agreement is exercised, in the proportions and in the manner described
in the Agreement.

APPENDIX A

FORM OF "LOCK-UP" AGREEMENT

R. J. STEICHEN & COMPANY
Midwest Plaza, Suite 1100
801 Nicollet Mall
Minneapolis, MN 55402

Re: Eco Soil Systems, Inc.

Ladies and Gentlemen:

The undersigned, a beneficial owner of common stock (the "Common Stock") of Eco
Soil Systems, Inc. (the "Company"), understands and acknowledges that the
Company is intending to file with the Securities and Exchange Commission a
Registration Statement on Form SB-2 (the "Registration Statement") for the
registration of the offer and sale of shares of Common Stock, including shares
subject to the Underwriters' over-allotment option (collectively, the "Shares").
The undersigned further understands that the Company, as issuer, and R. J.
Steichen & Company, on behalf of the underwriters (collectively, the
"Underwriters") named in Schedule I to that certain proposed underwriting
agreement expected to be entered into in connection with the public offering of
the Shares by the Underwriters (the "Underwriting Agreement"), contemplate
entering into such Underwriting Agreement.

In order to induce the Underwriters to proceed with the public offering, the
undersigned agrees, for the benefit of the Company and the Underwriters, that
should such public offering be effectuated, the undersigned will not, without
the prior written consent of R. J. Steichen & Company, during the 180 days
commencing on the effective date of the Registration Statement:

(i) offer to sell, contract to sell, pledge, hypothecate, transfer
or otherwise dispose of, grant any rights with respect to
(collectively, a "Disposition"), any shares of Common Stock of
the Company, and options, warrants and other rights to
purchase any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for shares of
Common Stock now owned or hereafter acquired by the
undersigned (collectively, "Securities") or with respect to
which the undersigned has or hereafter acquires the power of
Disposition; or

(ii) effect any Disposition of any Securities

other than by gifts to donees who agree in writing to be bound by the same
restriction, or by will or the laws of descent, in which case the Securities
also will be subject to the same restriction.

The undersigned hereby agrees to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of the Securities except in
compliance with this Agreement.

Dated:_______________, 1996. Very truly yours,

_________________________________
Signature

_________________________________
Name Typed or Printed

APPENDIX B

FORM OF REPRESENTATIVE'S WARRANTS

ECO SOIL SYSTEMS, INC.

COMMON STOCK PURCHASE WARRANT

NO. _____ 330,000 SHARES

FOR GOOD AND VALUABLE CONSIDERATION, Eco Soil Systems, Inc., a
Nebraska corporation (the "Company"), hereby certifies that R. J. Steichen &
Company, Minneapolis, Minnesota (the "Representative"), or its registered
assigns, is entitled to subscribe for and purchase from the Company at any time
or from time to time after [ONE YEAR FROM EFFECTIVE DATE], to and including
[FIVE YEARS FROM EFFECTIVE DATE], Three Hundred Thousand (330,000) fully paid
and nonassessable shares of the Common Stock of the Company at the purchase
price of $_______ per share [120% OF INITIAL PUBLIC OFFERING PRICE] (the
"Warrant Exercise Price"), subject to adjustment as provided herein. Reference
is made to this Warrant in the Underwriting Agreement dated January ___, 1997 by
and between, among others, the Company and the Representative. As used herein,
(i) this warrant and all warrants hereafter issued in exchange or substitution
for this warrant are referred to as the "Warrants;" (ii) the shares which may be
acquired upon exercise of the Warrants are referred to herein as the "Warrant
Shares;" (iii) the term "Holder" means the Representative, any party who
acquires all or a part of this Warrant as a registered transferee of the
Representative, or any record holder or holders of the Warrant Shares issued
upon exercise, whether in whole or in part, of the Warrant; (iv) the term
"Common Stock" means and includes the Company's presently authorized common
stock, $.005 per share par value, together with any other equity securities
which may be issued by the Company with respect thereto or in substitution
therefor; and (v) the term "Convertible Securities" means any stock or other
securities convertible into, or exchangeable for, Common Stock.

This Warrant is subject to the following provisions, terms and
conditions, to which each Holder hereof consents and agrees:

1. Exercise; Transferability.

(a) The rights represented by this Warrant may be exercised by
the Holder hereof, in whole or in part (but not as to a fractional share of
Common Stock) by written notice of exercise (in the form attached hereto)
delivered to the Company at the principal office of the Company prior to the
expiration of this Warrant and accompanied or preceded by the surrender of this
Warrant along with a check in payment of the Warrant Exercise Price for the
Warrant Shares being acquired upon such exercise.

(b) Until exercisable, this Warrant may not be sold, assigned,
hypothecated, or otherwise transferred (other than by will, pursuant to the
operation of law, or where directed by a court of competent jurisdiction upon
the dissolution or liquidation of a corporate Holder hereof), except to (i) a
person who is both an officer and a shareholder of the Representative, (ii) a
successor in interest to the business of the Representative, (iii) a person who
is both an officer and a shareholder of a successor, or (iv) a person who is an
employee of the Representative or a successor, but only if such employee is also
an officer of the Representative or successor; such transfer to be by
endorsement (by the Holder hereof executing the form of assignment attached
hereto) and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery. Further, this Warrant may
not be sold, transferred, assigned, hypothecated or divided into two or more
Warrants of smaller denominations, nor may any Warrant Shares issued pursuant to
exercise of this Warrant be transferred, except as provided in Section 7 hereof.

2. Exchange and Replacement. Subject to Sections 1 and 7 hereof, this
Warrant is exchangeable upon the surrender hereof by the Holder to the Company
at its office for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of Warrant Shares purchasable
hereunder, each of such new Warrants to represent the right to purchase such
number of Warrant Shares (not to exceed the aggregate total number purchasable
hereunder) as shall be designated by the Holder at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction, or mutilation of this Warrant, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver a new Warrant of like tenor, in lieu of this Warrant;
provided, however, that if the Representative shall be such Holder, an agreement
of indemnity by such Holder shall be sufficient for all purposes of this Section
2. This Warrant shall be promptly canceled by the Company upon the surrender
hereof in connection with any exchange or replacement. The Company shall pay all
expenses, taxes (other than stock transfer taxes), and other charges payable in
connection with the preparation, execution, and delivery of Warrants pursuant to
this Section 2.

3. Issuance of the Warrant Shares.

(a) The Company agrees that the shares of Common Stock
purchased upon exercise of this Warrant shall be and are deemed to be issued to
the Holder as of the close of business on the date on which this Warrant shall
have been surrendered and the payment made for such Warrant Shares as aforesaid.
Subject to the provisions of Section 3(b), the Company shall deliver or cause to
be delivered to the Holder within a reasonable time, not exceeding fifteen (15)
calendar days after the rights represented by this Warrant shall have been so
exercised, certificates for the Warrant Shares so purchased, and, unless this
Warrant has expired, a new Warrant representing the right to purchase the number
of Warrant Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be delivered to the Holder within such time.

(b) Notwithstanding the foregoing, the Company shall not be
required to deliver any certificate for Warrant Shares upon exercise of this
Warrant except in accordance with exemptions from the applicable securities
registration requirements or registrations under applicable securities laws.
Nothing herein, however, shall obligate the Company to effect registrations
under federal or state securities laws, except as provided in Section 9. If
registrations are not in effect and if exemptions are not available when the
Holder seeks to exercise the Warrant, the Warrant exercise period will be
extended, if need be, to prevent the Warrant from expiring, until such time as
either registrations become effective or exemptions are available, and the
Warrant shall then remain exercisable for a period of at least 30 calendar days
from the date the Company delivers to the Holder written notice of the
availability of such registrations or exemptions. The Holder agrees to execute
such documents and make such representations, warranties, and agreements as may
be reasonably required solely to comply with the exemptions relied upon by the
Company, or the registrations made, for the issuance of the Warrant Shares.

4. Covenants of the Company. The Company covenants and agrees that all
Warrant Shares will, upon issuance, be duly authorized and issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant.

5. Antidilution Adjustments. The provisions of this Warrant are subject
to adjustment as provided in this Section 5.

(a) If the Company shall at any time after the date this
Warrant was first issued:

(i) declare a dividend on any class of stock of the
Company payable in Common Stock or securities convertible into
Common Stock;

(ii) subdivide its then outstanding shares of Common
Stock into a greater number of shares;

(iii) combine outstanding shares of Common Stock, by
reclassification or otherwise, into a smaller number of
shares; or

(iv) issue any shares of its capital stock by
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing corporation);

then, in any such event, the Warrant Exercise Price in effect at the time of
such record date for such dividend or of the effective date of such subdivision,
combination or reclassification, shall be adjusted immediately after such event
to a price (calculated to the nearest full cent) determined by dividing (A) the
number of shares of Common Stock outstanding immediately prior to such event,
multiplied by the then existing Warrant Exercise Price, by (B) the total number
of shares of Common Stock outstanding immediately after such event (including in
each case the maximum number of shares of Common Stock issuable in respect of
any securities convertible into Common Stock), and the resulting quotient shall
be the adjusted Warrant Exercise Price per share. An adjustment made pursuant to
this subsection shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination, reclassification
or other event. If, as a result of an adjustment made pursuant to this
subsection, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Company, the Company's
Board of Directors (whose determination shall be conclusive, absent manifest
error) shall determine in good faith the allocation of the adjusted Warrant
Exercise Price between or among shares of such classes of capital stock or
shares of Common Stock and other capital stock. Any adjustment made pursuant to
this Section 5(a) shall be made successively whenever any event described above
shall occur. All calculations under this subsection shall be made to the nearest
cent or to the nearest 1/100 of a share, as the case may be. In the event that
at any time as a result of an adjustment made pursuant to this subsection, the
holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive any shares of the Company other than shares of Common Stock,
thereafter the Warrant Exercise Price of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this subsection.

(b) If the Company shall distribute to all holders of Common
Stock (including any such distribution made to the shareholders of the Company
in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price (as hereinafter defined) at the record date for such distribution)
or assets (other than dividends payable in shares of its capital stock), or
rights, options, or warrants to subscribe for or purchase Common Stock or
securities convertible into or exchangeable for shares of Common Stock, then, in
each such case, the Warrant Exercise Price shall be adjusted by multiplying the
Warrant Exercise Price in effect immediately prior to the record date for the
determination of shareholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Current Market Price per share of
Common Stock on such record date, less the fair market value (as determined in
good faith by the Company's Board of Directors, whose determination shall be
conclusive, absent manifest error) of the portion of the evidences of
indebtedness or assets so to be distributed, or of such rights, options, or
warrants or convertible or exchangeable securities, or the amount of such cash,
applicable to one share, and the denominator of which shall be such Current
Market Price per share of Common Stock. Such adjustment shall be made whenever
any such distribution is made, and shall become effective on the record date for
the determination of shareholders entitled to receive such distribution.

(c) For the purpose of any computation under this Warrant, the
Current Market Price per share of Common Stock on any date shall be the average
of the daily closing prices for the 30 consecutive trading days immediately
preceding the date in question. The closing price for each day shall be the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the closing bid price regular way, in either case on the principal
national securities exchange (including, for purposes hereof, The Nasdaq
National Market) on which the Common Stock is listed or admitted to trading or,
if the Common Stock is not listed or admitted to trading on any national
securities exchange, the highest reported bid price for the Common Stock as
furnished by the National Association of Securities Dealers, Inc. through Nasdaq
or a similar organization if Nasdaq is no longer reporting such information. If,
on any such date, the Common Stock is not listed or admitted to trading on any
national securities exchange and is not quoted by Nasdaq or any similar
organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the Company's Board of Directors, whose
determination shall be conclusive, absent manifest error, shall be used.

(d) No adjustment in the Warrant Exercise Price shall be
required if such adjustment is less than $.05; provided, however, that any
adjustments which by reason of this Section 5 are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 5 shall be made to the nearest cent or to the
nearest whole share, as the case may be.

(e) In any case in which this Section 5 shall require that an
adjustment in the Warrant Exercise Price may be made effective as of a record
date for a specified event, the Company may elect to defer, until the occurrence
of such event, issuing to the Holder, if the Holder exercised or converted this
Warrant after such record date, the shares of Common Stock, if any, issuable
upon such exercise or conversion over and above the shares of Common Stock, if
any, issuable upon such exercise or conversion on the basis of the Warrant
Exercise Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to the Holder a due bill or other appropriate instrument
evidencing the Holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.

(f) Upon each adjustment of the Warrant Exercise Price
pursuant to Section 5(a) above, the Holder of each Warrant shall thereafter
(until another such adjustment) be entitled to purchase at the adjusted Warrant
Exercise Price the number of shares, calculated to the nearest full share,
obtained by multiplying the number of shares specified in such Warrant (as
adjusted as a result of all adjustments in the Warrant Exercise Price in effect
prior to such adjustment) by the Warrant Exercise Price in effect prior to such
adjustment and dividing the product so obtained by the adjusted Warrant Exercise
Price.

(g) In case of any consolidation or merger to which the
Company is a party other than a merger or consolidation in which the Company is
the continuing corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), there shall be no adjustment under
Subsection (a) of this Section above but the Holder of each Warrant then
outstanding shall have the right thereafter to convert such Warrant into the
kind and amount of shares of stock and other securities and property which he
would have owned or have been entitled to receive immediately after such
consolidation, merger, statutory exchange, sale, or conveyance had such Warrant
been converted immediately prior to the effective date of such consolidation,
merger, statutory exchange, sale, or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the application of the
provisions set forth in this subsection with respect to the rights and interests
thereafter of any Holders of the Warrant, to the end that the provisions set
forth in this subsection shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares of stock and other
securities and property thereafter deliverable on the exercise of the Warrant.
The provisions of this subsection shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances.

(h) Upon any adjustment of the Warrant Exercise Price, then
and in each such case, the Company shall (i) give written notice thereof, by
registered mail, postage prepaid, within ten (10) calendar days after the date
when the circumstances giving rise to the adjustment occurred, addressed to the
Holder as shown on the books of the Company, which notice shall state the
Warrant Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock purchasable at such
price upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based; and
(ii) prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new Warrant Exercise Price.

6. No Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company.

7. Notice of Transfer of Warrant or Resale of the Warrant Shares.

(a) Subject to the sale, assignment, hypothecation, or other
transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance
hereof, agrees to give written notice to the Company before transferring this
Warrant or transferring any Warrant Shares of such Holder's intention to do so,
describing briefly the manner of any proposed transfer. Promptly upon receiving
such written notice, the Company shall present copies thereof to the Company's
counsel and to counsel to the original purchaser of this Warrant. If, in the
opinion of each such counsel, the proposed transfer may be effected without
registration or qualification (under any federal or state securities laws), the
Company, as promptly as practicable, shall notify the Holder of such opinion,
whereupon the Holder shall be entitled to transfer this Warrant or to dispose of
Warrant Shares received upon the previous exercise of this Warrant, all in
accordance with the terms of the notice delivered by the Holder to the Company;
provided that an appropriate legend may be endorsed on this Warrant or the
certificates for such Warrant Shares describing restrictions upon transfer
thereof necessary or advisable in the opinion of counsel and satisfactory to the
Company to prevent further transfers which would be in violation of Section 5 of
the Securities Act of 1933, as amended (the "Securities Act") and applicable
state securities laws; and provided further that the prospective transferee or
purchaser shall execute such documents and make such representations,
warranties, and agreements as may be required solely to comply with the
exemptions relied upon by the Company for the transfer or disposition of the
Warrant or Warrant Shares.

(b) If, in the opinion of either of the counsel referred to in
this Section 7, the proposed transfer or disposition of this Warrant or such
Warrant Shares described in the written notice given pursuant to this Section 7
may not be effected without registration or qualification of this Warrant or
such Warrant Shares, the Company shall promptly give written notice thereof to
the Holder, and the Holder will limit its activities in respect to such transfer
or disposition as, in the opinion of both such counsel, are permitted by law.

(c) Until this Warrant is duly transferred on the books of the
Company, the Company shall treat the registered Holder of this Warrant as
absolute owner hereof for all purposes without being affected by any notice to
the Company.

8. Fractional Shares. Fractional shares shall not be issued upon the
exercise of this Warrant, but in any case where the holder would, except for the
provisions of this Section, be entitled under the terms hereof to receive a
fractional share, the Company shall, upon the exercise of this Warrant for the
largest number of whole shares then called for, pay a sum in cash equal to the
sum of (a) the excess, if any, of the "Fair Market Value" (as defined in Section
10(d) hereof) of such fractional share over the proportional part of the Warrant
Exercise Price represented by such fractional share, plus (b) the proportional
part of the Warrant Exercise Price represented by such fractional share.

9. Registration Rights.

(a) The Company agrees that, if at any time (but on a one-time
basis only) during the period commencing one year from the date of this Warrant
and ending five (5) years from [DATE OF EFFECTIVENESS], and provided that a
Registration Statement on Form S-3 (or any successor or equivalent form) is then
available to the Company, the Holder of this Warrant and/or the Holders of any
other Warrants and/or Warrant Shares who collectively shall hold not less than
50% of the Warrants and/or Warrant Shares outstanding at such time and not
previously sold pursuant to this Section 9, shall request that the Company file
a registration statement covering all or any part of the Warrant Shares:

(i) the Company will promptly notify the Holder and
all other registered Holders, if any, of other Warrants and/or Warrant
Shares that such registration statement will be filed and that the
Warrant Shares which are then held and/or which may be acquired upon
the exercise of the Warrants by the Holder and such other Holders will
be included in such registration statement at the Holder's and such
Holders' request; and

(ii) the Company will cause such registration
statement to include all Warrant Shares which it has been so requested
to include, will take all necessary steps to register or qualify such
Warrant Shares under the Securities Act and the securities laws of such
states as the holders may reasonably request, and will use its best
efforts to cause such registration statement and qualifications to
become effective as soon as practicable.

The Company shall keep effective and maintain any registration, qualification,
notification, or approval specified in this Section 9(a) for such period as may
be reasonably necessary for such Holder or Holders of such Warrant Shares to
dispose thereof and from time to time shall amend or supplement the prospectus
used in connection therewith to the extent necessary in order to comply with
applicable law; provided, that the Company need not maintain the effectiveness
of any such registration, qualification, notification or approval, whether or
not at the request of the Holders, more than nine (9) months following the
effective date thereof. Notwithstanding the provisions of this Section 9(a), the
Company shall not be required to file a registration statement covering all or
any part of the Warrant Shares as required by this Section 9(a) if the Company's
Board of Directors or other governing body determines in good faith and by at
least the requisite vote required for such matters that such filing of a
Registration Statement would not be in the best interests of the Company and its
shareholders. If a request for registration is submitted pursuant to this
Section 9(a) and either a Registration Statement is not filed, or a Registration
Statement is filed but is not declared effective by the Securities and Exchange
Commission or any state securities authority within ninety (90) days after
filing and such Registration Statement is withdrawn at the request of the
Holders of at least a majority of the Warrant Shares covered by such
Registration Statement, the right of the Holders to again request registration
of the Warrant Shares under this Section 9(a) shall not be prejudiced or
otherwise affected.

(b) The Company agrees that, if at any time and from time to
time during the period commencing one year from the date of this Warrant and
ending seven (7) years from [DATE OF EFFECTIVENESS], the Company proposes to
file a registration statement under the Securities Act (other than a Form S-4 or
Form S-8 Registration Statement or any successor forms thereto) or qualify for a
public distribution under Section 3(b) of the Securities Act, any of its
securities in connection with the proposed offer of such securities by the
Company or any of its shareholders:

(i) the Company will promptly notify the Holder and
all other registered Holders, if any, of other Warrants and/or Warrant
Shares, at least thirty (30) days prior to each such filing, that it
intends to file such registration statement or effect such
qualification, and that the Warrant Shares which are then held and/or
which may be acquired upon the exercise of the Warrants by the Holder
and such other Holders will be included in such registration statement
or qualification at the Holder's and such Holders' request; and

(ii) the Company will use its best efforts to cause
such registration statement or qualification to include all Warrant
Shares which it has been so requested to include; provided, however,
that in an offering that is underwritten, if a greater number of
Warrant Shares is offered for participation in the proposed offering
than in the reasonable opinion of the managing underwriter of the
proposed offering can be accommodated without adversely affecting the
proposed offering, then the amount of Warrant Shares proposed to be
offered by such Holders for registration, as well as the number of
securities of any other selling shareholders participating in the
registration, shall be proportionately reduced to a number deemed
satisfactory by the managing underwriter.

The Holder and such other Holders may request that their Warrant Shares be
included in such registration statement or qualification by making written
request to the Company specifying the number of Warrant Shares to be so
included. Such request shall be made within twenty (20) days after receipt from
the Company of notice of such intended registration or qualification.

(c) With respect to each inclusion of securities in a
registration or qualification pursuant to this Section 9, the Company shall bear
all fees, costs, and expenses thereof, including, without limitation, all filing
fees, fees imposed by the National Association of Securities Dealers, Inc.,
printing expenses, fees and disbursements of counsel and accountants for the
Company, fees and disbursements of counsel for the underwriter or underwriters
of such securities (if the Company is required to bear such fees and
disbursements), all internal expenses, the premiums and other costs of policies
of insurance against liability arising out of the public offering, and legal
fees and disbursements and other expenses of complying with state securities
laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Notwithstanding the foregoing, fees and disbursements
of special counsel and accountants for the selling Holders, underwriting
discounts and commissions attributable to the Warrant Shares to be sold, and
transfer taxes for selling Holders shall be borne by the selling Holders.

(d) The Company will furnish the Holders whose Warrant Shares
are included in a registration or qualification pursuant to this Section 9 with
a reasonable number of copies of any prospectus and/or other offering materials
included in such filings and will amend or supplement the same as required
during the period of required use thereof. In connection with any registration
filed or qualification made pursuant to this Section 9 in which Warrant Shares
are included, and to the extent permissible under the Securities Act and
controlling precedent thereunder, the Company and each Holder whose Warrant
Shares are so included in such registration or qualification shall provide
cross-indemnification agreements to each other in customary scope covering the
accuracy and completeness of the information furnished by each in connection
therewith.

(e) Each Holder of Warrant Shares included in a registration
or qualification pursuant to this Section 9 agrees to cooperate with the Company
in the preparation and filing of any such registration statement or other
offering materials and in the furnishing of information concerning the Holder
for inclusion therein, or in any efforts by the Company to establish that the
proposed sale is exempt under the Securities Act as to any proposed
distribution.

10. Right to Convert.

(a) The Holder of this Warrant shall have the right (but not
the obligation) to require the Company to convert this Warrant (the "Conversion
Right"), at any time after one year from the date of this Warrant and prior to
its expiration, into shares of Common Stock as provided for in this Section 10.
Upon exercise of the Conversion Right by the Holder, the Company shall deliver
to the Holder (without payment by the Holder of any exercise price) that number
of shares of Common Stock equal to the quotient obtained by dividing (i) the
value of the Warrant at the time the Conversion Right is exercised (determined
by subtracting the aggregate Warrant Exercise Price for the Warrant Shares in
effect immediately prior to the exercise of the Conversion Right from the
aggregate "Fair Market Value" (as determined below) for the Warrant Shares
immediately prior to the exercise of the Conversion Right) by (ii) the Fair
Market Value of one share of Common Stock immediately prior to the exercise of
the Conversion Right.

(b) The Conversion Right may be exercised by the Holder, at
any time or from time to time, prior to its expiration, on any business day, by
delivering a written notice (the "Conversion Notice") to the Company at the
offices of the Company exercising the Conversion Right and specifying (i) the
total number of shares of Common Stock the Holder will purchase pursuant to such
conversion, and (ii) a place, and a date not less than five (5) nor more than
twenty (20) business days from the date of the Conversion Notice, for the
closing of such purchase.

(c) At any closing under Section 10(b) hereof, (i) the Holder
will surrender the Warrant, (ii) the Company will deliver or cause to be
delivered to the Holder a certificate or certificates for the number of shares
of Common Stock issuable upon such conversion, together with cash, in lieu of
any fraction of a share, and (iii) the Company will deliver to the Holder a new
Warrant representing the number of shares of Common Stock, if any, with respect
to which the Warrant shall not have been converted.

(d) "Fair Market Value" of a share of Common Stock as of a
particular date (the "Determination Date") shall mean:

(i) If the Company's Common Stock is traded on an
exchange or is quoted on The Nasdaq National Market or The Nasdaq
SmallCap Market, then the average closing or last sale prices,
respectively, reported for the ten (10) business days immediately
preceding the Determination Date.

(ii) If the Company's Common Stock is not traded on
an exchange or on The Nasdaq National Market or The Nasdaq SmallCap
Market but is traded in the over-the-counter market, then the average
of the closing bid and asked prices as reported by Metro Data Company,
Inc. (or a similar organization) from quotations by market makers in
such Common Stock on the Minneapolis-St. Paul local over-the-counter
market for the ten (10) business days immediately preceding the
Determination Date.

11. Miscellaneous. The Company shall not, by amendment of its articles
of incorporation or through reorganization, consolidation, merger, dissolution
or sale of assets, or by any other voluntary act or deed, avoid or seek to avoid
the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Company, but will, at
all times in good faith, assist, insofar as it is able, in the carrying out of
all provisions hereof and in the taking of all other action which may be
necessary in order to protect the rights of the Holders against dilution.

Upon written request of the Holder of this Warrant, the Company will
promptly provide such Holder with a then current written list of the names and
addresses of all Holders of warrants originally issued under the terms of, and
concurrent with, this Warrant.

The representations, warranties and agreements herein contained shall
survive the exercise of this Warrant. This Warrant shall be interpreted under
the laws of the State of Minnesota.

IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer and to be dated ___________, 1997.

ECO SOIL SYSTEMS, INC.

By____________________________________
Signature
______________________________________
Name Typed or Printed

Its___________________________________
Title Typed or Printed

NOTICE OF EXERCISE OF WARRANT

(To be signed upon the exercise of the Warrant for cash or by check)

The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder, for cash, ________________ of the shares of
Common Stock of Eco Soil Systems, Inc. issuable upon the exercise of such
Warrant, herewith makes payment of $___________ therefor in cash or by check,
and requests that certificates for such shares (together with a new Warrant to
purchase the number of shares, if any, with respect to which this Warrant is not
exercised) be issued in the name set forth below and be delivered to the address
set forth below.

Dated: _______________________

___________________________________
(Signature)

___________________________________
(Name Typed or Printed)

___________________________________
(Address)

___________________________________
(Social Security or Tax Ident. No.)

* The signature on the Notice of Exercise of Warrant must exactly
correspond to the name as written upon the face of the Warrant in every
particular without alteration or any change whatsoever. When signing on
behalf of a corporation, partnership, trust or other entity, PLEASE
indicate your position(s) and title(s) with such entity.

NOTICE OF WARRANT CONVERSION

(To be signed only upon conversion of warrant)

The undersigned hereby irrevocably elects to exercise the conversion
right provided in Section 10 of the attached Warrant and to purchase thereunder
_____________ Shares of the Common Stock of Eco Soil Systems, Inc. to which such
Warrant relates and herewith tenders the Warrant in full payment of the shares
and requests that the certificates for such shares be issued in the name of, and
be delivered to _________________________, whose address is set forth below the
signature of the undersigned.

Dated: _______________________

___________________________________
(Signature)

___________________________________
(Name Typed or Printed)

___________________________________

___________________________________
(Address)

* The signature on the Assignment of Warrant must exactly correspond to
the name as written upon the face of the Warrant in every particular
without alteration or any change whatsoever. When signing on behalf of
a corporation, partnership, trust or other entity, PLEASE indicate your
position(s) and title(s) with such entity.

ASSIGNMENT OF WARRANT

(To be signed only upon authorized transfer of the Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto _________________________________ the right to purchase
_______________ shares of the Common Stock of Eco Soil Systems, Inc. to which
the within Warrant relates and appoints _________________________________, as
attorney-in-fact, to transfer said right on the books of Eco Soil Systems, Inc.
with full power of substitution in the premises.

Dated: ______________________

___________________________________
(Signature)

___________________________________
(Name Typed or Printed)

___________________________________
(Address)

___________________________________
(Social Security or Tax Ident. No.)

RESTRICTION ON TRANSFER

The security evidenced hereby has not been registered under the
Securities Act of 1933, as amended, or any state securities laws and may not be
sold, transferred, assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such act or laws
covering such security or the company receives an opinion of counsel for the
Company stating that such sale, transfer, assignment, pledge or distribution is
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended, and all applicable state securities laws.

3,300,000 Shares1

ECO SOIL SYSTEMS, INC.

Common Stock

SELECTED DEALERS' AGREEMENT

Gentlemen:

1. R. J. Steichen & Company and the other Underwriters named in the
Prospectus referred to below (the "Underwriters"), acting through us as
Representative, have severally agreed to purchase, subject to the terms and
conditions set forth in the Underwriting Agreement referred to in the Prospectus
(the "Underwriting Agreement"), from Eco Soil Systems, Inc., a Nebraska
corporation (the "Company"), an aggregate of 3,300,000 shares (the "Firm
Shares") of the Company's common stock, $0.005 per share par value ("Common
Stock"). In addition, the several Underwriters have been granted an option to
purchase from the Company up to an aggregate of an additional 495,000 shares of
Common Stock (the "Option Shares") to cover overallotments in connection with
the sale of the Firm Shares. The Firm Shares and the Option Shares are
hereinafter collectively called the "Shares." The Shares and the terms upon
which they are to be offered for sale by the several Underwriters are more
particularly described in the enclosed Prospectus.

2. The Shares are to be offered to the public by the several
Underwriters at a price of $_______ per share (hereinafter called the "Public
Offering Price") and in accordance with the terms of offering set forth in the
Prospectus.

3. Subject to the terms and conditions hereof, some or all of the
several Underwriters are severally offering a portion of the Shares for sale to

(i) certain dealers which are members of the National Association of
Shares Dealers, Inc. (the "NASD") and which agree to comply with all
applicable rules of the NASD, including, without limitation, the NASD's
Interpretation with respect to Free-Riding and Withholding and Rule
2740 of the Rules of the Association, and

(ii) foreign dealers or institutions ineligible for membership in the
NASD which agree

(x) not to resell the Shares

(A) to purchasers in, or to persons who are nationals
or residents of, the United States of America, or

- --------

1 Plus an option to purchase up to 495,000 additional shares to cover
over-allotments.

(B) when there is a public demand for the Shares, to
persons specified as those to whom members of the
NASD participating in a distribution may not sell,
and

(y) to comply, as though such foreign dealer or institution
were a member of the NASD, with such Interpretation with
respect to Free-Riding and Withholding and with Rules 2730,
2740, 2420 (as such Section applies to foreign non-members)
and 2750 of such Rules of the Association

(such dealers and institutions agreeing to purchase Shares hereunder being
hereinafter referred to as "Selected Dealers") at the Pubic Offering Price less
a selling concession of $________ per share, payable as hereinafter provided,
out of which concession an amount not exceeding $______ per share may be
reallowed by Selected Dealers to members of the NASD or to foreign dealers or
institutions ineligible for membership therein which agree as aforesaid. This
offering is made subject to delivery of the Shares and their acceptance by us,
to the approval of all legal matters by counsel and to the terms and conditions
herein set forth. Some or all of the Underwriters may be included among the
Selected Dealers. Each of the Underwriters has agreed that, during the term of
this Agreement, it will be governed by the terms and conditions hereof whether
or not such Underwriter is included among the Selected Dealers.

4. We, acting as Representative, and with our consent, any Underwriter,
may buy Shares from, or sell Shares to, any Selected Dealer, or any other
Underwriter, and any Selected Dealer may buy Shares from, or sell Shares to, any
other Selected Dealer or any Underwriter at the Public Offering Price less all
or any part of the concession. We, acting as Representative, after the initial
public offering, may change the concession and the reallowance.

5. If, prior to the termination of this Agreement, we purchase or
contract to purchase, in the open market or otherwise, for the account of any
Underwriter, any Shares purchased by you hereunder, you agree to pay us on
demand for the accounts of the several Underwriters an amount equal to the
concession on such Shares. In addition, we may charge you with any transfer
taxes and broker's commissions or dealer's mark-up paid in connection with such
purchase or contract to purchase.

6. We shall act on behalf of the Underwriters under this Agreement and
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the public offering of the Shares.

7. If you desire to purchase any of the Shares, your subscription
should reach us promptly by telephone by calling Ms. Vicki Anderson at (612)
341-6276 or by telegraph at the offices of R. J. Steichen & Company, 801
Nicollet Mall, Suite 1100, Minneapolis, Minnesota 55402, and we will use our
best efforts to fill the same. We reserve the right to reject all subscriptions,
in whole or in part, to make allotments and to close the subscription books at
any time without notice. The Shares allotted to you will be confirmed, subject
to the terms and conditions of this Agreement.

8. The privilege of purchasing the Shares is extended to you only on
behalf of the several Underwriters, if any, that may lawfully sell the Shares to
dealers in your state.

9. Any of the Shares purchased by you under the terms of this Agreement
may be immediately reoffered to the public in accordance with the terms of the
offering thereof set forth herein and in the Prospectus, subject to the
securities laws of the various states. Neither you nor any other person is or
has been authorized to give any information or to make any representations in
connection with the sale of the Shares other than as contained in the
Prospectus.

10. This Agreement will terminate when we shall have determined that
the public offering of the Shares has been completed and upon telegraphic notice
to you of such termination, but, if not previously terminated, this Agreement
will terminate at the close of business on the thirtieth (30th) full business
day after the date hereof; provided, however, that we shall have the right to
extend this Agreement for an additional period or periods not exceeding thirty
(30) full business days in the aggregate upon telephonic notice to you. Promptly
after the termination of this Agreement, there shall become payable to you the
selling concession on the number of Shares that you shall have purchased
hereunder and that shall not have been purchased or contracted for (including
certificates issued upon transfer) by us, in the open market or otherwise
(except pursuant to Section 12 hereof), during the term of this Agreement for
account of one or more of the several Underwriters.

11. For the purpose of stabilizing the market in the Common Stock of
the Company, we have been authorized to make purchases and sales thereof, in the
open market or otherwise, and, in arranging for sale of the Shares, to
over-allot.

12. You agree to advise us from time to time upon request, prior to the
termination of this Agreement, of the number of Shares purchased by you
hereunder and remaining unsold at the time of such request, and if, in our
opinion, any such Shares shall be needed to make delivery of the Shares sold or
over-allotted for the account of one or more of the Underwriters, you will,
forthwith upon our request, grant to us for the account or accounts of such
Underwriter or Underwriters the right, exercisable promptly after receipt of
notice from you that such right has been granted, to purchase, at the Public
Offering Price less the selling concession or such part thereof as we shall
determine, such number of Shares owned by you as shall have been specified in
our request.

13. On becoming a Selected Dealer, and in offering and selling the
Shares, you agree (which agreement shall also be for the benefit of the Company)
to comply with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). You confirm that you are familiar with Rule 15c2-8
under the Exchange Act relating to the distribution of preliminary and final
prospectuses for securities of an issuer and confirm that you have complied and
will comply therewith.

14. Upon request, you will be informed as to the jurisdictions in which
we have been advised that the Shares have been qualified for sale under the
respective securities or Blue Sky laws of such jurisdictions, but neither we nor
any of the Underwriters assume any obligation or responsibility as to the right
of any Selected Dealer to sell the Shares in any jurisdiction or as to any sale
therein. You are responsible for filing any notices, statements or any other
documents with and/or for paying any filing fees or other fees to the respective
securities or Blue Sky law authorities of the states in which the Shares have
been qualified for sale where such notices, statements, or other documents or
fees are necessary or advisable for the sale of the Shares by you in those
states.

15. Additional copies of the Prospectus will be supplied to you in
reasonable quantities upon request.

16. It is expected that public advertisement of the Shares will be no
sooner than the first day after the effective date of the Registration Statement
or such later date as the initial offering price of the Shares is determined if
the Company elects to rely on Rule 430A under the Act. Twenty-four (24) hours
after such advertisement shall have appeared, but not before, you will be free
to advertise at your own expense, over your own name, subject to any restriction
of local laws, but your advertisement must conform in all respects to the
requirements of the Act, and neither we nor the Underwriters shall be under any
obligation or liability in respect of your advertisement.

17. No Selected Dealer is authorized to act as our agent or as agent
for the Underwriters, or otherwise to act on our behalf or on behalf of the
Underwriters, in offering or selling the Shares to the public or otherwise.

18. We and the several Underwriters shall not be under any liability
for or in respect of the value, validity or form of the Shares, or delivery of
the certificates for the Shares, or the performance by anyone of any agreement
on his part, or the qualification of the Shares for sale under the laws of any
jurisdiction, or for or in respect of any matter connected with this Agreement,
except for lack of good faith and for obligations expressly assumed by use or by
the several Underwriters in this Agreement. The foregoing provisions shall not
be deemed a waiver of any liability imposed under the Act.

19. Payment for the Shares sold to you hereunder is to be made at the
Public Offering Price, on or about January __, 1997 or such later date as we may
advise, by certified or official bank check, payable to the order of R. J.
Steichen & Company, in current funds, at such place as we shall specify on one
day's notice to you against delivery of the Shares. Notwithstanding the
foregoing, if actions in the Shares can be settled through the facilities of The
Depository Trust Company, payment for and delivery of Shares purchased by you
hereunder will be made through the facilities of The Depository Trust Company,
if you are a member, unless you have otherwise notified us prior to the date
specified in our telex or telegram to you, or, if you are not a member,
settlement may be made through a correspondent who is a member pursuant to
instructions you may send us prior to such specified date.

20. Notice to us should be addressed to R. J. Steichen & Company,
Midwest Plaza, Suite 1100, 801 Nicollet Mall, Minneapolis, Minnesota 55402.
Notices to you shall be deemed to have been duly given if telegraphed or mailed
to you at the address to which this letter is addressed.

21. If you desire to purchase any of the Shares, please confirm your
subscription by signing and returning to us your confirmation overleaf on the
duplicate copy of this letter enclosed herewith, even though you have previously
advised us thereof by telephone, teletype or telegraph.

Very truly yours,

R. J. STEICHEN & COMPANY
As Representative

By____________________________________
Signature

Its___________________________________
Title

__________________, 1997.

CONFIRMATION

R. J. STEICHEN & COMPANY
As Representative
Midwest Plaza, Suite 1100
801 Nicollet Mall
Minneapolis, Minnesota 55402

Dear Sirs:

We hereby agree to purchase __________________ shares of common stock,
$.01 par value per share, of Eco Soil Systems, Inc., in accordance with all
terms and conditions stated in the foregoing letter. We hereby acknowledge
receipt of the Prospectus referred to in the first paragraph thereof relating to
said Shares. We further state that in purchasing said Shares we have relied upon
said Prospectus and upon no other statement whatsoever, written or oral. We
hereby confirm that we are a dealer actually engaged in the investment banking
or securities business and that we are either (a) a member in good standing of
the National Association of Securities Dealers. Inc. (the "NASD") or (b) a
dealer with its principal place of business located outside the United States,
its territories and its possessions and not registered as a broker or dealer
under the Securities Exchange Act of 1934, as amended, who hereby agrees not to
make any sales within the United States, its territories or its possessions or
to persons who are nationals thereof or residents therein. We hereby agree to
comply with all applicable rules of the NASD, including, without limitation, the
NASD's Interpretation with respect to Free-Riding and Withholding and Rule 2740
of the Rules of the Association and, if we are a foreign dealer and not a member
of the NASD, we also agree to comply with such Interpretation with respect to
Free-Riding and Withholding and to comply, as though we were a member of the
NASD, with Rules 2730, 2740, 2420 (as such Rule applies to foreign non-members)
and 2750 of Article III of such Rules of the Association. We confirm that we
will not sell any of the Shares to discretionary accounts.

____________________________________

By__________________________________
Authorized Representative

____________________________________
(Address)
____________________________________

Dated: ___________________, 1997.

3,300,000 Shares(1)

ECO SOIL SYSTEMS, INC.

Common Stock

AGREEMENT AMONG UNDERWRITERS

R. J. STEICHEN & COMPANY ______________, 1997
As Representative of the several Underwriters
named in Schedule I to the Underwriting
Agreement described herein
Midwest Plaza, Suite 1100
801 Nicollet Mall
Minneapolis, Minnesota 55402

Dear Sirs:

1. Underwriting Agreement. We understand that an underwriting agreement
(the "Underwriting Agreement") substantially in the form furnished
simultaneously herewith with respect to 3,300,000 shares (the "Firm Shares") of
common stock, $0.005 per share par value ("Common Stock"), of Eco Soil Systems,
Inc., a Nebraska corporation (the "Company"), proposed to be sold by the Company
is to be entered into among the Company, you and other prospective underwriters,
acting severally and not jointly. The parties on whose behalf you are to execute
the Underwriting Agreement to be named in Schedule I thereto and are herein
called the "Underwriters." The Underwriting Agreement also provides for the
grant by the Company to the several Underwriters of an option, on the terms and
conditions set forth therein, to purchase up to an additional 495,000 shares of
Common Stock (the "Option Shares"). The Firm Shares and any Option Shares
purchased pursuant to the Underwriting Agreement are hereinafter collectively
called the "Shares." It is also understood that changes may be made to those who
are to be Underwriters and to the respective aggregate number of Shares to be
purchased by them, but that the aggregate number of the Shares to be purchased
by us as set forth in the accompanying form of Underwriting Agreement will not
be changed without our consent except as provided herein or in the Underwriting
Agreement.

2. Registration Statement and Prospectus. As used herein, the terms
"Registration Statement," "Preliminary Prospectus" and "Prospectus" shall have
the meanings ascribed to them in the Underwriting Agreement. You will furnish to
us as soon as possible copies of the Prospectus to be used in connection with
the offering of the Shares. We will confirm that, if

- --------

1 Plus an option to purchase up to 495,000 additional shares to cover
over-allotments.

requested by you as Representative, that we have furnished a copy of any amended
Preliminary Prospectus to each person to whom we have furnished a copy of any
previous Preliminary Prospectus, and we confirm that we have delivered and agree
that we will deliver all Preliminary Prospectuses and Prospectuses and all
supplements thereto required for compliance with the provisions of Rule 15c2-8
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We
consent to being named in the Prospectus as one of the Underwriters of the
Shares.

3. Authority and Compensation. We hereby authorize you, as our
Representative and on our behalf, to enter into the Underwriting Agreement with
the Company substantially in the form furnished simultaneously herewith and to
take such action as you deem advisable in connection with the performance of the
Underwriting Agreement and this Agreement and the purchase, carrying, sale and
distribution of the Shares. You may waive performance or satisfaction by the
Company of other obligations or conditions included in the Underwriting
Agreement if, in your judgment, such waiver will not have a material adverse
effect upon the interests of the Underwriters.

As compensation for your services, we will pay you an amount equal to
$_____ per share with respect to each share of the Shares which we agree to
purchase under the Underwriting Agreement, and you may charge our account
therefor.

4. Public Offering. In connection with the public offering of the
Shares, we authorize you, in your discretion:

(a) To determine the time of the initial public offering, to
change the public offering price and the concessions and discounts to
dealers after the initial public offering, to furnish the Company with
the information to be included in the Registration Statement or
Prospectus with respect to the terms of offering and to determine all
matters relating to advertising and communications with dealers or
others;

(b) To reserve for sale to dealers selected by you ("Selected
Dealers") and to others, all or any part of our Shares, such
reservations for sales to others to be as nearly as practicable in
proportion to the respective underwriting obligations of the
Underwriters unless you agree to a smaller proportion at the request of
any Underwriter and, from time to time, to add to the reserved Shares
any Shares retained by us remaining unsold and to release to us any of
our Shares reserved but not sold;

(c) To sell reserved Shares, as nearly as practicable in
proportion to the respective reservations, to Selected Dealers at the
public offering price less the Selected Dealers' concession and to
others at the public offering price; and

(d) To buy Shares for our account from Selected Dealers at the
public offering price less such amount not in excess of the Selected
Dealers' concession as you determine.

We authorize you to determine the form and manner of any communications
or agreements with Selected Dealers. If there shall be any agreements with
Selected Dealers, you are authorized to act as manager thereunder, and we agree
in such event to be governed by the terms and conditions of such agreements. The
form of Selected Dealers' Agreement furnished simultaneously herewith is
satisfactory to us.

Sales of Shares between Underwriters may be made with your prior
consent, or as you deem advisable for Blue Sky purposes.

After advice from you that the Shares have been released for public
offering, we will offer to the public in conformity with the terms of offering
set forth in the Prospectus such of our Shares as you advise us are not
reserved.

If, prior to the termination of this Agreement, you shall purchase or
contract to purchase, in the open market or otherwise, any Shares sold by us
(otherwise than through you) pursuant to this Agreement, we agree to repurchase
such Shares on demand at a price equal to the total cost of such purchase made
by you as Representative, including commissions, if any, and transfer taxes on
the redelivery. Certificates for the Shares delivered on such repurchase need
not be the identical certificates so purchased by you. In lieu of such action,
you may in your discretion sell for our account the Shares so purchased and
debit or credit our account for the loss or profit resulting from such sale, or
charge our account with an amount not in excess of the Selected Dealers'
concession with respect to such Shares.

5. Payment and Delivery. We authorize you to make payment on our behalf
to the Company of the purchase price of our Shares, to take delivery of our
Shares, registered as you may direct in order to facilitate deliveries, and to
deliver our reserved Shares against sales. At your request, we will pay you an
amount equal to the public offering price, less the selling concession, of
either our Shares or our unreserved Shares as you direct, and such payment will
be directed to our account and applied to the payment of the purchase price.
After you receive payment for reserved Shares sold for our account, you will
remit to us the purchase price (if any) paid by us for such Shares and credit or
debit our account with the difference between the sale price and the purchase
price thereof. You will deliver to us our unreserved Shares promptly, and our
reserved but unsold Shares against payment of the purchase price therefor
(except in the case of Shares for which payment has previously been made), as
soon as practicable after the termination of the provisions referred to in
Section 9 hereof, except that if the aggregate number of reserved but unsold
Shares upon such termination does not exceed 10% of the total number of the
Shares, you may in your discretion sell such reserved but unsold Shares for the
accounts of the several Underwriters as soon as practicable after such
termination, at such prices and in such manner as you determine.

6. Authority to Borrow. In connection with the purchase or carrying of
our Shares, we authorize you, in your discretion, to advance your funds for our
account, charging current interest rates, to arrange loans for our account, and
in connection therewith to execute and deliver any notes or other instruments
and to hold or pledge as security any of our Shares. Any lender may rely upon
your instructions in all matters relating to any such loan. Any Shares held by
you for our account may be delivered to us for carrying purposes and, if so
delivered, will be redelivered to you upon demand.

7. Stabilization and Over-Allotment. We authorize you, in your
discretion, to make purchases and sales of Shares and of the outstanding shares
of Common Stock, in the open market or otherwise, for long or short account, on
such terms as you deem advisable, and to over-allot in arranging sales. Such
purchases and sales and over-allotments will be made for the accounts of the
Underwriters as nearly as practicable in proportion to their respective
underwriting obligations. We authorize you, in your discretion, to cover any
short position incurred pursuant to this Section by purchasing securities on
such terms as you deem advisable. At no time will our net commitment under the
foregoing provisions of this Section exceed 15% of our underwriting obligation.
We will on demand take up at cost any securities so purchased and deliver any
securities so sold or over-allotted for our account, and, if any other
Underwriter defaults in its corresponding obligation, we will assume our
proportionate share of such obligation without relieving the defaulting
Underwriter from liability. Upon request, we will advise you of the Shares
retained by us and unsold and will sell to you for the account of one or more of
the Underwriters such of our unsold Shares at such price, not less than the net
price to Selected Dealers nor more than the public offering price, as you
determine.

If you effect stabilizing purchases pursuant to Section 7 hereof, you
will notify us promptly of the initiation and termination thereof. If
stabilization is effected, we will furnish to you not later than three business
days following the date on which stabilizing was commenced such information as
is required by Rule 17a-2(d) under the Exchange Act.

8. Open Market Transactions. We and you agree not to bid for, purchase,
attempt to induce others to purchase, or sell, directly or indirectly, any
Shares or outstanding shares of Common Stock, except as brokers pursuant to
unsolicited orders and as otherwise provided in this Agreement.

We represent that we have not participated in any transaction
prohibited by the preceding paragraph and that we have at all times complied
with the provisions of Rules l0b-6 and l0b-6A of the Securities and Exchange
Commission as applicable to the offering of the Shares.

9. Termination. The provisions of the last two paragraphs of Section 4,
the first sentence of Section 7, and all of Section 8 hereof, will terminate at
the close of business on the thirtieth (30th) day after the date of the initial
public offering of the Shares, unless sooner terminated as hereinafter provided.
You may terminate such provisions at any time by notice to us to the effect that
the offering provisions of this Agreement are terminated.

10. Expenses and Settlement. You may charge our account with any
transfer taxes on sales made by you of Shares purchased by us under the
Underwriting Agreement and with our proportionate share (based upon our
underwriting obligation) of all other expenses incurred by you under this
Agreement or in connection with the purchase, carrying, sale or distribution of
the Shares. The accounts hereunder will be settled as promptly as practicable
after the termination of the provisions referred to in Section 9 hereof, but you
may reserve such amount as you may deem advisable for additional expenses. Your
determination of the amount to be paid to or by us will be conclusive. You may
at any time make partial distributions of credit balances or call for payment of
debit balances. Any of our funds in your hands may be held with your general
funds without accountability for interest. Notwithstanding any settlement, we
will remain liable for any taxes on transfers for our account, and for our
proportionate share (based upon our underwriting obligation) of all expenses and
liabilities which may be incurred by or for the accounts of the Underwriters.

11. Default by Underwriters. Default by one or more Underwriters
hereunder or under the Underwriting Agreement will not release the other
Underwriters from their obligations or affect the liability of any defaulting
Underwriter to the other Underwriters for damages resulting from such default.
If one or more Underwriters default under the Underwriting Agreement, you may
arrange for the purchase by others, including nondefaulting Underwriters, of
Shares not taken up by the defaulting Underwriter or Underwriters.

12. Position of Representative. You will be under no liability to us
for any act or omission except for obligations expressly assumed by you herein,
and no obligation on your part will be implied hereby or inferred herefrom. The
rights and liabilities of the Underwriters are several and not joint, and
nothing will constitute the Underwriters a partnership, association or separate
entity.

If for federal income tax purposes the Underwriters should be deemed to
constitute a partnership, then each Underwriter elects to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code
of 1986, as amended. You, as Representative of the several Underwriters, are
authorized, in your discretion, to execute on behalf of the Underwriters such
evidence of such election as may be required by the Internal Revenue Service.

13. Indemnification. We will indemnify and hold harmless each other
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "Securities
Act"), or Section 20(a) of the Exchange Act, and reimburse your and their
expenses, to the extent and upon the terms upon which each Underwriter agrees to
indemnity the Company in the Underwriting Agreement.

14. Contribution. Each Underwriter (including you) will pay upon your
request, as contribution, its proportionate share, based upon its underwriting
obligation, of any losses, claims, damages or liabilities, joint or several,
paid or incurred by any Underwriter to any person other than an Underwriter,
arising out of or based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any related Preliminary Prospectus, or any
other selling or advertising material approved by you for use by the
Underwriters in connection with the sale of the Shares, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading (other than an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by an Underwriter specifically for use therein); and will pay such
proportionate share of any legal or other expenses reasonably incurred by you or
with your consent in connection with investigating or defending any such loss,
claim, damage or liability, or any action in respect thereof. In determining the
amount of any Underwriter's obligation under this Section, appropriate
adjustment may be made by you to reflect any amounts received by one or more
Underwriters in respect of such claim from the Company pursuant to Section 6 of
the Underwriting Agreement or otherwise. There shall be credited against any
amount paid or payable by us pursuant to this Section any loss, damage,
liability or expense which is incurred by us as a result of any such claim
asserted against us, and if such loss, claim, damage, liability or expense is
incurred by us subsequent to any payment by us pursuant to this Section,
appropriate provisions shall be made to effect such credit, by refund or
otherwise. If any such claim is asserted, you may take such action in connection
therewith as you deem necessary or desirable, including retention of counsel for
the Underwriters, and in your discretion separate counsel for any particular
Underwriter or group of Underwriters, and the fees and disbursements of any
counsel so retained by you shall be included in the amount payable pursuant to
this Section. In determining amounts payable pursuant to this Section, any loss,
claim, damage, liability or expense incurred by any person controlling any
Underwriter within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act which has been incurred by reason of such control
relationship shall be deemed to have been incurred by such Underwriter. Any
Underwriter may elect to retain at its own expense its own counsel. You may
settle or consent to the settlement of any such claim, on advice of counsel
retained by you, with the approval of a majority in interest of the
Underwriters. Whenever you receive notice of the assertion of any claim to which
the provisions of this Section would be applicable, you will give prompt notice
thereof to each Underwriter. You will furnish each Underwriter with periodic
reports, at such times as you deem appropriate, as to the status of such claim
and the action taken by you in connection therewith. If any Underwriter or
Underwriters default in their obligation to make any payments under this
Section, each nondefaulting Underwriter shall be obligated to pay its
proportionate share of all defaulted payments, based upon such Underwriter's
underwriting obligation as related to the underwriting obligations of all
nondefaulting Underwriters.

15. Reports and Blue Sky Matters. We authorize you to file with the
Securities and Exchange Commission and any other governmental agency any reports
required in connection with any transaction effected by you for our account
pursuant to this Agreement, and we will furnish any information needed for such
reports. You will not have any responsibility with respect to the right of any
Underwriter or other person to sell the Shares in any jurisdiction,
notwithstanding any information you may furnish in that connection.

16. Miscellaneous. Any notice hereunder from you to us or from us to
you shall be deemed to have been duly given when sent by mail, telegram or
delivered in person, if to us, at the address stated in the Underwriters'
Questionnaire or telex constituting Questionnaire which we have furnished in
connection with this offering or, if to you, to R. J. Steichen & Company,
Midwest Plaza, Suite 1100, 801 Nicollet Mall, Minneapolis, Minnesota 55402.

We understand that you are members in good standing of the National
Association of Securities Dealers, Inc. ("NASD"). We hereby confirm that we are
either (i) a member in good standing of the NASD or (ii) a dealer with its
principal place of business located outside the United States, its territories
and its possessions and not registered as a broker or dealer under the Exchange
Act who agrees not to make any sales within the United States, its territories
or its possessions or to persons who are nationals thereof or residents therein.
We hereby agree to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation with respect to Free-Riding and
Withholding and Rule 2740 of the Rules of the Association and, if we are a
foreign dealer and not a member of the NASD, to comply with such Interpretation
with respect to Free-Riding and Withholding and the provisions of Rules 2730,
2740, 2420 (as such Section applies to foreign nonmembers) and 2750 of Article
III of such Rules of the Association as though we were a member of the NASD. In
connection with the sales and offers to sell Shares made by us outside the
United States (x) we will either furnish to each person to whom any such sale or
offer is made a copy of the then current Preliminary Prospectus or the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), as the case may be, or inform such
person that such Preliminary Prospectus or Prospectus will be available upon
request and (y) we will furnish to each person to whom any such sale or offer is
made such Prospectus, advertisement or other offering document containing
information relating to the Shares or the Company as may be required under the
law of the jurisdiction in which such offer or sale is made. Any prospectus,
advertisement or other offering document furnished by us to any such person in
accordance with the preceding sentence and any such additional offering material
as we may furnish to any person (A) shall comply in all respects with the law of
the jurisdiction in which it is so furnished, (B) shall be prepared and so
furnished at our sole risk and expense, and (C) shall not contain information
relating to the Shares or the Company which is inconsistent in any respect with
the information contained in the then current Preliminary Prospectus or in the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), as the case may be. We confirm that we
will not make sales of the Shares to discretionary accounts.

This instrument may be signed by the Underwriters in various
counterparts which together shall constitute one and the same agreement among
all the Underwriters and shall become effective at such time as all the
Underwriters shall have signed such counterparts and you shall have confirmed
all such counterparts.

Please confirm that the foregoing correctly states the understanding
between us by signing and returning to us a counterpart hereof.

Very truly yours,

_______________________________________
[Type or Print Firm Name]

By____________________________________
Signature of Authorized Representative

_______________________________________
Name of Authorized Representative Typed
or Printed

Its____________________________________
Title of Authorized Representative Typed
or Printed

Accepted and confirmed as of the date first above written.

R. J. STEICHEN & COMPANY
As Representative

By: ___________________________________

Its____________________________________

AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ECO SOIL SYSTEMS, INC.

PURSUANT to the provisions of R.S. Supp. 21-2056 and 21-2064
of the Nebraska Business Corporation Act, the undersigned Corporation hereby
adopts the following Amended and Restated Articles of Incorporation:

1. The name of the Corporation is Eco Soil Systems, Inc.

2. These Amended and Restated Articles of Incorporation,
which restate, integrate and amend the Articles of Incorporation of this
Corporation, were duly adopted by the Board of Directors of the Corporation in
accordance with the provisions of Section 21-2056 and Section 21-2064 of the
Nebraska Business Corporation Act.

3. These Amended and Restated Articles of Incorporation
supersede the original Articles of Incorporation, as amended.

4. The Articles of Incorporation as heretofore amended are
hereby amended and restated in their entirety as follows:

ARTICLE 1.

The name of this Corporation is Eco Soil Systems, Inc.

ARTICLE 2.

The period of the Corporation's duration is perpetual.

ARTICLE 3.

The purpose of this Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Nebraska Business
Corporation Act.

ARTICLE 4.

A. Authorized Shares.

The total number of shares of stock which this Corporation is
authorized to issue is 25,000,000 shares of a par value of one half cent ($.005)
per share, of which 20,000,000 shares shall be Common Stock and 5,000,000 shares
shall be Preferred Stock. Before any of such stock is issued, it shall be paid
for in full in cash or in securities, property or other equivalent at a price
agreeable to the Board of Directors.

B. Preferred Stock.

Authority is hereby expressly vested in the Board of
Directors, subject to the provisions of this Article 4 and to the limitations
prescribed by law, to authorize the issue from time to time one or more
series of preferred stock and with respect to each such series to fix, by
resolution or resolutions adopted by the affirmative vote of a majority of the
whole Board of Directors providing for the issue of such series, the voting
powers, full or limited, if any, of the shares of such series and the
designations, preferences and relative, participating, optional or other special
rights and the qualifications, limitations or restrictions thereof. The
authority of the Board of Directors with respect to each series shall include,
but not be limited to, the determination or fixing of the following:

(1) The number of shares constituting such series and the
designation of such series.

(2) The dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or
classes or series of this Corporation's capital stock, and whether such
dividends shall be cumulative or noncumulative.

(3) Whether the shares of such series shall be subject to
redemption by this Corporation at the option of either the Corporation
or the holder or both or upon the happening of a specified event, and,
if made subject to any such redemption, the times or events, prices and
other terms and conditions of such redemption.

(4) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series.

(5) Whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either the
holder or the Corporation or upon the happening of a specified event,
shares of any other class or classes or of any other series of the same
or any other class or classes of the Corporation's capital stock, and,
if provision be made for conversion or exchange, the times or events,
prices, rates, adjustments, and other terms and conditions of such
conversions or exchanges.

(6) The restrictions, if any, on the issue or reissue of any
additional preferred stock, including increases or decreases in the
number of shares of any series subsequent to the issue of shares of
that series.

(7) The rights of the holders of the shares of such series
upon the voluntary or involuntary liquidation, dissolution or winding
up of the Corporation.

(8) Any right to vote with holders of shares of any other
series or class and any right to vote as a class, either generally or
as a condition to specified corporate action, in addition to any voting
powers required by law.

ARTICLE 5.

In furtherance, and not in limitation, of the powers conferred
by statute, the Board of Directors is expressly authorized to make, amend,
alter, change, add to or repeal bylaws of the Corporation, without any action on
the part of the shareholders. The bylaws made by the Board of Directors may be
amended, altered, changed, added to or repealed by the shareholders. Any
specific provision in the bylaws regarding amendment thereof shall be
controlling.

ARTICLE 6.

The Shareholders of the Corporation shall have no pre-emptive
rights to acquire unissued shares of the Corporation.

ARTICLE 7.

The name and mailing address/place of residence of the
Incorporator is as follows:

Kenneth L. Cutler
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402

The address of the registered office of the Corporation and the name of
the resident agent at such address is as follows:

Heartland Capital Fund Ltd.
11930 Arbor Street, Suite 201
Omaha, NE 68144

ARTICLE 8.

The affairs of the Corporation shall be conducted by a Board
of Directors, the number of which shall be set by the Shareholders of the
Corporation. The Directors shall elect officers of the Corporation, including
but not limited to a President, a Secretary, and a Treasurer.

ARTICLE 9.

A Director of the Corporation shall not be personally liable
to the Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a Director; provided, however, that this article shall not
eliminate or limit the liability of a Director (a) for any breach of the
Director's duty of loyalty to the Corporation or its shareholders; (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (c) for the unlawful payment of dividends or unlawful
stock purchases or redemptions under Section 21-2046 of the Nebraska Business
Corporation Act; or (d) for any transaction from which the Director derived an
improper personal benefit. This article shall not eliminate or limit the
liability of a Director for any act or omission occurring prior to the effective
date of this Article 9.

If the Nebraska Business Corporation Act is hereafter amended
to authorize any further limitation of the liability of a Director, then the
liability of a Director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Nebraska Business Corporation Act, as amended.

Any repeal or modification of the foregoing provisions of this
Article 9 by the shareholders of the Corporation shall not adversely affect any
right or protection of a Director of the Corporation existing at the time of
such repeal or modification.

ARTICLE 10.

In furtherance and not in limitation of the powers conferred
on them by the laws of the State of Nebraska, the Board of Directors are
expressly authorized to make and alter bylaws, to manage and control the affairs
of the Corporation, to elect and appoint officers, agents and employees of the
Corporation, and to delegate such duties and powers as they may deem necessary
and expedient.

The Corporation may, in its bylaws, confer powers additional
to the foregoing, upon the Directors, in addition to the powers and authorities
expressly conferred upon them by law.

In absence of fraud, no contract or other transaction between
the Corporation or any other person, corporation, firm, syndicate, association,
partnership or joint venture shall be wholly or partially invalidated or
otherwise affected by reason of the fact that one or more Directors of the
Corporation are or become directors or officers of such other corporation, firm,
syndicate or association, or members of such partnerships, or joint ventures, or
have a pecuniary or other interest in such contractual transaction, provided,
however, that the fact that such Director of the Corporation is so situated or
so interested in both corporations, shall be disclosed or shall have been known
to the Board of Directors of the Corporation. Any Director of the Corporation
who is also a director or officer of such other corporation, firm, syndicate or
association, or member of such partnership, or joint venture, or has a pecuniary
or other interest in such contract or transaction may be counted for the purpose
of determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation authorizing any such contract or transaction, and
in the absence of fraud, and as long as such Director acts in good faith, any
such Director may vote thereat to authorize any such contract or transaction,
with like force and effect as if such Director were not a director or officer of
such other firm, corporation, syndicate or association, or a member of such
partnership or joint venture, or had a pecuniary or other interest in such
contract or transaction.

ARTICLE 11.

The Corporation reserves the right to amend, alter, change, or
repeal any or all of the provisions contained in these Amended and Restated
Articles of Incorporation in the manner now or hereafter prescribed by statute,
and all rights conferred upon shareholders herein are granted subject to this
reservation.

ARTICLE 12.

The objects specified herein shall, except where otherwise
expressed, be in no way limited or restricted by reference to or inference from
the terms of any other clause or paragraph of these Amended and Restated
Articles of Incorporation. `The objects and purposes and powers specified in
each of the clauses or paragraphs in these Amended and Restated Articles of
Incorporation shall be regarded as independent objects, purposes and powers.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his name this 6th day of December, 1996.

/s/ Jeffrey A. Johnson, Secretary

BYLAWS

ECO SOIL SYSTEMS, INC.

ARTICLE I.
Offices, Corporate Seal

Section 1.01. Offices. The Corporation shall have a registered
office, a principal office and such other offices as the Board of Directors may
determine.

The registered office of the corporation required by the
Nebraska Business Corporation Act to be maintained in the State of Nebraska may
be, but need not be, identical with the principal office in the State of
Nebraska, and the address of the registered office may be changed from time to
time by the Board of Directors.

Section 1.02. Corporate Seal. The Board of
Directors shall provide a corporate seal which shall be circular in form
and shall have inscribed thereon the name of the corporation and the
words, "Corporate Seal."

ARTICLE II.
Meetings of Shareholders

Section 2.01. Place and Time of Meetings. Meetings of the
shareholders may be held at such place and at such time as may be designated by
the Board of Directors. In the absence of a designation of place, this meeting
shall be held at the principal office. In the absence of a designation of time,
the meeting shall be held at l0:00 a.m.

Section 2.02. Annual Meetings.

(a) The annual meeting of the shareholders of the Corporation
shall be held on such business day as the Board of Directors shall determine.

(b) At an annual meeting the shareholders, voting as provided
in the articles of incorporation and these Bylaws, shall elect qualified
successors for directors who serve for an indefinite term or whose terms have
expired or are due to expire within six months after the date of the meeting and
shall transact such other business as may properly come before them.

(c) To be properly brought before an annual meeting of
shareholders, business must be (1) specified in the notice of the meeting, (2)
directed to be brought before the meeting by the Board of Directors or (3)
proposed at the meeting by a shareholder who (i) was a shareholder of record at
the time of giving of notice provided for in these Bylaws, (ii) is entitled to
vote at the meeting and (iii) gives prior notice of the matter, which must
otherwise be a proper matter for shareholder action, in the manner herein
provided. For business to be properly brought before a regular meeting by a
shareholder, the shareholder must give written notice to the Secretary of the
Corporation so as to be received at the principal executive offices of the
Corporation not later than the close of business on the fifteenth day following
the day on which the notice of the annual meeting was mailed to shareholders.
Such notice shall set forth (1) the name and record address of the shareholder
and of the beneficial owner, if any, on whose behalf the proposal will be made,
(2) the class and number of shares of the Corporation owned by the shareholder
and beneficially owned by the beneficial owner, if any, on whose behalf the
proposal will be made, (3) a brief description of the business desired to be
brought before the regular meeting and the reasons for conducting such business,
and (4) any material interest in such business of the shareholder and the
beneficial owner, if any, on whose behalf the proposal is made. The chair of the
meeting may refuse to acknowledge any proposed business not made in compliance
with the foregoing procedure.

Section 2.03. Special Meetings. Special meetings of the
shareholders for any purpose or purposes shall be called by the Secretary at the
request of two or more directors, by the Chairman of the Board, by the President
or by the President at the request of shareholders owning a majority of the
shares outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed special meeting. Within 30 days after receipt of such a
request by one of those officers, the Board of Directors shall cause a special
meeting of shareholders to be called and held on notice no later than 90 days
after receipt of the request, at the expense of the Corporation. Special
meetings shall be held on the date and at the time and place fixed by the
President or the Board of Directors, except that a special meeting called by or
at demand of a shareholder or shareholders shall be held in the county where the
principal executive office is located. Business transacted at any special
meeting shall be limited to the purposes stated in the notice.

Section 2.04. Quorum, Adjourned Meetings. The holders of a
majority of the shares outstanding and entitled to vote, represented in person
or by proxy, shall constitute a quorum for the transaction of business at any
annual or special meeting. If a quorum is not present at a meeting, a majority
of those shares as represented shall adjourn to such day as they shall agree.
Notice of any adjourned meeting need not be given if the time and place thereof
are announced at the meeting at which the adjournment is taken. At an adjourned
meeting at which a quorum is present, any business may be transacted which might
have been transacted at the meeting as originally noticed. If a quorum is
present, the shareholders may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.

Section 2.05. Organization. At each meeting of the
shareholders, the Chairman of the Board or in the absence of the Chairman of the
Board, the President, or in the absence of the President, the chairman chosen by
a majority in voting interest of the shareholders present in person or by proxy
and entitled to vote, shall act as chairman; and the Secretary of the
Corporation, or in the absence of the Secretary, an Assistant Secretary, or in
the absence of an Assistant Secretary, any person whom the chairman of the
meeting shall appoint shall act as secretary of the meeting.

Section 2.06. Order of Business. The order of business at all
meetings of the shareholders shall be determined by the chairman of the meeting,
but such order of business may be changed by the vote of a majority in voting
interest of those present or represented at such meeting and entitled to vote
thereat.

Section 2.07. Voting. Subject to the provisions of this
Section 2.07 describing voting for directors, each outstanding share entitled to
vote shall be entitled to one (1) vote upon each matter submitted to a vote at a
meeting of shareholders. Shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent or proxy as the bylaws
of such corporation may prescribe, or, in the absence of such provision, as the
board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by such person,
either in person or by proxy, without a transfer of such shares into such
person's name. Shares standing in the name of a trustee may be voted by such
trustee, either in person or by proxy, but no trustee shall be entitled to vote
shares held by such trustee without a transfer of such shares into such
trustee's name. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver, and shares held
by or under the control of a receiver may be voted by such receiver without the
transfer thereof into such receiver's name if authority so to do be contained in
an appropriate order of the court by which such reciever was appointed. A
shareholder whose shares are pledged shall be entitled to vote such shares until
the shares have been transferred into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote the shares so transferred. Neither
treasury shares, nor shares held by another corporation if a majority of the
shares entitled to vote for the election of directors of such other corporation
is held by the Corporation, shall be voted at any meeting, or counted in
determining the total number of outstanding shares at any given time.

Section 2.08. Inspectors of Election. At each meeting of the
shareholders, the chairman of such meeting may appoint two inspectors of
election to act. Each inspector of election so appointed shall first subscribe
an oath or affirmation briefly to execute the duties of an inspector of election
at such meeting with strict impartiality and according to the best of such
inspector of election's ability. Such inspector of election, if any, shall take
charge of the ballots at such meeting and after the balloting thereat on any
question shall count the ballots cast thereon and shall make a report in writing
to the Secretary of such meeting of the results thereof. An inspector of
election need not be a shareholder of the Corporation, and any officer or
employee of the Corporation may be an inspector of election on any question
other than a vote for or against the election of such inspector of election to
any position with the Corporation or on any other question in which such
inspector of election may be directly interested.

Section 2.09. Notices of Meetings and Consents. Every
shareholder shall furnish the Secretary of the Corporation with an address at
which notices of meetings, notices and consent material with respect to proposed
corporate action without a meeting and all other corporate communications may be
served on or mailed to such shareholder. Except as otherwise provided by the
Articles of Incorporation or by statute, a written notice stating the place, day
and hour of each annual and special meeting of shareholders and, in the case of
a special meeting, the purpose or purposes for which the meeting is called,
shall be given not less than l0 nor more than 50 days before the date of such
meeting or the date on which the corporate action without a meeting is proposed
to be taken, to each shareholder of record of the Corporation entitled to vote
at such meeting, by delivering such notice of meeting to such shareholder
personally or depositing the same in the United States mail, postage prepaid,
directed to such shareholder at the post office address shown upon the records
of the Corporation. Service of notice is complete upon mailing. Personal
delivery to any officer of a Corporation or association or to any member of a
partnership is delivery to such Corporation, association or partnership.

Section 2.10. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or by his
duly authorized attorney in fact. Such proxy shall be filed with the Secretary
of the corporation before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy. Subject to the above, any proxy may be revoked if an
instrument revoking it, or a proxy bearing a later date, is filed with the
Secretary of the Corporation.

Section 2.11. Written Action. Any action that may be taken at
a meeting of the shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the actions so
taken, shall be signed by all of the shareholders entitled to vote with respect
to the subject matter thereof. Such consent shall have the same force and effect
as a unanimous vote of the shareholders.

Section 2.12. Shareholder List. The officer who has charge of
the stock transfer books of the Corporation shall prepare and make, at least ten
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order and showing the
address of each shareholder and the number of shares registered in the name of
each shareholder. Such list shall be open to the examination of any shareholder
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof and may be inspected by any
shareholder who is present. The original stock transfer book shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.

ARTICLE III.
Board of Directors

Section 3.01. General Powers. The business of the Corporation
shall be managed by the Board of Directors.

Section 3.02. Number, Qualification and Term of Office. The
number of directors shall be established by a resolution adopted by a majority
of the total number of directors. The directors of the Corporation shall be
divided into three classes, as nearly equal in number as reasonably possible, to
serve for staggered terms of three years, except that one initial class of
directors will hold office for a two-year term and one initial class will hold
office for a one-year term. Directors need not be shareholders or residents of
the State of Nebraska. Each director shall hold office until the annual meeting
of shareholders held three years after such director's election or until the
shareholders have elected directors by consent in writing without a meeting and
until such director's successor is elected and qualified or until such
director's earlier death, resignation or removal.

Section 3.03. Annual Meeting. As soon as practicable after
each election of directors, the Board of Directors shall meet at the registered
office of the Corporation, or at such other place previously designated by the
Board of Directors, for the purpose of electing the officers of the Corporation
and for the transaction of such other business as may come before the meeting.

Section 3.04. Regular Meetings. Regular meetings of the Board
of Directors shall be held from time to time at such time and place as may be
fixed by resolution adopted by a majority of the total number of directors.

Section 3.05. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman of the Board, the President, or by
any two of the directors and shall be held from time to time at such time and
place as may be designated in the notice of such meeting.

Section 3.06. Notice of Meetings. No notice need be given of
any annual or regular meeting of the Board of Directors. Notice of any special
meeting shall be given at least ten (10) days previously thereto by written
notice delivered personally or mailed to each director at such director's
business address, or by telegram. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except when a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the Board of Directors, need be specified in the
notice or waiver of notice of such meeting.

Section 3.07. Quorum. A majority of the total number of
directors shall constitute a quorum for the transaction of business, but a
majority of the directors present may adjourn the meeting from time to time
without further notice. The vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors
unless these Bylaws require a greater number.

Section 3.08. Vacancies. Any vacancy among the directors, or
increase in the authorized number of directors, shall be filled for the
unexpired term by a majority of the directors then in office, even if less than
a quorum, or by the sole remaining director. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office may fill such vacancy or vacancies to take effect when such
resignation or resignations shall become effective.

Section 3.09. Removal. Any director may be removed from office
for cause at any special meeting of the shareholders called expressly for that
purpose by a vote of the holders of a majority of the shares then entitled to
vote at an election of directors. If the entire Board of Directors or any one or
more directors are so removed, new directors shall be elected at the same
meeting.

Section 3.10. Committees of Directors. The Board of Directors
may, by resolution adopted by a majority of the total number of directors,
designate one or more committees, each to consist of two or more of the
directors of the Corporation, which, to the extent provided in the resolution,
may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation. The Board of Directors may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Such committee or
committees shall have such name or names as may be determined by the resolution
adopted by the directors. The committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors when required.

Section 3.11. Written Action. Any action required or permitted
to be taken at a meeting of the Board of Directors or any committee thereof may
be taken without a meeting if all directors or committee members consent thereto
in writing and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.

Section 3.12. Compensation. Directors who are not salaried
officers of the Corporation may receive a fixed sum per meeting attended or a
fixed annual sum and such other forms of reasonable compensation as may be
determined by resolution of the Board of Directors. All directors shall receive
their expenses, if any, of attendance at meetings of the Board of Directors or
any committee thereof. Any director may serve the Corporation in any other
capacity and receive proper compensation therefor.

Section 3.13. Conference Communications. Directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by means of a conference telephone conversation or other
comparable communication technique whereby all persons participating in the
meeting can hear and communicate to each other. For the purposes of establishing
a quorum and taking any action at the meeting, such directors participating
pursuant to this Section 3.l4 shall be deemed present in person at the meeting;
and the place of the meeting shall be the place of origination of the conference
telephone conversation or other comparable communication technique.

Section 3.14. Presumption of Assent. A director of the
corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless such director's dissent shall be entered in the minutes
of the meeting or unless such director shall file a written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof, or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.

ARTICLE IV.
Officers

Section 4.01. Number. The officers of the Corporation shall
consist of a President, at least one Vice President, a Secretary, a Treasurer,
and any officers and agents as the Board of Directors by a majority vote of the
total number of directors may designate. Any person may hold two or more
offices.

Section 4.02. Election, Term of Office and Qualifications. At
the first meeting after each annual meeting of the Board of Directors all
officers, from within or without their number, shall be elected. Such officers
shall hold office until their successors are elected and qualified, or until
such office is eliminated by a vote of the majority of all directors. Officers
who may be directors shall hold office until the election and qualification of
their successors, notwithstanding an earlier termination of their directorship.

Section 4.03. Removal and Vacancies. Any officer may be
removed from such office by a majority vote of the total number of directors
with or without cause. Such removal shall be without prejudice to the contract
rights of the person so removed. A vacancy among the officers by death,
resignation, removal, or otherwise shall be filled for the unexpired term by the
Board of Directors.

Section 4.04. Chairman of the Board. The Chairman of the
Board, if one is elected, shall preside at all meetings of the shareholders and
directors and shall have such other duties as may be prescribed, from time to
time, by the Board of Directors.

Section 4.05. President. The President shall have general
active management of the business of the Corporation and shall preside at all
meetings of the shareholders and directors. The President shall be the chief
executive officer of the Corporation and shall see that all orders and
resolutions of the directors are carried into effect. The President shall be ex
officio a member of all standing committees. The President may execute and
deliver in the name of the Corporation any deeds, mortgages, bonds, contracts or
other instruments pertaining to the business of the Corporation, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed and
in general shall perform all duties usually incident to the office of the
president. The President shall have such other duties as may, from time to time,
be prescribed by the Board of Directors.

Section 4.06. Vice President. Each Vice President shall have
such powers and shall perform such duties as may be prescribed by the Board of
Directors or by the President. In the event of absence or disability of the
President, Vice Presidents shall succeed to the power and duties of the
President in the order designated by the Board of Directors.

Section 4.07. Secretary. The Secretary shall be secretary of
and shall attend all meetings of the shareholders and Board of Directors and
shall record all proceedings of such meetings in the minute book of the
Corporation. The Secretary shall give proper notice of meetings of shareholders
and the Board of Directors. The Secretary shall perform such other duties as may
from time to time be prescribed by the Board of Directors or by the President.

Section 4.08. Treasurer. The Treasurer shall keep accurate
accounts of all moneys of the Corporation received or disbursed. The Treasurer
shall deposit all moneys, drafts and checks in the name of and to the credit of
the Corporation in such banks and depositaries as a majority of the whole Board
of Directors shall from time to time designate. The Treasurer shall have power
to endorse for deposit all notes, checks and drafts received by the Corporation.
The Treasurer shall disburse the funds of the Corporation as ordered by the
directors, making proper vouchers therefor. The Treasurer shall render to the
President and the Board of Directors whenever required an account of all the
Treasurer's transactions as Treasurer and of the financial condition of the
Corporation, and shall perform such other duties as may from time to time be
prescribed by the Board of Directors or by the President.

Section 4.09. Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries, when authorized by the Board of Directors, may sign
with the President or a Vice-President certificates for shares of the
Corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Baord of Directors.

Section 4.10. Duties of Other Officers. The duties of such
other officers and agents as the Board of Directors may designate shall be set
forth in the resolution creating such office or by subsequent resolution.

Section 4.11. Compensation. The officers of the Corporation
shall receive such compensation for their services as may be determined from
time to time by resolution of the Board of Directors or by one or more
committees to the extent so authorized from time to time by the Board of
Directors.

ARTICLE V.
Shares and Their Transfer

Section 5.01. Certificates for Shares. Every holder of shares
in the Corporation shall be entitled to a certificate, to be in such form as
shall be prescribed by the Board of Directors, certifying the number of shares
in the Corporation owned by such shareholder. Certificates representing shares
of the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a
Vice-President and by the Secretary or an Assistant Secretary. All certificates
for shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. Every certificate surrendered to the Corporation for
exchange or transfer shall be cancelled, and no new certificate or certificates
shall be issued in exchange for any existing certificate until such certificate
shall have been so cancelled, except in cases provided for in Section 5.04.

Section 5.02. Issuance of Shares. The Board of Directors is
authorized to cause to be issued shares of the Corporation up to the full amount
authorized by the Articles of Incorporation in such amounts and for such
consideration as may be determined by the Board of Directors. No shares shall be
allotted except in consideration of cash, labor, personal property, or real
property, or leases thereof, or of an amount transferred from surplus to stated
capital upon a share dividend. At the time of such allotment of shares, the
Board of Directors shall state its determination of the fair value to the
Corporation in monetary terms of any consideration other than cash for which
shares are allotted. Shares so issued shall be fully paid and nonassessable. The
amount of consideration to be received in cash or otherwise shall not be less
than the par value of the shares so allotted. Treasury shares may be disposed of
by the Corporation for such consideration, expressed in dollars, as may be fixed
by the Board of Directors.

Section 5.03. Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the Corporation by
the holder or record thereof or by such person's legal representative, who shall
furnish proper evidence of authority to transfer, or by such person's attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the books
of the Corporation shall be deemed by the Corporation to be the owner thereof
for all purposes.

Section 5.04. Loss of Certificates. Any shareholder claiming a
certificate for shares to be lost, stolen or destroyed shall make an affidavit
of that fact in such form as the Board of Directors may require and shall, if
the Board of Directors so requires, give the Corporation a bond of indemnity in
form, in an amount, and with one or more sureties satisfactory to the Board of
Directors, to indemnify the Corporation against any claims that may be made
against it on account of the alleged loss, theft or destruction of the
certificate or issuance of such new certificate. A new certificate may then be
issued in the same tenor and for the same number of shares as the one claimed to
have been lost, stolen or destroyed.

Section 5.05. Facsimile Signatures. Whenever any certificate
is countersigned by a transfer agent or by a registrar other than the
Corporation or its employee, then the signatures of the officers or agents of
the Corporation may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed on any
such certificate shall cease to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation as though
the person who signed such certificate or whose facsimile signature or
signatures had been placed thereon were such officer, transfer agent or
registrar at the date of issue.

ARTICLE VI.
Dividends, Surplus, Etc.

Section 6.01. Dividends. The Board of Directors may declare
dividends on its outstanding shares from the Corporation's surplus, or if there
be none, out of its net profits for the current fiscal year, and/or the
preceding fiscal year in such amounts as are advisable in view of their
evaluation of the affairs of the Corporation in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.

Section 6.02. Use of Surplus and Reserves. The Board of
Directors may use any of the Corporation's property or funds, unless such would
cause an impairment of capital, in purchasing any of the shares, bonds,
debentures, notes, scrip or other securities or evidences of indebtedness of the
Corporation. The Board of Directors may from time to time set aside from the
Corporation's surplus or net profits such sums as it deems proper as a reserve
fund for any purpose.

ARTICLE VII.
Books and Records, Audit, Fiscal Year

Section 7.01. Books and Records. The Board of Directors of the
Corporation shall cause to be kept: (a) a stock transfer book which shall be a
charge of an officer designated by the Board of Directors; (b) records of all
proceedings of shareholders and directors; and (c) such other records and books
of account as shall be necessary and appropriate to the conduct of the corporate
business.

Section 7.02. Audit. The Board of Directors shall cause the
records and books of account of the Corporation to be audited at least once in
each fiscal year and at such other times as it may deem necessary or
appropriate.

Section 7.03. Annual Report. The Board of Directors shall
cause to be filed with the Nebraska Secretary of State in each year the annual
report required by law.

Section 7.04. Fiscal Year. The fiscal year of the Corporation
shall be fixed by a resolution of the Board of Directors.

Section 7.05. Examination by Shareholders. Any shareholder of
record of the Corporation, upon written demand under oath stating the purpose
thereof, shall have the right to inspect in person or by agent or attorney,
during usual business hours, for any proper purpose, the Corporation's stock
transfer book, a list of its shareholders and its other books and records, and
to make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a shareholder. Holders of voting
trust certificates representing shares of the Corporation shall be regarded as
shareholders for the purpose of this section 7.05. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act on behalf of the
shareholder. The demand under oath shall be directed to the Corporation at its
registered office in Nebraska or at its principal office.

ARTICLE VIII.
Indemnification

Section 8.01. Indemnification. The Corporation shall indemnify
such persons for such liabilities in such manner under such circumstances and to
such extent as permitted by Section 21-2004(15) of the Nebraska Business
Corporation Act, as now enacted or hereafter amended. The Board of Directors may
authorize the purchase and maintenance of insurance and/or the execution of
individual agreements for the purpose of such indemnification, and the
Corporation shall advance all reasonable costs and expenses (including
attorneys' fees) incurred in defending any action, suit or proceeding involving
all persons entitled to indemnification under this section 8.01, all in the
manner, under the circumstances and to the extent permitted by Section
21-2004(15) of the Nebraska Business Corporation Act, as now enacted or
hereafter amended.

ARTICLE IX.
Miscellaneous

Section 9.01. Fixing Date for Determination of Shareholders of
Record. (a) In order that the Corporation may determine the shareholders
entitled to receive notice of, or to vote at, any meeting of shareholders or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of shares or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than 50 nor less than l0 days before the
date of such meeting, nor more than 50 days prior to any other action.

(b) If the stock transfer books are not closed and no record
date is fixed for the determination of shareholders entitled to notice of or to
vote at a meeting of shareholders, or shareholders entitled to receive payment
of a dividend, in the manner prescribed by law, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders.

(c) A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.

Section 9.02. Periods of Time. During any period of time
prescribed by these Bylaws, the date from which the designated period of time
begins to run shall not be included, and the last day of the period so computed
shall be included.

Section 9.03. Voting Securities Held by the Corporation.
Unless otherwise ordered by the Board of Directors, the President shall have
full power and authority on behalf of the Corporation (a) to attend and to vote
at any meeting of security holders of other corporations in which the
Corporation may hold securities; (b) to execute any proxy for such meeting on
behalf of the Corporation; and (c) to execute a written action in lieu of a
meeting of such other corporation on behalf of the Corporation. At such meeting,
by such proxy or by such writing in lieu of meeting, the President shall possess
and may exercise any and all rights and powers incident to the ownership of such
securities that the Corporation might have possessed and exercised if it had
been present. The Board of Directors may, from time to time, confer like powers
upon any other person or persons.

Section 9.04. Purchase and Sale of Securities. Unless
otherwise ordered by the Board of Directors, the President shall have full power
and authority on behalf of the Corporation to purchase, sell, transfer or
encumber any and all securities of any other corporation owned by the
Corporation and may execute and deliver such documents as may be necessary to
effectuate such purchase, sale, transfer or encumbrance. The Board of Directors
may, from time to time, confer like powers upon any other person or persons.

Section 9.05. Contracts. The Board of Directors may authorize
any officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances.

Section 9.06. Checks, Drafts, Etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or officers,
agent or agents of the Corporation and in such manner as shall from time to time
be determined by resolution of the Board of Directors.

Section 9.07. Waiver of Notice. Whenever any notice is
required to be given to any shareholder or director of the Corporation under the
provisions of these Bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Nebraska Business Corporation Act,
such shareholder or director may waive the notice orally or in a writing signed
by the person or persons entitled to such notice, whether before or after the
time stated therein. Such waiver shall be deemed equivalent to the giving of
such notice.

ARTICLE X.
Amendments

Section 10.01. Amendments. These Bylaws may be amended,
altered or repealed, and new Bylaws may te adopted, by a vote of the majority of
the total number of directors or of the shareholders at any meeting upon proper
notice.

The undersigned, Secretary of Eco Soil Systems, Inc., a
Nebraska corporation, does hereby certify that the foregoing Amended and
Restated Bylaws are the Amended and Restated Bylaws adopted for the Corporation
by its Board of Directors at a meeting held on January 16, 1997.

/s/ Jeffrey A. Johnson
------------------------------------
Secretary

Exhibit 5.1

Eco Soil Systems, Inc.
10890 Thornmint Road, Suite 200
San Diego, California 92127

Re: Eco Soil Systems, Inc.
Registration Statement on Form SB-2
Registration No. 333-15883

Ladies and Gentlemen:

We have acted as counsel to Eco Soil Systems, Inc. (the "Company"), a
Nebraska corporation, in connection with a Registration Statement on Form SB-2
(the "Registration Statement") relating to the issuance and sale of 3,795,000
shares of Common Stock, $.005 par value (the "Shares"), of the Company. The
Shares will be issued pursuant to an Underwriting Agreement (the "Underwriting
Agreement") between the Company and R. J. Steichen and Company (the
"Underwriter").

We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our opinion
set forth below. In rendering our opinion, we have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all signatures
and the conformity to authentic originals of all documents submitted to us as
copies. We have also assumed the legal capacity for all purposes relevant hereto
of all natural persons and, with respect to all parties to agreements or
instruments relevant hereto, that such parties had the requisite power and
authority (corporate or otherwise) to execute, deliver and perform such
agreements or instruments, that such agreements or instruments have been duly
authorized by all requisite action (corporate or otherwise), executed and
delivered by such parties and that such agreements or instruments are the valid,
binding and enforceable obligations of such parties. We have also assumed that
the Shares will be issued and sold as described in the Registration Statement.

Based on the foregoing, we are of the opinion that the Shares being
sold by the Company have been duly authorized and, upon issuance, delivery and
payment therefor as described in the Underwriting Agreement, will be legally
issued, fully paid and nonassessable.

The opinion set forth above is subject to the following qualifications
and exceptions:

(a) Our opinion is subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar law
of general application affecting creditors' rights.

(b) Our opinion is subject to the effect of general principles
of equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar
doctrines affecting the enforceability of agreements generally
(regardless of whether considered in a proceeding in equity or at law).

We are admitted to practice in the State of Minnesota, and we express
no opinion as to the laws of any jurisdiction other than the State of Minnesota
and the federal laws of the United States of America. For purposes of our
opinions set forth above with respect to corporate matters, we have relied
solely on a review of (a) a copy of the Company's articles of incorporation, as
certified by the Secretary of State of the State of Nebraska and (b) a good
standing certificate issued with respect to the Company by the Secretary of
State of the State of Nebraska. We are not able to express, and do not express,
any opinion with respect to the Nebraska Business Corporation Act.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the caption
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.

Dated: January 15, 1997

Very truly yours,

/s/ DORSEY & WHITNEY LLP

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, effective as of July 10, 1996, is entered
into by and between Eco Turf Products, Inc. a Delaware corporation ("EMPLOYER"),
a wholly owned subsidiary of Eco Soil Systems, Inc., a Nebraska corporation
("ECO") and Walter Fuchs (the "EMPLOYEE"), with respect to the following facts:

RECITALS

A. EMPLOYER. Employer is a Delaware corporation engaged in the
general business of turf and crop maintenance, products, sales and service.

B. EMPLOYEE. Employee is the originator of the Turf Products
division of Employer's business and is currently being employed to act as the
Vice-President and General Manager of the Turf Products division of Employer.

C. EMPLOYMENT. Employer desires assurance of the continued
association and services of Employee in order to retain his experience, skills,
abilities, background and knowledge, and is therefore willing to engage his
services on the terms and conditions set forth below. Employee desires to be
employed by Employer and is willing to do so on the terms and conditions set
forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows.

1. EMPLOYMENT. The Employer hereby employs Employee and Employee
accepts employment with Employer pursuant to the terms and provisions of this
Agreement.

2. EFFECTIVE DATE. The effective date of this Employment
Agreement shall be as of the date first written above.

3. TERM. Said employment shall continue until the second
anniversary of the date of this Agreement (the "SCHEDULED TERMINATION DATE"),
unless terminated earlier under the provisions of Paragraph 17. Any change in
the Term of this Agreement shall be reflected by a written endorsement attached
to this Agreement and signed by Employee and a duly authorized officer of
Employer.

4. TITLE. Employee's title during the Term of employment shall
be "Vice-President" and "General Manager".

5. DUTIES OF EMPLOYEE. The duties of the Employee during the
Term of this Agreement are to perform those duties ordinarily and necessarily
performed by a Vice-President and General Manager as well as those duties deemed
necessary and appropriate by the Board of Directors of Employer or Eco.
Employee's duties shall include but not be limited to developing the initial
management structure of Turf Products, a division of Employer; continuing to
participate in trade organizations such as ITOIDA, and spearheading a
consolidation plan to locate and gain the interest of additional dealers like
Turf Products, Inc.; formulating a product line to be utilized throughout the
distribution system; overseeing management functions needed to successfully
operate Turf Products, a division of Employer; and reporting to The Golf Group
at Eco. It is envisioned that Employer shall continue to maintain offices in the
Chicago metropolitan area and that Employee's duties shall not require Employee
to travel outside the Chicago metropolitan area more than 20 business days per
calendar year (excluding any days of travel appropriate as a consequence of
Employee's involvement with ITOIDA).

6. MATTERS REQUIRING CONSENT OF BOARD OF DIRECTORS. The Employee
shall not, without specific approval of the Employer or its President, do or
contract to do any of the following:

a. Borrow on behalf of Employer sums exceeding $2,500.

b. Purchase capital equipment or make expenditures for
amounts in excess of the amounts budgeted by the Employer.

c. Do any act which would or could subject Employer to
any liability (provided that the foregoing shall not be construed as prohibiting
Employee from taking any acts undertaken in the ordinary course of Employer's
business, in good faith, and in accordance with reasonably prudent business
practices).

7. DEVOTION TO EMPLOYER'S BUSINESS. Employee shall devote such
of his time as is appropriate for a position of this type (as compared to
customary commercial practices) toward the satisfactory performance of his
duties for Employer.

8. COMPETITIVE ACTIVITIES; COVENANT NOT TO COMPETE. During the
Term of this Agreement and for a period of three (3) years after its
termination, the Employee will not directly or indirectly solicit business from,
engage in business with, or divert business from any of ECO's or Employer's
current or future customers (including without limitation any former customers
of Turf Products, Inc.), and that he will not directly or indirectly, either as
an employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in competition in any
manner with the business of the Employer, Eco or any other division of
subsidiary thereof. Such agreement not to compete shall include such activities
in any country, state or county, in which Employer, Eco, or any other division
or subsidiary thereof conducts business.

The parties intend that this covenant not to compete be
construed in the broadest possible manner. Each series of separate covenants and
agreements, one for each city, county, state, political subdivision of each
state, and country, in which Employer, Eco or any other division or subsidiary
thereof. If any court should rule that the territorial scope of this covenant
not to compete is over broad, and that any city, county, state, political
subdivision of any state, or country, specified is not permissibly within the
scope of the covenant not to compete, this covenant not to compete shall be
narrowed so that its territorial scope would be limited to the maximum
geographical area permitted by law, and shall remain effective and enforceable
with respect to each other specified city, county, state, territory and country.

If any provision of this Agreement is held to be unenforceable
or invalid by a court, the invalid or unenforceable provision shall, if
possible, be construed narrowly so as to be enforceable to the maximum extent
permitted by law. If the court cannot or will not narrow the time, scope or
effect of the unenforceable or invalid provision so as to make it enforceable
and valid, the offending provision shall be deemed severed from this Agreement,
and the remainder of this Agreement shall remain in full force and effect.

Employee acknowledges that the violation of the terms of this
Section 8 would be detrimental and cause irreparable injury to Employer and Eco
which could not be compensated by money damages. Employee agrees that an
injunction from a court of competent jurisdiction is the appropriate remedy for
these provisions, and consents to the entry of an appropriate judgment enjoining
Employee from violating these provisions in the event there is a finding of a
breach.

Notwithstanding the foregoing provisions of this Section 8, if
either Employer or ECO shall fail to remedy a material breach by either of them
of any covenant set forth in a Transaction Agreement within 30 days after
Employee delivers a written notice to Employer or ECO describing in reasonable
detail the nature of such material breach, then from and of the end of said
30-day period the provisions of this Section 8 shall have further force or
effect.

9. TRADE SECRETS. The parties acknowledge and agree that during
the term of this Agreement Employee shall have access to and become acquainted
with information concerning operations and products of Employer and Eco and that
such information constitutes Employer's trade secrets. The Employee specifically
agrees that he shall not misuse, misappropriate, or disclose any such trade
secrets, directly or indirectly, to any other person or use them in any way
during the term of this Agreement or at any time thereafter.

10. BASE COMPENSATION. The compensation to be paid to Employee
during the Term shall be as follows:

a. During the term hereof, Employee shall receive annual
compensation of One Hundred Fifty-Five Thousand Dollars ($155,000), payable in
equal monthly installments of Twelve Thousand Nine Hundred Sixteen and 67/100
Dollars ($12,916.67). The monthly installments shall be payable one-half (1/2)
on the first day of each month and one-half (1/2) on the fifteenth day of each
month.

b. Any change in the base compensation shall be
reflected by a written endorsement attached to this Agreement and signed by
Employee and a duly authorized officer of Employer.

11. INCENTIVE COMPENSATION. Employee shall be entitled to
incentive compensation as follows:

A. STOCK INCENTIVE PROGRAM. At some point in the
future, Employee may be entitled to participate in Eco's stock incentive program
and would do so based on the terms and conditions as spelled out in the proposed
Non-qualified Stock Option Plan, a copy has been provided to Employee. Employer
and Eco reserve the right to amend or terminate such non-qualified Stock Option
Plan, in their sole discretion.

B. BONUS PERFORMANCE. One of the duties that Employee
has is to locate other suitable dealers similar to Turf Products, Inc. who would
be interested in joining Eco on a basis similar to that of Turf Products, Inc.
In an effort to encourage the peak performance of Employee in this area,
Employer will grant, and Employee shall receive, an option to purchase 25,000
shares of Eco for each dealer listed on Exhibit "1" attached hereto which:

(i) Employee locates;

(ii) is approved of by the Board of Directors of
Eco, in its sole and absolute discretion, and

(iii) is able to complete a purchase, merger or
other form of consolidation with Eco, provided such purchase, merger or
other form of consolidation is closed within 90 days after termination
of this Agreement. Employee shall earn and receive such options upon
the closing of any such transactions. Whether a particular dealer is a
suitable candidate for this purpose is a decision to be made by, and is
within the sole discretion of, the Board of Directors of Eco. The
option price for such option shares shall be determined based on the
then current fair-market value of such shares at the time of closing of
each respective purchase, merger or other form of consolidation with
each dealer that has been presented by Employee and approved of by the
Board of Directors of Eco. Each such option shall terminate on the
earlier of four (4) years after issuance thereof and six (6) months
after termination of Employee's employment hereunder.

C. CASH BONUS. Employee further shall be eligible for
an annual cash bonus of $50,000, which shall be determined and paid for each
year during the term hereof, if at all, as soon as reasonably possible following
each anniversary of the commencement date of the employment hereunder. The
requirements to be satisfied in order to achieve said bonus for the first year
shall be determined by Employer and Employee in good faith within 30 days after
the date of the commencement of the term hereof, and the requirements to be
satisfied in order to achieve said bonus for the second year shall be determined
by Employer and Employee in good faith within 30 days after the start of the
second year of the term.

D. SURVIVAL. Except as otherwise agreed in writing by
the parties, in the event of termination of this Agreement pursuant to Section
17.b, 17.c or 17.d,the bonuses payable to Employee pursuant to this Section 11
(with respect to the year of the term during which the termination occurs, or
any prior year) shall continue to be payable following the termination.

12. BUSINESS EXPENSES. The Employer shall promptly reimburse
Employee for all reasonable business expenses within its stated annual budget
and for all other pre-approved business expenses incurred by the Employee on
behalf of the Employer.

13. FACILITIES. The Employer shall provide the Employee with an
office consistent with that which Employee had prior to the merger of Employer
with Eco, appropriate office equipment, supplies, stenographic and other
employee services, and all other facilities and services suitable to Employee's
position and necessary and customary for the performance of his duties.

14. MEDICAL INSURANCE. Employer agrees to provide Employee and
Employee's family at Employer expense with suitable medical insurance
commensurate with what Employee maintained for himself just prior to entering
into this Agreement (provided that Employer shall be entitled from time to time
to modify the terms of such coverage so long as the coverage provided remains
consistent with that generally provided to employees then holding positions of
like responsibility within Eco or any other subsidiaries of Eco).

15. VACATIONS. The Employee shall be entitled to four (4) weeks
vacation time each year for the Term of this Agreement, without loss of
compensation. The Employee may be absent from his employment for vacation at
such time or times as the Board of Directors shall approve. If the Employee is
unable, for any reason, to take the total amount of vacation time authorized
during any year, he may accrue that time or may, in his discretion, receive cash
payment in an amount equal to the amount of annual salary attributable to that
period of time.

16. CAR ALLOWANCE. Employer shall provide Employee with a car by
allowing Employee continued use of the cars now owned. The Employer shall be
responsible for obtaining adequate insurance coverage for the automobile and for
its maintenance.

17. TERMINATION. This Agreement may be terminated in the
following manner:

A. FOR CAUSE. The Employer may terminate this Agreement
upon thirty (30) days written notice if Employee materially breaches this
Agreement or the Agreement and Plan of Merger to which this Agreement is made
an exhibit, habitually neglects the duties he is required to perform or commits
such acts of dishonesty, fraud, misrepresentation or other acts of moral
turpitude as would prevent the effective performance of his duties.

B. WITHOUT CAUSE. This Agreement may be terminated
without cause upon thirty (30) days written notice to the Employee. If Employee
is terminated without cause, he shall be entitled to continue (a) to receive the
scheduled compensation payments contemplated by Section 10.a hereof through the
Scheduled Termination Date, and (b) to receive, at Employer's expense, family
medical insurance coverage through the Scheduled Termination Date on
substantially the same terms as those applying prior to the termination
(provided that Employer shall be entitled from time to time to modify the terms
of such coverage so long as the coverage provided remains consistent with that
generally provided to employees then holding positions of like responsibility
within Eco or any other subsidiaries of Eco).

C. BY EMPLOYEE. The Employee may terminate this
Agreement upon giving sixty (60) days written notice to the Board of Directors.

D. DEATH OR DISABILITY. In the event of Employee's
death or on the continuing incapacitating disability of the Employee for a
period in excess of one (1) year during the term of this Agreement, it shall
terminate immediately.

18. NOTICES. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally to the party to
whom notice is to be given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:

To Employer: Eco Turf Products, Inc.
c/o William B. Adams
10890 Thornmint Road, #200
San Diego, CA 92127

To Employee: Walter Fuchs
2 North 255 County Farm Road
West Chicago, IL 60185

19. ARBITRATION. Any controversy between the Employer and Employee
regarding the construction or application of any of the terms, provisions, or
conditions of this Agreement shall, upon the written request of either party
served on the other, be submitted to arbitration in Illinois in accordance with
the provisions of the American Arbitration Association.

20. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to provisions of this Agreement and contains all of the covenants and agreements
between the parties whatsoever. Each party to this Agreement acknowledges that
they have read and understood this Agreement and that no representations,
inducements, promises, or agreements, oral or otherwise, have been made by
either party or anyone acting on behalf of either party, which are not embodied
herein, and that no agreement, statement, or promise not contained in this
Agreement shall be valid or binding.

21. MODIFICATIONS. Any modification of this Agreement will be
effective only if it is in writing and signed by all of the parties.

22. SEVERABILITY. Should any provision in this Agreement be
declared invalid, void or unenforceable, then such portion shall be deemed to be
severable from this instrument and shall not affect the remainder thereof.

23. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.

24. BINDING UPON SUCCESSORS. This instrument shall be binding upon
and inure to the benefit of the personal and legal representatives, successors
and assigns, except as restricted in Paragraph 25 below, of the parties hereto
and also upon the heirs, executors and administrators of the individual persons
executing this instrument.

25. NON-ASSIGNABILITY CLAUSE. It is agreed that neither Employee
nor any other designee or successor, other than the estate of Employee, shall
have any right to commute, sell, assign, transfer, encumber or otherwise convey
the right to receive any payments hereunder, which payments and the right
thereto are expressly declared to be non-assignable and non-transferable, and
any attempt to do such shall be null and void.

26. CUMULATIVE RIGHTS. The various rights, options, elections,
powers and remedies of a party or parties to this instrument shall be construed
as cumulative and no one of them exclusive of any others or of any other legal
or equitable remedy which said party or parties might otherwise have in the
event of breach or default in the terms hereof, and the exercise of one right or
remedy by a party or parties shall not in any way impair his rights to any other
right or remedy until all obligations imposed on a party or parties have been
performed.

27. TIME. Time is of the essence of this Agreement.

28. NO WAIVER OF DEFAULT. No waiver of default by any party or
parties hereto shall be implied from any omission by a party or parties to take
any action on account of such default if such default persists or is repeated
and no express waiver shall affect any default other than the default specified
in the express waiver, and that only for the time and to the extent therein
stated. One or more waivers of any covenant, term or condition of this
instrument by a party or parties shall not be construed to be a waiver of any
subsequent breach of the same covenant, term or condition. The consent or
approval by any party or parties shall be deemed to waive or render unnecessary
the consent to or approval of said party or parties of any subsequent or similar
acts by a party or parties.

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first above written.

EMPLOYER:

ECO TURF PRODUCTS, INC.,
a Delaware corporation

By: /s/ William B. Adams
-------------------------------------------------
William B. Adams, President

EMPLOYEE:

/s/ Walter Fuchs
--------------------------
WALTER FUCHS

SCHEDULE 1 TO

INDEPENDENT TURF AND ORNAMENTAL
DISTRIBUTORS ASSOCIATION

AgraTurf Searcy, Arkansas
Benham Chemical Farmington Hills, Michigan
Big Bear Turf Equipment Omaha, Nebraska
Cannon Turf Supply Indianapolis, Indiana
The Chas. C. Hart Seed Co. Wethersfield, Connecticut
Geo. W. Hill & Co., Inc. Florence, Kentucky
Landscape Supply, Inc. Roanoke, Virginia
Lea's Green Meadows, Inc. Temple Hills, Maryland
Maxwell Turf & Supply Jericho, New York
Metro Milorganite Bedford Hills, New York
J. Mollema & Son, Inc. Grand Rapids, Michigan
Nick Knott Turf Supply Broken Arrow, Oklahoma
Professional Turf Specialties, Inc. Champaign, Illinois
SAJ Turf Federal Heights, Colorado
Sierra Pacific Turf Supply, Inc. Campbell, California
Southeastern Turf Grass Supply Jacksonville, Florida
Southern Agricultural Insecticides, Inc. Palmetto, Florida
Supreme Turf Products Eureka, Missouri
The Terre Company Clifton, New Jersey
Todd Farm Equipment Chesapeake, Virginia
Turf & Nursery Supply, Inc. Canton, Ohio
Turfgrass, Inc. South Lyon, Michigan
Turf Specialties Corp. Fort Wayne, Indiana
Turf Specialty Londonderry, New Hampshire
Turf Supply Eagan, Minnesota
Westchester Turf Supply Lincolndale, New York
Zimco Supply Sioux City, Iowa

EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
August 14, 1996 (except for Note 10, as to which the date is September 25,
1996) in Amendment No. 4 to the Registration Statement on Form SB-2 and
related Prospectus of Eco Soil Systems, Inc. for the registration of
3,795,000 shares of its common stock.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

San Diego, California
January 15, 1997

EXHIBIT 23.3

CONSENT OF BIGELOW & COMPANY, CPA, P.C., INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
July 30, 1996, with respect to the financial statements of Turf Specialty,
Inc., as a subsidiary of Eco Soil Systems, Inc., which financial statements
are not included in Amendment No. 4 to the Registration Statement on Form
SB-2 and related Prospectus of Eco Soil Systems, Inc., for the registration
of its common stock.

BIGELOW & COMPANY
Certified Public Accountants, P.C.
By:

/s/ Marie C. McKay
Marie C. McKay
Certified Public Accountant

January 15, 1997
Manchester, New Hampshire

EXHIBIT 23.4

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the use of our report dated October 3, 1996, with respect to
the financial statements of Turf Products, Ltd. in Amendment No. 4 to the
Registration Statement on Form SB-2 and related Prospectus of Eco Soil
Systems, Inc. for the registration of 3,795,000 shares of its common stock.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

San Diego, California
January 15, 1997

EXHIBIT 23.5

CONSENT OF BIGELOW & COMPANY, CPA, P.C., INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our reports
dated July 19, 1996, with respect to the financial statements of Turf
Specialty, Inc., included in Amendment No. 4 to the Registration Statement on
Form SB-2 and related Prospectus of Eco Soil Systems, Inc., for the
registration of its common stock.

BIGELOW & COMPANY
Certified Public Accountants, P.C.
By:

/s/ Marie C. McKay
Marie C. McKay
Certified Public Accountant

January 15, 1997
Manchester, New Hampshire