AgriSolar Solutions, Inc. (Form: 10-Q, Received: 02/14/2012 16:30:31)

See accompanying notes to condensed consolidated financial statements


Agrisolar Solutions, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended December 31, 2011 and 2010
(Unaudited)

	2011		2010
Net cash used in operating activities	$	(1,447,613)	$	(1,802,259)

Cash flows from investing activities:
Purchase of property, plant and equipment		(127,137)		(64,959)
Payments on intangible asset		-		(3,268)
Net cash used in investing activities		(127,137)		(68,227)

Cash flows from financing activities:
Advances from an officer and stockholder		7,453		370,916
Repayments of long-term borrowings				(29,036)
Proceeds from short-term borrowings		1,029,114		710,850
Repayments of short-term borrowings		(797,367)		(438,847)
Repayment of notes payable		(25,000)
Proceeds from private placement, net of expenses		480,770		1,820,416
Net cash provided by financing activities		694,970		2,434,299

Effect of exchange rate changes in cash and cash equivalents		104,860		57,080

Net Change In Cash and Cash Equivalents		(774,920)		620,893
Cash and Cash Equivalents, Beginning of Period		1,241,620		208,671
Cash and Cash Equivalents, End of Period		466,700	$	829,564

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	59,163	$	-
Cash paid for interest	$	160,288	$	14,900

Non-Cash Investing And Financing Activities:
Dividend on preferred stock	$	67,635	$	35,358
Conversion of preferred stock into common stock	$	25,000	$	-
Conversion of short-term borrowings into common stock	$	-	$	438,846
Conversion of note payable to common stock	$	-	$	160,000
Loss on extinguishment of debt	$	-		440,000

See accompanying notes to condensed consolidated financial statements

Agrisolar Solutions, Inc.

Notes To Condensed Consolidated Financial Statements

For The Nine Months Ended December 31, 2011 and 2010

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited financial statements of AgriSolar Solutions, Inc. at December 31, 2011 and 2010 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions to Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended March 31, 2011. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended December 31, 2011 and 2010 presented are not necessarily indicative of the results to be expected for the full year. The March 31, 2011 balance sheet has been derived from the Company’s audited financial statements included in its annual report on Form 10-K for the year ended March 31, 2011.

Note 2. Organization and Business Background

AgriSolar Solutions, Inc. (“We” “Us” “Our” “AGSO” or the “Company”) was incorporated in the State of Colorado on March 13, 2006. On January 8, 2010, we changed our name from “V2K International, Inc.” to our current name.

We are principally engaged in the design, manufacture, distribution and sales of solar energy saving, insect killer and plastic products in the People’s Republic of China (the “PRC”) and overseas.

On January 8, 2010, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Fuwaysun Technology, Ltd (“FTUS”). Pursuant to the terms of the Exchange Agreement, we agreed to acquire all of the issued and outstanding shares of common stock in FTUS, in exchange for the issuance of an aggregate of up to 58,055,000 shares of our common stock to the shareholders of FTUS, thereby causing FTUS to become a wholly-owned subsidiary of the Company (the “Share Exchange”). As a result of the Share Exchange, the former shareholders of FTUS own 99.5% of the issued and outstanding shares of the Company. In connection with the Share Exchange, all of the Company’s former directors and officers resigned from their positions and we appointed a new chairman of the Board of Director and Chief Executive Officer.

The Share Exchange has been accounted for as a reverse acquisition and recapitalization of AGSO whereby FTUS is deemed to be the accounting acquirer (legal acquiree) and AGSO to be the accounting acquiree (legal acquirer). The accompanying condensed consolidated financial statements are in substance those of FTUS, with the assets and liabilities, and revenues and expenses, of AGSO being included effective from the date of stock exchange transaction. AGSO is deemed to be a continuation of the business and operations of FTUS.

AGSO and its subsidiaries and variable interest entity (“VIE”) are hereinafter collectively referred to as (“the Company”).

Note 3. Going Concern Uncertainties

The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

For the nine months ended December 31, 2011, we experienced negative cash flows from operations of $1,447,613 with an accumulated deficit of $2,368,941 as of that date. Our continuation as a going concern through December 31, 2012 is dependent upon the collections of our accounts receivable, continuing financial support from our stockholders, and credit facilities. We are currently pursuing additional financing for our operations. However, there

is no assurance that we will be successful in securing sufficient funds to sustain the operations.

These factors raise substantial doubt about our ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in our not being able to continue as a going concern.

Note 4. Summary of Significant Accounting Policies

Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.

Inventories

Inventories consist primarily of raw materials, work in process and finished goods of solar products and plastic products and are stated at the lower of cost or net realizable value, with cost being determined on a weighted average basis. Costs include material, direct labor and manufacturing overhead costs. Allowance for obsolescence is an estimated amount based on an analysis of current business and economic risks, the duration of the inventories held and other specific identifiable risks that may indicate a potential loss. The allowance is reviewed regularly to ensure that it adequately provides for all reasonable expected losses.

For the three and nine months ended December 31, 2011, we provided for an allowance for slow-moving and obsolete inventories of $35,971.

For the three and nine months ended December 31, 2010, we did not provide for an allowance for slow-moving and obsolete inventories.

As of December 31, 2011 and March 31, 2011, the allowance for obsolescence was $55,136 and $18,178, respectively.

Product warranty and post service support

We generally offer product warranty and post-contract customer support (“PCS”) to its customers for a period of two years, free of charge. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary. We recorded no reserve for the three months ended December 31, 2011, and a reserve of $17,193 for sales returns for the nine months ended December 31, 2011. We recorded no reserve for the three and nine months periods ended December 31, 2010.

Subsidy income

Subsidy income is received at a discretionary amount as determined by the local PRC government to subsidize the research and development activities. The amount is un-conditional, non-refundable and without any restrictions on usage at the time of grant to and receipt by the Company. Such grant is recognized as income when it is received from the local PRC government during the period. We received $23,308 of subsidy income for the three and nine months ended December 31, 2011.

Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.

Our reporting currency is the United States Dollars (“US$”) and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, our operating subsidiaries in Hong Kong and the PRC maintain their books and record in their respective local currencies, Hong Kong Dollars (“HK$”) and Renminbi Yuan

(“RMB”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, “ Translation of Financial Statement” , using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity.

Translation of amounts from the local currency of our subsidiaries into US$ has been made at the following exchange rates for the nine month periods ended December 31, 2011 and 2010:


	2011	2010
Period-end rates HK$: US$1 exchange rate	7.76910	7.78320
Period average rates HK$: US$1 exchange rate	7.78414	7.77136
Period-end rates RMB: US$1 exchange rate	6.36470	6.61180
Period average rates RMB: US$1 exchange rate	6.43558	6.76000

Fair Value Measurement

ASC Topic 820, “ Fair Value Measurements and Disclosures” ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

Our financial instruments consist of cash and cash equivalents, trade receivables, other receivables, payables, line of credit, notes payable and amount due to a stockholder. The carrying values of cash and cash equivalents, trade receivables, other receivables, payables and line of credit approximate their fair value due to their short maturities.

Recent accounting pronouncements

We have reviewed all recently issued, but no yet effective, accounting pronouncements and do not believe the future adoptions of any such pronouncements may be expected to cause a material impact on our financial condition or the results of operations.

Note 5. Net (Loss) Income Per Share

Earnings per share are based on the weighted average number of shares outstanding during the period after consideration of the dilutive effect, if any, for common stock equivalents, including stock options, restricted stock, and other stock-based compensation. Earnings per common share are computed in accordance with ASC Topic 260, “ Earnings Per Share ” which requires companies to present basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing net (loss) income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding and dilutive securities outstanding during the period.

The following table sets forth the computation of basic and diluted net (loss) income per share for the three and nine months ended December 31, 2011 and 2010:

In connection with the Series AA and Series AAA Preferred Stock, we recorded accrued dividends of $67,635 and $35,358 for the nine months ended December 31, 2011 and 2010, respectively.

Note 11. Income Taxes

For the nine months ended December 31, 2011 and 2010, the United States and foreign components of (loss) income before income taxes were comprised of the following:


	2011		2010
Tax jurisdictions from:
– United States	$	(284,697)	$	(641,610)
– Foreign representing:-
- Hong Kong		(74,395)		(78,523)
- The PRC		(52,849)		1,107,628
(Loss) income before income taxes	$	(411,941)	$	387,495

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The entities that operate in various countries: United States, Hong Kong and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows:

United States of America

AGSO and FTUS are registered in the State of Colorado and are subject to the tax laws of the United States of America.

As of December 31, 2011, AGSO and FTUS incurred $2,031,420 of the aggregate net operating losses carryforwards available for federal tax purposes that may be used to offset future taxable income and will begin to expire in 2031, if unutilized. We have provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating losses carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

Hong Kong

Our operating subsidiary in Hong Kong is subject to Hong Kong Profits Tax at the statutory rate of 16.5% for the nine months ended December 31, 2011 and 2010 on the assessable income for its tax reporting years. As of December 31, 2011, $794,813 of cumulative operating losses carryforwards is available for income tax purposes at no expiration. We have provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating losses carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The PRC

Our subsidiary and VIE, Forboss and Shenzhen Fuwaysun are subject to the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), at a unified income tax rate of 25%. However, for entities operating in special economic zones that previously enjoyed preferential tax rates, the applicable tax rate is increased progressively to 25% over a 5-years’ period under a transitional policy.

Shenzhen Fuwaysun is registered and operates in Shenzhen City, the PRC and is recognized as “Enterprise Located in Special Economic Zone”. Hence, Shenzhen Fuwaysun is entitled to income tax at a preferential tax rate of 15% over the transitional period under the New CIT Law. Shenzhen Fuwaysun is also entitled to the tax holiday at 50%-reduction in its preferential corporate income tax rate for the following three years, expiring through fiscal year 2012.

The reconciliation of income tax rate to the effective income tax rate based on (loss) income before income taxes from the operation in the PRC for the nine months ended December 31, 2011 and 2010 are as follows:


	2011		2010
(Loss) income before income taxes	$	(52,849)	$	1,107,628
Statutory income tax rate		25%		25%
Income tax (benefit) expense at statutory rate		(13,212)		276,907
Effect of tax holiday		6,601		(155,067)
Effect of non-deductible items		157,730		376
Tax adjustments		(20,366)		-
Income tax expense	$	130,753	$	122,216

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2011 and March 31, 2011:


	December 31, 2011		March 31, 2011
Deferred tax assets:
Net operating loss carry forwards from:
United States	$	710,997	$	611,353
Hong Kong		131,144		118,869
		842,141		730,222
Less: valuation allowance		(842,141)		(730,222)
Deferred tax assets	$	-	$	-

As of December 31, 2011 and March 31, 2011, We have provided for a full valuation allowance against the aggregate deferred tax assets of $842,141 and $730,222 on the expected future tax benefits from the net operating losses carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. For the nine months ended December 31, 2011, the valuation allowance increased by $111,919, primarily relating to net operating losses carryforwards.

Note 12. Segment Reporting

We operate in one reportable operating segment in the design, manufacture, distribution and sales of solar energy saving, insect killer and plastic products in the PRC and Hong Kong, as defined by ASC Topic 280. All of our identifiable long-lived assets are located in the PRC during the periods presented.

Major Products

Summarized financial information concerning our major products is shown in the following table for the three and

nine months ended December 31, 2011 and 2010:


	Three Months Ended				Nine Months Ended
	December 31,				December 31 30,
	2011		2010		2011		2010
Solar products	$	3,632,442	$	1,648,108	$	10,303,420	$	7,298,955
Plastic products		521,347		142,009		790,386		323,608
Total revenue, net	$	4,153,789	$	1,790,117	$	11,093,806	$	7,622,563

Geographic Segment Reporting

In respect of geographical segment reporting, sales are based on the countries in which the customer is located, as follows:


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2011		2010		2011		2010
Revenue, net:
The PRC	$	4,123,192	$	1,670,102	$	10,948,103	$	7,449,739
Others		30,597		120,015		145,703		172,824
Total revenue, net	$	4,153,789	$	1,790,117	$	11,093,806	$	7,622,563

Note 13 Concentrations of Risk

We are exposed to the following concentrations of risk:

Major Customers

For the three months ended December 31, 2011, customers who accounts for 10% or more of our revenues and their outstanding balance at December 31, 2011 is presented as follows:


	Three months ended December 31, 2011			December 31, 2011
		Revenue	Percentage of revenue	Trade receivable
Customers
Customer A	$	1,402,997	34%	$	1,891,373
Customer B		1,361,368	33%		1,718,117
Customer C		473,803	11%		1,192,436
Total	$	3,238,168	78%	$	4,801,926

For the three months ended December 31, 2010, customers who accounts for 10% or more of our revenues and their outstanding balance at December 31, 2010 is presented as follows:


	Three months ended December 31, 2010			December 31, 2010
		Revenue	Percentage of revenue	Trade receivable
Customers
Customer D	$	491,550	27%	$	-
Customer E		524,543	29%		281,115
Total	$	1,016,093	56%	$	281,115

For the nine months ended December 31, 2011, customers who accounts for 10% or more of our revenues and their outstanding balance at December 31, 2011 is presented as follows:


	Nine months ended December 31, 2011			December 31, 2011
Customers		Revenue	Percentage of revenue	Trade receivable

Customer C	$	1,845,164	17%	$	1,192,436
Customer A		1,624,392	15%		1,891,373
Customer B		1,365,748	12%		1,718,117
Customer D		1,318,525	12%		1,872,610
Total	$	6,153,829	56%	$	6,674,536

For the nine months ended December 31, 2010, customers who accounts for 10% or more of our revenues and their outstanding balance at December 31, 2010 is presented as follows:


	Three months ended December 31, 2010			December 31, 2010
Customers		Revenue	Percentage of revenue	Trade receivable

Customer D	$	1,063,596	14%	$	-
Customer E		999,093	13%		281,115
Total	$	2,062,689	27%	$	281,115

Major Vendors

For the three months ended December 31 30, 2011, vendors who accounts for 10% or more of our purchases and their outstanding balance at December 31, 2011 is presented as follows:


	Three months ended December 31, 2011			December 31, 2011
Vendors		Purchases	Percentage of purchases	Trade payable

Vendor A	$	579,599	29%	$	582,906
Vendor B		309,429	15%		294,870
Vendor C		248,289	12%		293,733
Total	$	1,137,317	56%	$	1,171,509

For the three months ended December 31, 2010, vendors who accounts for 10% or more of our purchases and their outstanding balance at December 31, 2010 is presented as follows:


	Three months ended December 31, 2010			December 31, 2010
Vendors		Purchases	Percentage of purchases	Trade payable

Vendor D	$	348,168	33%	$	1,104,680
Vendor E		119,473	11%		326,546
Total	$	467,641	44%	$	1,431,226

For the nine months ended December 31, 2011, one vendor represented 10% or more of the Company’s purchase. This vendor accounts for 12% of purchase amounting to $934,810 with trade payable of $1,118,704 as of December 31, 2011.

For the nine months ended December 31, 2010, vendors who accounts for 10% or more of our purchases and their outstanding balance at December 312010 is presented as follows:


	Nine months ended December 31, 2010			December 31, 2010
		Purchases	Percentage of purchases	Trade payable

Vendor D	$	1,134,102	25%	$	1,104,680
Vendor E		853,659	19%		326,546
Total	$	1,987,761	44%	$	1,431,226

Note 14. Guarantees

As of December 31, 2011, its operating VIE in the PRC (“Shenzhen Fuwaysun”) is contingently liable as guarantor with respect to the loans of $549,908 (equivalent to RMB 3,500,000) to an unrelated third parties. The term of the guarantee is commenced from September 2010 through March 2012. At any time from the date of guarantees, should the third party fail to make their due debt payments, Shenzhen Fuwaysun will be obligated to perform under the guarantees by primarily making the required payments, including late fees and penalties. The maximum potential amount of future payments that the Shenzhen Fuwaysun is required to make under the guarantee is $549,908 (equivalent to RMB 3,500,000).

Note 15. Comparative figures

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation.

Note 16. Subsequent Events

We evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure.

ITEM 2.

MANAGEMENT’S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Introduction

Through our operating affiliate, Shenzhen Fuwaysun Technology Company Limited, a Peoples Republic of China (“China” or “PRC”) corporation (“Shenzhen Fuwaysun”), we are engaged primarily in the development, production and sale of solar products, including a solar insect killer and other products designed for agricultural and commercial use. Our manufacturing facility is located in Shenzhen, PRC, and a substantial majority of our current sales and business operations are in China.

Corporate History

We were incorporated in the State of Colorado on March 13, 2006 under the name V2K International, Inc. From March, 2006, through January, 2010, we were in the business of selling and supporting franchises in the residential and commercial window fashion industry, and in the business of developing and licensing proprietary software which allows users to decorate windows for both residential and commercial customers. During this time, our business operations were carried on through two wholly-owned subsidiaries, V2K Window Fashions, Inc. and V2K Technology, Inc.

On January 8, 2010, we acquired all of the issued and outstanding shares of Fuwaysun Technology, Ltd., (“Fuwaysun”), a Colorado corporation, in a share exchange transaction. As a result of completion of this share exchange transaction, Fuwaysun, its wholly-owned subsidiary Fuwaysun Technology (HK) Limited, a Hong Kong corporation (“FTHK”) and Forboss Solar (Shenzhen) Co, Ltd, a PRC corporations, which is a wholly-owned subsidiary of FTHK, became our wholly-owned subsidiaries, and Shenzhen Fuwaysun Technology Company Limited, a PRC corporation (“Shenzhen Fuwaysun”) became our operating affiliate. In conjunction with this share exchange transaction, we changed our name to AgriSolar Solutions, Inc.

We completed the share exchange transaction with Fuwaysun in order to acquire its business operations, and with the intent of focusing our business operations exclusively on the operations of Fuwaysun. As a result, on January 11, 2010, we sold our interest in V2K Window Fashions, Inc., and V2K Technology, Inc., for nominal consideration to Lotus Holdings, LLC, a Colorado limited liability company, which is an entity controlled by the former officers and directors of the Company.

As a result of completion of the share exchange transaction, Shenzhen Fuwaysun became our operating

affiliate. Shenzhen Fuwaysun was formed in 2006 to manufacture plastic injection parts and plastic moulds at its factory in Shenzhen, PRC. Initially, its business was limited to manufacturing and supplying parts for use in various products, including products used in the automotive industry, in household products, electrical appliances, hospital products, digital products, communication and computer equipment, toys and other industries. Commencing in 2007, Shenzhen Fuwaysun expanded its business to include development and production of solar products including a solar insect killer, solar mouse & bird repeller, a portable solar power supply system, a solar sprinkling and irrigation system and other solar products. For the period ended March 31, 2009, approximately 29.8% of the revenues of Shenzhen Fuwaysun came from production and sale of solar products and approximately 70.2% came from the business of manufacturing and supplying plastic injection parts and plastic moulds. For the fiscal year ended March 31, 2010, approximately 91% of the revenues of Shenzhen Fuwaysun came from production and sale of solar products and approximately 9% came from the business of manufacturing and supplying plastic injection parts and plastic moulds. For the fiscal year ended March 31, 2011, approximately 96% of the revenues of Shenzhen Fuwaysun came from production and sale of solar products and approximately 4% came from the business of manufacturing and supplying plastic injection parts and plastic moulds. For the three and nine months ended December 31, 2011, approximately 88% and 93% of the revenues of Shenzhen Fuwaysun came from production and sale of solar products and approximately 12% and 7% came from the business of manufacturing and supplying plastic injection parts and plastic moulds, respectively.

Corporate Structure

The Chart below depicts our corporate structure. As depicted below, AgriSolar owns 100% of the capital stock of Fuwaysun Technology Ltd., a Colorado corporation (“Fuwaysun”) and Fuwaysun owns 100% of the capital stock of Fuwaysun Technology (HK) Limited, a Hong Kong corporation (“FTHK”). At the present time, we do not have a direct ownership interest in Shenzhen Fuwaysun. However, through a series of contractual arrangements between FTHK and Shenzhen Fuwaysun and its shareholders, Shenzhen Fuwaysun is considered to be our operating affiliate because we are able to exert effective control over it and to receive all of the economic benefits derived from its business operations. We have agreements in place to acquire direct ownership of Shenzhen Fuwaysun, and are currently in the process of completing the administrative steps necessary to finalize the acquisition. Upon completion of these steps, FTHK will own 100% of the capital stock of Forboss Solar (Shenzhen) Co., Ltd., a PRC corporation (“Forboss”), and Forboss will own 100% of the capital stock of Shenzhen Fuwaysun, which will then be our operating subsidiary.

[AGRISOALRSOLUTIONS10Q1231001.JPG]

Current Operations

We are currently focused on the marketing and sale of our line of solar insect killers within the agricultural industry in China. China ranks first in worldwide farm output, producing a wide variety of crops including rice, wheat, potatoes, corn, cotton, peanuts, vegetables, tobacco, tea, coffee and many types of fruit. A total of approximately 120,000 of the Company’s solar insect killers are currently installed in various types of farms throughout China where all of these types of crops are being grown. Based on test results and reported results from many of these farms, we believe that our line of solar insect killers can provide effective pest control for all of these types of crops, without use of pesticides.

Ministry of Agriculture Subsidy Program

Since 2004, the China Ministry of Agriculture has had a program in place to promote the development of modern agriculture by providing subsidies for purchase of approved agricultural machinery. Six models of the Company’s line of solar insect killers have been approved by the Ministry of Agriculture, and are the only pest control products of their type which are currently approved for purchase under the terms of this subsidy program.

During calendar year 2010, the Ministry of Agriculture subsidy was 23 Billion RMB (approximately US$3.56 billion), and it is expected to be approximately 26 Billion RMB (approximately US $4.02 billion) for calendar year 2011. Under the subsidy program, farmers submit requests for purchase of approved agricultural equipment to local government offices, and following approval, the government purchases the equipment on their behalf.

We have six models of our line of solar insect killers which have been approved by the Ministry of Agriculture

Under the subsidy program, the government establishes both an allowance price and a maximum retail price for each product. The Company selects distributors and agrees to sell its products to them for the allowance price, which is the equivalent of the wholesale price. The distributors, in turn, are responsible for contacting the local government offices, which are the final purchasers of the products under the subsidy program, and negotiating the final sales price. When the government office completes the purchase transaction using subsidy funds, we receive the allowance price for each product sold, and the distributor retains the difference between the allowance price and the final negotiated purchase price.

Our profit margin from sales of our products generally ranges between 30% and 35%. However, because of the large mark-up between the allowance price and the retail price, which is the maximum purchase price the government will pay for the products under the subsidy program, the potential profit margin for distributors is much larger than the Company’s profit margin. As a result, distributors selected by the Company have a strong incentive to market the Company’s products.

Only agricultural products approved by the Ministry of Agriculture are eligible for purchase under the subsidy program. However, the program is administered by the local Department of Agriculture within each of the 32 areas in China which is designated as a province, an autonomous region or a municipality. As a result, in addition to Ministry of Agriculture approval, it is also necessary for the Company to obtain separate approval from the local Department of Agriculture in any geographical area in which it intends to make sales under the subsidy program.

During the nine months ended December 31, 2011, we were successful in selling our products under the subsidy program in 26 provinces, a significant increase as compared to the nine months ended December 31, 2010.

As of December 31, 2011, our products have been formally included for 2011 in the list of approved products for 29 provinces.

State Forestry Administration of China

The State Forestry Administration of China is responsible for monitoring national forestry affairs. Its mission is to sustain the health, diversity, and productivity of the nation’s forests and provide leadership in protection, management, pest forecasting, pest control, plant quarantine, pollution control, and aquatic ecosystems. Due to past damage to forest areas as a result of extensive use of chemicals in the past, the State Forestry Administration’s mission is to protect the forest by use of green technology and eco- friendly products. The Company’s solar insect

killer is one of the products that has been tested and authorized by the State Forestry Administration for use in helping to control pests in the National forest. The State Forestry Administration has special funding for purchasing green technology and eco-friendly products. We have begun receiving orders under this new program.

The Plant Plantation Station

The Plant Plantation Station is an arm of the China Ministry of Agricultural which is responsible for the health of food crops nationally. The Station monitors such things as soil and fertilizer technology, seed quality, seed industry development, water saving agriculture, pest control and pest forecasting. The Station has done extensive testing on the Company’s solar insect killer product line and has issued a study report to educate farmers on the advantages of using the Company’s products. In addition, the Plant Plantation Station has a program to promote the use of the solar insect killer nationally, and has special funding set aside for this program which is separate from the Ministry of Agriculture subsidy program. We have already received some orders under this program and expects to continue to receive additional orders.

Markets outside the PRC

In June, 2011, the Company entered into an International Distribution Agreement (“European Distribution Agreement”) which appoints a distributor (“European Distributor”) as the exclusive distributor for the territory of Europe defined as those states, except for Hungary and Russia, belonging to the Council of Europe. Under the terms of the Agreement, if the Company does not appoint a distributor for Hungary by May 31, 2012, then Hungary will become part of the exclusive territory under the European Distribution Agreement. Among other terms, under the European Distribution Agreement, there is no minimum purchase requirement for the year ending December 31, 2011 and a minimum purchase requirement of $1,000,000 for the year ending December 31, 2012. If the European Distributor fails to meet the minimum purchase requirements the Company may, in its sole discretion, terminate the European Distribution Agreement. The initial term of the European Distribution Agreement is for 5 years.

One of the purposes of establishing distribution channels outside China is to eliminate the seasonality associated with the agriculture industry in China. In addition, the Company believes that there is a global market for its products.

Subsequent to June, 2011, the European Distribution Agreement was revised to grant the European Distributor worldwide distribution rights for the Company’s products.

The European Distributor appointed in June, 2011, has actively engaged in establishing its business operations and in developing potential distribution channels. Its efforts to date have included, among other things, approval of the design and development of a logistical infrastructure for operating a distribution company within the European Economic Union, Eastern Europe and Russia, securing an agreement with Amazon Corporation to manage its web-based product ordering, fulfillment, billing and shipping requirements, establishing contacts or working relationships with individuals in various parts of central and eastern Europe, Russia, the Middle East and North Africa, South Africa, and Argentina to represent the Company’s products in these areas, participation in various trade shows in the United States, trade fairs in Holland for the greenhouse market, vegetable expositions in Italy for the Mediterranean field market, and a AgriTechnica Exposition in Germany, which focused on agricultural technology and equipment sales for the Eastern European field farming industry.

We have begun making sales outside of China.

Critical Accounting Policies

is no assurance that we will be successful in securing sufficient funds to sustain the operations.

These factors raise substantial doubt about our ability to continue as a going concern. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in our not being able to continue as a going concern.

We have identified the following accounting policies that are important to the presentation of financial information in this report.

Use of Estimates

In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.

Variable Interest Entity

Our subsidiary, FTHK through Shenzhen Fuwaysun operates its business in the PRC in the form of a VIE.

FTHK entered into a series of contractual arrangements with Shenzhen Fuwaysun. Through the contractual arrangements, described below, we have control of Shenzhen Fuwaysun and the right to substantially all of the risks and rewards of ownership.

Agreements that provide us with effective control over Shenzhen Fuwaysun:

1. Option Agreement, FTHK has the option to purchase all Shenzhen Fuwaysun’s assets and ownership at any time.

2. Operating Agreement and Exclusive Consulting Services Agreement, FTHK is appointed as the exclusive service provider for Shenzhen Fuwaysun to provide business support and related consulting services. Shenzhen Fuwaysun agrees to pay a consulting and service fee equal to 100% of their net profits to FTHK.

3. Pledge Agreement, Shenzhen Fuwaysun and its shareholders agreed to pledge their legal interest to FTHK as security for performance of the obligations of Shenzhen Fuwaysun under the Exclusive Consulting Services Agreement.

4. Proxy Agreement, The shareholders of Shenzhen Fuwaysun agreed to irrevocably grant FTHK all of their voting rights as shareholders of Shenzhen Fuwaysun.

With the above agreements, FTHK demonstrates its ability to control Shenzhen Fuwaysun as the primary beneficiary and the operating results of the VIE was included in the consolidated financial statements for the years presented.

We believe that FTHK’s contractual arrangements with Shenzhen Fuwaysun are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements.

Our ability to control Shenzhen Fuwaysun also depends on the voting power obtained under the Proxy Agreement. As noted above, we believe this Proxy Agreement is legally enforceable but may not be as effective as direct equity ownership.

In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the PRC government could, among other things:

· revoke our business and operating licenses;

· require us to discontinue or restrict operations;

· restrict our right to issue the invoice and collect revenues;

· block our websites;

· require us to restructure the operations in such a way as to compel us to establish a new enterprise, re-apply for the necessary licenses or relocate our business, staff and assets;

· impose additional conditions or requirements with which the Group may not be able to comply; or

· take other regulatory or enforcement actions against us that could be harmful to our business.

The imposition of any of these penalties may result in a material and adverse effect on our ability to conduct our business. In addition, if the imposition of any of these penalties causes us to lose the rights to direct the activities of Shenzhen Fuwaysun or the right to receive its economic benefits, we would no longer be able to consolidate Shenzhen Fuwaysun. We do not believe that any penalties imposed or actions taken by the PRC Government would result in the liquidation of the Company, FTHK or Shenzhen Fuwaysun.

Revenue Recognition

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition”, we recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured.

Sales of products

Revenue from the sale of solar and plastic products is recognized when the products are delivered to and received by the customers, collectability is reasonably assured and the prices are fixed and determinable.

Revenue represents the invoiced value of goods, net of value-added tax (“VAT”) and sales allowance. Our products that are locally sold in the PRC are subject to VAT which is levied at the rate of 13% to 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by us in addition to the invoiced value of purchases to the extent not refunded for export sales. We have recorded an allowance for sales returns of $17,193 for the nine months ended December 31, 2011 and no allowance for the three months ended December 31, 2011 and the three and nine months ended December 31, 2010.

Cost of revenue

Cost of revenue includes cost of raw materials, direct labor, packaging cost, depreciation and production overhead that are directly attributable to the manufacture of solar and other plastic products. Shipping and handling cost are recorded in cost of revenue and are recognized when the related product is delivered to the customer.

Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying consolidated statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

Foreign currencies translation

Our reporting currency is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, our operating subsidiaries in Hong Kong and the PRC maintain their books and record in their respective local currencies, Hong Kong Dollars (“HK$”) and Renminbi Yuan (“RMB”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830, “translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity.

Translation of amounts from the local currency of our subsidiaries into US$ has been made at the following exchange rates for the nine month periods ending December 31, 2011 and 2010:


	2011	2010
Period-end rates HK$: US$1 exchange rate	7.76910	7.78320
Period average rates HK$: US$1 exchange rate	7.78414	7.77136
Period-end rates RMB: US$1 exchange rate	6.36470	6.61180
Period average rates RMB: US$1 exchange rate	6.43558	6.76000

Stock-based compensation

Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in our statement of operations.

We use the Black-Scholes option pricing model (“Black-Sholes model”) to determine fair value. The determination of fair value of shares-based payment awards on the grant using an option-pricing model is affected our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited tom our expected stock price volatility over the term of the awards, and actual and projected employee option exercise behaviors.

Non-employee stock-based compensation is presented in accordance with the guidance ASC Topic 505, “Equity-Based Payments to Non-Employees”, stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC 718.

Fair value measurement

ASC Topic 820, “Fair Value Measurements and Disclosures” ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

Recent accounting pronouncements

Results of Operation

Results of Operation for the Three Months Ended December 31, 2011 Compared to the Three Months Ended December 31, 2010.

Revenue

Revenue for the three months ended December 31, 2011 was $4,153,789 as compared to revenue of $1,790,117 for the three months ended December 31, 2010, an increase of $2,363,672 (132%). The increase in revenue resulted from shipping products to new customers outside of the Ministry of Agriculture subsidy program. During the three months ended December 31, 2011, we made sales to State Forestry Administration of China and the Plant Plantation Station in addition to the sales made under the subsidy program.

We began limited shipments to our European distributor during the three months ended December 31, 2011.

Cost of revenue and gross profit:

Cost of revenue for the three months ended December 31, 2011, as a percentage of revenue, was 67.1% as compared to 71.7% for the three months ended December 31, 2010. Our gross profit increased $861,708 (170%) from $505,976 for the three months ended December 31, 2010 to $1,367,684 for the three months ended December 31, 2011. As a percentage of revenue, gross profit increased from 28.26% for the three months ended December 31, 2010 to 32.93% for the three months ended December 31, 2011. The increase in gross profits is primarily due to increases in material and labor costs offset by economies of scale. As a result of the PRC government’s concern of the environmental effect of lead, a significant number of battery manufacturers were shut down, which caused an increase in battery prices. We cannot determine when or if this price increase will reverse itself or when, however they have appeared to stabilize for now. Plastic costs increased with the increases in oil prices in the three months ended December 31, 2011. We were able to offset this trend by purchasing in larger quantities to get better pricing

As our light bulb production line has matured we have been more efficient. We expect this trend to keep through the end of our fiscal year.

Operating expenses

Operating expenses increased $767,764 (160 %) from $479,062 for the three months ended December 31, 2010 to $1,246,826 for the three months ended December 31, 2011.

Of our operating expenses, $512,983 and $188,011 represent selling and marketing expenses for the three months ended December 31, 2011 and 2010, respectively. The following is a breakdown of our selling and marketing expenses:


	Three Months Ended December 31,
	2011		2010		Difference
Sales commission	$	140,429	$	65,258	$	75,171
Travel and entertainment expenses		69,492		25,145		44,347
Service fee		337		-		337
Salaries		37,612		13,651		23,961
Advertising and promotion expenses		144,111		61,208		82,903
Exhibitions		113,122		10,480		102,642
Others		7,880		12,269		(4,389)
	$	512,983	$	188,011	$	324,972

Sales commissions increased $75,171 (115%) from $65,258 for the three months ended December 31, 2010 to $140,429 for the three months ended December 31, 2011 as a result of the increase in revenue and the mix of customers. More customers were house accounts and no commissions were paid on those sales.

Travel and entertainment expenses increased $44,347 (176%) from $25,145 for the three months ended December 31, 2010 to $69,492 for the three months ended December 31, 2011 as we were selling in more diverse geographic

area in the three months ended December 31, 2011 than in the three months ended December 31, 2010.

Salaries increased $23,961 (176%) from $13,651 for the three months ended December 31, 2010 to $37,612 for the three months ended December 31, 2011. We had 5 new employees assigned to the sales and marketing department.

Advertising, promotion and exhibition expenses increased $185,545 (259%) from $71,688 for the three months ended December 31, 2010 to $257,233 for the three months ended December 31, 2011. The increase was deliberate and resulted in more sales.

None of the other changes in our selling and marketing expenses are deemed to be significant.

Of our operating expenses, $733,843 and $291,051 represent general and administrative expenses for the three months ended December 31, 2011 and 2010, respectively. The following is a breakdown of our general and administrative expenses:


	Three Months Ended December 31,
	2011		2010		Difference
Provision for doubtful debts/bad debt	$	378,611	$	1,690	$	376,921
Research and development		64,133		41,164		22,969
Salaries and benefits		87,818		70,961		16,857
Professional fees		44,156		52,762		(8,606)
Travel and entertainment		36,846		25,189		11,657
Public and investor relations		22,944		735		22,209
Office supplies and expenses		21,283		21,366		(83)
Motor vehicle expenses		16,467		16,200		267
Rent expenses		8,146		8,920		(774)
Depreciation and amortization		7,950		5,925		2,025
Other administrative expenses		45,489		46,139		(650)
	$	733,843	$	291,051	$	442,792

General and administrative expenses increased $442,792 (152%) from $291,051 for the three months ended December 31, 2010 to $733,843 for the three months ended December 31, 2011.

The most significant increase was the provision for doubtful accounts, of $378,611 for the three months ended December 31, 2011, as compared to $1,690 for the three months ended December 31, 2010. A significant majority of our sales to date have been made under the Ministry of Agriculture subsidy program described above. In determining that a loss from uncollectable receivable be accrued we used the guidance in ASC Topic 310 “Receivables” (ASC 310”) and the related sections of ASC Topic “Contingencies” (ASC 450”). We contacted all of our customers with extended aging and in many cases the local agency responsible for processing the reimbursement to our customer. We reviewed the status of the outstanding invoices. In those cases where all of the supporting documentation available was not as yet complete we determined that there was a risk of loss. We estimated the amount of loss to be the amounts outstanding for aging over 1 year. We also estimated that for those amounts over 270 days documentation is still in process and not all are uncollectable. Based on our discussions as to the probability that the documentation will be available we determined that a reserve of approximately 50% of those accounts would be appropriate. In considering those receivables which were not reserved for we made an estimate that 1% of the remaining accounts would be subject to the risk of collectability. We believe that those receivables for which all of the documentation is in process are collectable because of the good faith and credit of the PRC government. We have in a number of cases received collection after one year.

During the three months ended December 31, 2011 we made a decision to increase our research and development to enhance the functionality of our existing products so that the products can be used in forested and orchard environments. Research and development expenses increased $22,969 (55.8%) from $41,164 for the three months ended December 31, 2010 to $64,133 for the three months ended December 31, 2011.

None of the other changes in our administrative expenses are deemed to be significant.

Results of Operation for the Nine Months Ended December 31, 2011 Compared to the Nine Months Ended December 31 , 2010.

Revenue

Revenue for the nine months ended December 31, 2011 was $11,093,806 as compared to revenue of $7,622,563 for the nine months ended December 31, 2010, an increase of $3,471,243 (45.5%). During the nine months ended December 31, 2011, six models of our line of solar insect killers were approved by the Ministry of Agriculture of the PRC and continued as items which were subsidized by the PRC government. As the acceptance of our product grew in 2011 we sold our products into more provinces than in 2010. Moreover, we continued to employ more sales agent to promote our products in different provinces. We made sales to State Forestry Administration of China and the Plant Plantation Station in addition to the sales made under the subsidy program.

Cost of revenue and gross profit:

Cost of revenue for the nine months ended December 31, 2011, as a percentage of revenue, was 71.0% as compared to 67.7% for the nine months ended December 31, 2010. Our gross profit increased $756,570 from $2,459,210 for the nine months ended December 31, 2010 to $3,215,780 for the nine months ended December 31, 2011. As a percentage of revenue, gross profit decreased from 32.3% for the nine months ended December 31, 2010 to 29% for the nine months ended December 31, 2011. The decrease in gross profits is primarily due to increases in material and labor costs in the second quarter of our fiscal year. This was reversed in the nine months ended December 31, 2011, our third quarter. As a result of the PRC government’s concern of the environmental effect of lead, a significant number of battery manufacturers were shut down, which caused an increase in battery prices. We cannot determine when or if this price increase will reverse itself, however they appear to have stabilized for now. Plastic costs increased with the increases in oil prices in the second quarter. We expect that plastic costs will fluctuate with the price of oil.

Although we did lay off approximately 100 employees we did not see a significant effect on our results of operations as there was a wage increase mandated by the PRC government of approximately 46.7% in mid-year.

As our light bulb light bulb production line has matured we have been more efficient. We expect this trend to keep through the end of our fiscal year.

Operating expenses

Operating expenses increased $1,919,700 (121%) from $1,588,491 for the nine months ended December 31, 2010 to $3,508,191 for the nine months ended December 31, 2011.

Of our operating expenses, $1,142,195 and $529,409 represent selling and marketing expenses for the nine months ended December 31, 2011 and 2010, respectively. The following is a breakdown of our selling and marketing expenses:


Selling	Nine Months Ended December 31,
	2011		2010		Difference
Sales commission	$	411,018	$	260,440	$	150,578
Travel and entertainment		203,794		51,180		152,614
Service fee		74,094		10,001		64,093
Salaries		100,449		33,939		66,510
Advertising and promotion expenses		184,742		119,952		64,790
Exhibitions		156,887		42,350		114,537
Others		11,211		11,547		(336)
	$	1,142,195	$	529,409	$	612,786

Sales commissions increased $150,578 (57.8%) from $260,440 for the nine months ended December 31, 2010 to

$411,018 for the nine months ended December 31, 2011 as a result of the increase in revenue and the mix of customers. More customers were house accounts and no commissions were paid on those sales..

Travel expenses increased $152,614 (298%) from $51,180 for the nine months ended December 31, 2010 to $203,794 for the nine months ended December 31, 2011 as we were selling in more diverse geographic area in the nine months ended December 31, 2011 than in the nine months ended December 31, 2010.

Service fee increased by $64,093 (640%) from $10,001 for the nine months ended December 31, 2010 to $74,094 for the nine months ended December 31, 2011 as we engaged more agents to help the distributors to accelerate the processing of our invoice with the Ministry of Agriculture of the PRC.

Salaries increased $66,510 (196%) from $33,939 for the nine months ended December 31, 2010 to $100,449 for the nine months ended December 31, 2011. We had 5 new employees assigned to the sales and marketing department.

Advertising, promotion and exhibition expenses increased $179,327 (110%) from $162,302 for the nine months ended December 31, 2010 to $341,629 for the nine months ended December 31, 2011. The increase was deliberate and resulted in more sales

None of the other changes in our selling and marketing expenses are deemed to be significant.

Of our operating expenses, $2,365,996 and $1,059,082 represent general and administrative expenses for the nine months ended December 31, 2011 and 2010, respectively. The following is a breakdown of our general and administrative expenses:


	Nine Months Ended December 31,
	2011		2010		Difference
Provision for doubtful debts/bad debt	$	1,260,282	$	201,842	$	1,058,440
Research and development		292,618		76,513		216,105
Salaries and benefits		284,286		221,247		63,039
Professional fees		145,161		123,435		21,726
Travel and entertainment		100,655		178,194		(77,539)
Public and investor relations		58,749		11,890		46,859
Office supplies and expenses		55,718		43,794		11,924
Motor vehicle expenses		52,569		41,995		10,574
Rent expenses		32,131		37,623		(5,492)
Depreciation and amortization		22,820		14,845		7,975
Other administrative expenses		61,007		107,704		(46,697)
	$	2,365,996	$	1,059,082		1,306,914

General and administrative expenses increased $1,306,914 (123%) from $1,059,082 for the nine months ended December 31, 2010 to $2,365,996 for the nine months ended December 31, 2011.

The most significant increase was the provision for doubtful accounts, of $1,260,282 for the nine months ended December 31, 2011, as compared to $201,842 for the nine months ended December 31, 2010. A significant majority of our sales to date have been made under the Ministry of Agriculture subsidy program described above. In determining that a loss from uncollectable receivable be accrued we used the guidance in ASC Topic 310 “Receivables” (ASC 310”) and the related sections of ASC Topic “Contingencies” (ASC 450”). We contacted all of our customers with extended aging and in many cases the local agency responsible for processing the reimbursement to our customer. We reviewed the status of the outstanding invoices. In those cases where all of the supporting documentation available was not as yet complete we determined that there was a risk of loss. We estimated the amount of loss to be the amounts outstanding for aging over 1 year. We also estimated that for those amounts over 270 days documentation is still in process and not all are uncollectable. Based on our discussions as to the probability that the documentation will be available we determined that a reserve of approximately 50% of those accounts would be appropriate. In considering those receivables which were not reserved for we made an estimate that 1% of the remaining accounts would be subject to the risk of collectability. We believe that those receivables

for which all of the documentation is in process are collectable because of the good faith and credit of the PRC government. We have in a number of cases received collection after one year.

During the nine months ended December 31, 2011 we made a decision to increase our research and development to enhance the functionality of our existing products so that the products can be used in forested and orchard environments. Research and development expenses increased $216,105 (282%) from $76,513 for the nine months ended December 31, 2010 to $292,618 for the nine months ended December 31, 2011.

Salaries and benefits increased $63,039 (28.5%) from $221,247 for the nine months ended December 31, 2010 to $284,286 for the nine months ended December 31, 2011. The increase resulted primarily from the hiring of a Chief Financial Officer for our factory in Shenzhen, PRC.

Professional fees increased $21,726 (17.6%) from $123,435 for the nine months ended December 31, 2010 to $145,161 for the nine months ended December 31, 2011. This results primarily from increased accounting and auditing fees and the use of more consultants.

Travel and entertainment decrease $77,539 (43.5%) from $178,194 for the nine months ended December 31, 2010 to $100,655 for the nine months ended December 31, 2011. We anticipate an increased travel expenses to be closer to 2010 levels.

Included in other administrative expenses is an adjustment for an over accrual of social insurance expenses in prior years of $67,376. None of the other changes in our administrative expenses are deemed to be significant.

Liquidity and Capital Resources

As of December 31, 2011, we had working capital of $3,811,865 as compared to a working capital of $3,817,347 at March 31, 2011. However the working capital at December 31, 2011 included accounts receivable of $11,333,880, broken down as follows.


Accounts receivable, trade
- Billed	$	5,282,516
- Accrued		7,432,139
		12,714,655
Less: allowances for doubtful accounts and returns		(1,380,775)
Accounts receivable, net	$	11,333,880

For the nine months ended December 31, 2011, we provided for an allowance for doubtful accounts of $1,243,089. In addition, we provided an allowance for returns of $17,193 for the nine months ended December 31, 2011.

Accrued accounts receivable represents revenue from the products that are delivered to, received by and accepted by the customers prior to invoicing, and are presented on the balance sheets in the aggregate with accounts receivable. The accrual results from delays in completion of required documentation under governmental procedures.

Our receivables tend to be outstanding for extended periods of time. Of the total billed accounts receivable at December 31, 2011, $367,068 were between 0 and 90 days old, $361,124 were between 91 and 180 days old, and $4,554,324 were over 180 days old. Of the total accrued accounts receivable at December 31, 2011, $3,922,379 were between 0 and 90 days old, $293,466 were between 91 and 180 days old, and $3,216,294 were over 180 days old. This results primarily from our customers’ aging of government subsidy payments. .

In determining that a loss from uncollectable receivable be accrued we used the guidance in ASC Topic 310 “Receivables” (ASC 310”) and the related sections of ASC Topic “Contingencies” (ASC 450”). We contacted all of our customers with extended aging and in many cases the local agency responsible for processing the reimbursement to our customer. We reviewed the status of the outstanding invoices. In those cases where all of the supporting documentation available was not as yet complete we determined that there was a risk of loss. We estimated the amount of loss to be the amounts outstanding for aging over 1 year. We also estimated that for those amounts over

270 days documentation is still in process and not all are uncollectable. Based on our discussions as to the probability that the documentation will be available we determined that a reserve of approximately 50% of those accounts would be appropriate. In considering those receivables which were not reserved for we made an estimate that 1% of the remaining accounts would be subject to the risk of collectability. We believe that those receivables for which all of the documentation is in process are collectable because of the good faith and credit of the PRC government. We have in a number of cases received collection after one year. We will continue to monitor our receivable closely. We believe that our receivables, not reserved for, are collectable, albeit slowly

Up to February 13, 2012 we collected approximately $902,145 (8%) of the balance of the net accounts receivable and we billed approximately $1,201,402 (16%) of the accrued receivables.

We are currently exploring the possibility of factoring or selling our receivables to generate cash flow. There can be no assurance that we will be able to find buyer or investor for our receivables.

During the nine months ended December 31, 2011 we used cash in operations of $1,447,613, as compared to cash used in operations of $1,802,259 for the nine months ended December 31, 2010. For the nine months ended December 31, 2011 we used cash of $127,137 for investing activities as compared to cash used for investing activities of $68,227 for the nine months ended December 31, 2010. Cash in the amount of $694,970 was provided from financing activities for the nine months ended December, 31, 2011 as compared to $2,434,299 for the nine months ended December 31, 2010.

As of December 31, 2011, we have an outstanding liability to our CEO, Liang Chao Wei, in the amount of $955,844, which represents temporary advances made by Mr. Liang to fund current operations. The advances are unsecured and interest-free. Mr. Liang has agreed that no repayment of any portion of these temporary advances is required until we are profitable and have generated annual gross revenues of in excess of $30,000,000.

On December 10, 2009, we issued a promissory note (the “Note”) with a principal amount of $500,000, together with accrued interest in the amount of $100,000 due and payable on May 10, 2010, to a Director of the Company. The Note is in default and accordingly interest is charged at 18% per annum until such time as the note is paid in full. During the nine months ended December 31, 2011 we made payments of $100,000 which represented accrued interest. The note is currently in default.

Prior to closing of the share exchange transaction between the Company and Fuwaysun Technology, Ltd., on January 8, 2010, Fuwaysun acquired control of the Company through the purchase of a total of 172,712 shares, or approximately 57.88%, of the then issued and outstanding common stock. The shares were purchased from Lotus Holdings, LLC, a shareholder of the Company, for a total purchase price of $350,000, including $200,000 paid in cash and $150,000 through execution of a promissory note due and payable on or before January 8, 2011. During the nine months ended December 31, 2011 we made payments aggregating $75,000 on the note. The note is currently in default.

At December 31, 2011, we had contractual obligations under various non-cancelable operating leases of approximately $309,820 of which $120,834 is due by December 31, 2012.

The aggregate minimum requirements under the non-cancelable leases at December 31, 2011 are as follows:



Years ending December 31,:
2012	$	120,834
2013		94,658
2014		80,941
2015		12,357
2016		1,030
Total:	$	309,820

We anticipate that we will require additional working capital for various purposes, including payment of expenses associated with production and sale of our line of solar insect killer under the subsidy program of the PRC Ministry

of Agriculture. Based on initial purchase plan estimates received from 29 provinces, management is expecting significant orders of its solar insect killer for the remainder of 2011 and for 2012. The expenses associated with a rapid increase in production include purchase of raw materials, payment of costs associated with hiring additional staff, and payment of costs associated with an increase in inventory.

We also intend to use working capital to improve the efficiency of the our production line and to pay marketing and development costs related to seeking to establish distribution channels for our products in markets outside of China, including particularly the US and South America. In that regard we have entered into a distribution agreement for Europe.

The Company does not currently have any commitments to obtain working capital. We are currently assessing all options to raise working capital.

We have begun selling our products outside of the PRC and to customers other than those that receive subsidy payment in the PRC.

We are currently expanding our operations in the European market. In May 2011 we entered into a distribution agreement for the exclusive distribution of our products in Europe. The distributor is currently ordering samples and developing its distribution strategies. We anticipate deriving revenues from sales in the European market by the end of our fiscal year, March 31, 2012. We believe that this will have a positive effect on our cash flow as there will be no deferred payment terms on all sales outside of the PRC.

Summary December 31, 2011

Our need to raise additional equity or debt financing and our ability to generate cash flow from operations will depend on the timing of additional provinces within the PRC approving the subsidy payments for the purchase of our products and our ability to expand to new markets outside of the PRC. If our working capital is insufficient to fund the implementation of our business plan we will be required to seek additional financing sooner than currently anticipated in order to proceed with our business goals. In the event that we need additional capital and are unable to obtain it, we could be left without sufficient liquidity.

Off-Balance Sheet Arrangements

At December 31, 2011 we had no obligations that would qualify to be disclosed as off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean the controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and

forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended December 31, 2011, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 1A.

RISK FACTORS.

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

(REMOVED AND RESERVED)

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), is entered into as of November 16, 2009, by and among Lotus Holdings, LLC (the “Seller”), on the one hand, and each of the buyers identified on Schedule A attached hereto (collectively, the “Buyers” and individually, each a “Buyer”). Each party to this Agreement is referred to herein as a “Party,” and they are all referred to collectively as “Parties.”

RECITALS:

WHEREAS, the Seller is the aggregate owner of 22,378,401 shares (the “Shares”) of the common stock, $0.001 per share (the “Common Stock”), of V2K International, Inc., a Colorado corporation (the “Company”), which constitutes approximately 60.0% of the total outstanding shares of the Common Stock of the Company immediately prior to the Closing (as defined below); and

WHEREAS, the Seller desires to sell and the Buyers desire to purchase from the Seller the Shares on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties and agreements set forth herein, the Parties hereto agree as follows:

ARTICLE I

SALE AND PURCHASE OF SHARES

1.1

Incorporation of Recitals . The provisions and recitals set forth above are hereby referred to and incorporated herein and made a part of this Agreement by reference.

1.2

Escrow Agent . In conjunction with the transactions contemplated herein, the Parties acknowledge and agree that Frascona, Joiner, Goodman and Greenstein, P.C. (the “Escrow Agent”), shall serve as escrow agent for the transactions described herein, pursuant to the terms of an Escrow Agreement (the “Escrow Agreement”), a copy of which is attached hereto as Exhibit A , which shall be executed by Seller, Buyers and Escrow Agent simultaneously with the mutual execution of this Agreement.

1.3

Sale and Purchase of Shares . Subject to the terms and conditions of this Agreement, at the Closing, the Seller hereby agrees to sell to Buyers and Buyers agree to purchase from the Seller the Shares for an aggregate purchase price of three hundred fifty thousand dollars (US $350,000) (the “Purchase Price”). Upon the mutual execution of this Agreement, Seller shall deliver to the Escrow Agent stock certificate(s) evidencing the Shares in negotiable form, duly endorsed in blank, or with stock transfer powers attached thereto (the “Share Certificates”), and Buyers have deposited two hundred thousand dollars (US $200,000) of the Purchase Price (the “Cash Portion”) and a promissory note in the principal amount of one hundred fifty thousand dollars (US $150,000) with a maturity date that is 12 months from the Closing Date, a copy of which is attached hereto as Exhibit B (the “Promissory Note”), in Escrow Agent’s Colorado Business Bank Holding Trust Account.

1.4

Closing . The closing of the transactions contemplated by this Agreement (the “Closing”) shall, unless otherwise agreed to in writing by the Parties, take place on or before December 11, 2009 (the “Closing Date”). On the Closing Date, upon signed written instructions from Seller and Buyers, Escrow Agent shall deliver the Cash Portion of the Purchase Price (after deducting any funds advanced by Buyers

Securities Purchase Agreement

Page 1 of 21

pursuant to Section 5.1 herein) and the executed Promissory Note to Seller and shall deliver the Share Certificates to the Buyers. On the Closing Date the Seller shall cause to be delivered to Buyers: (a) resignations of the officers and directors of the Company and their written appointment of one or more persons designated by Buyers as successor officers and directors; and all corporate documents (minutes, resolutions, agreements and contracts), bank accounts, check books, common seals, memorandum and articles and amendments, etc. of the Company.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller hereby represents and warrants to Buyers that now and as of the Closing:

2.1

Due Organization and Qualification; Subsidiaries; Due Authorization.

(a)

The Company is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of formation, with full corporate power and authority to own, lease and operate its business and properties and to carry on its business in the places and in the manner as presently conducted. The Company is duly qualified and in good standing as a foreign corporation in each jurisdiction in which the properties owned, leased or operated, or the business conducted, by it requires such qualification except for any failure to qualify, which when taken together with all other failures to qualify, is not likely to have a material adverse effect on the business of the Company.

(b)

Except for the companies identified on Schedule B , the Company does not have, and has never had, any subsidiaries and does not own, directly or indirectly, any capital stock, equity or interest in any corporation, firm, partnership, joint venture or other entity. The Seller represents and warrants that all of the Company’s business operations are conducted exclusively through the companies identified on Schedule B , and other than the business operations conducted through such subsidiary companies, the Company does not conduct any business operations.

(c)

Seller is the beneficial owner of the Shares and has sole power and authority over the disposition of the Shares. The Shares are free and clear of any liens, claims, encumbrances, and charges. The Shares have not been sold, conveyed, encumbered, hypothecated or otherwise transferred by Seller except pursuant to this Agreement. Seller has the legal right to enter into and to consummate the transactions contemplated hereby and otherwise to carry out its obligations hereunder, and at Closing, Buyers shall receive good and marketable title to the Shares free and clear of any liens, claims, encumbrances and charges. This Agreement constitutes the valid and binding obligation of Seller. The execution, delivery and performance by the Seller of this Agreement does not violate any contractual restriction contained in any agreement which binds or affects or purports to bind or affect the Seller. The Seller is not a party to any agreement, written or oral, creating rights in respect of any of such Shares in any third party or relating to the voting of the Shares. The Seller is not a party to any outstanding or authorized options, warrants, rights, calls, commitments, conversion rights, rights of exchange or other agreements of any character, contingent or otherwise, providing for the purchase, issuance or sale of any of the Shares, and there are no restrictions of any kind on the transfer of any of the Shares other than (a) restrictions on transfer imposed by the Securities Act of 1933, as amended (the “Securities Act”) and (b) restrictions on transfer imposed by applicable state securities or “blue sky” laws.

2.2

No Conflicts or Defaults. The execution and delivery of this Agreement by the Seller and the consummation of the transactions contemplated hereby do not and shall not (a) contravene the Articles of Incorporation or By-laws of the Company or (b) with or without the giving of notice or the passage of time (i) violate, conflict with, or result in a breach of, or a default or loss of rights under, any material

Securities Purchase Agreement

Page 2 of 21

covenant, agreement, mortgage, indenture, lease, instrument, commitment, arrangement, permit or license to which the Seller or the Company is a party or by which the Seller or the Company is bound (each a “Contract”), or any judgment, order or decree, or any federal, state or other statute, law, ordinance, rule or regulation to which the Seller or the Company is subject, (ii) result in the creation of, or give any party the right to create, any mortgage, security interest, lien, charge, easement, lease, sublease, covenant, option, claim, restriction or encumbrance or any other right or adverse interest (“Liens”) upon any of the properties or assets of the Company, (iii) terminate or give any party the right to terminate, amend, abandon or refuse to perform, any Contract to which the Seller or the Company is a party or by which the Company’s assets are bound, or (iv) accelerate or modify, or give any party the right to accelerate or modify, the time within which, or the terms under which, the Seller or the Company is to perform any duties or obligations or receive any rights or benefits under any material agreement, arrangement or commitment to which it is a party.

2.3

Capitalization. On the Closing Date, the authorized capital stock of the Company consists of 110,000,000 shares of capital stock, of which 100,000,000 shares are Common Stock, par value $0.001, and 10,000,000 shares are preferred stock, par value $.001 per share, of which 37,297,336 shares of Common Stock are, as of the date hereof, issued and outstanding (the “Company Shares”). The Company has no issued and outstanding shares of preferred stock. All of the Company Shares are duly authorized, validly issued, fully paid and nonassessable, and have not been issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right, or any similar right of stockholders. Other than as disclosed in the Company’s reports and filings with the SEC or herein, the Company Shares are not, and the Shares are not and will not be as of the Closing, subject to any preemptive or subscription right, and there is no outstanding voting trust agreement or other Contract, agreement, arrangement, option, warrant, call, commitment or other right of any character obligating or entitling the Company to issue, sell, redeem or repurchase any of its securities, and there is no outstanding security of any kind convertible into or exchangeable for the Common Stock of the Company, nor has the Company, or any of its agents orally agreed to issue any of the foregoing. There are no declared or accrued unpaid dividends with respect to any shares of the Company’s Common Stock. Other than as disclosed in the Company’s reports and filings with the SEC or herein, there are no agreements, written or oral, between the Company and any of its stockholders or among any stockholders relating to the acquisition (including without limitation rights of first refusal or preemptive rights), or disposition, or registration under the Securities Act or voting of the capital stock of the Company, and there are no outstanding shares of Common Stock that are subject to vesting. The Company has no capital stock other than the Common Stock authorized, issued or outstanding.

2.4

Financial Statements.

(a)

SEC Documents . The Seller hereby makes reference to the documents filed with the United States Securities and Exchange Commission (the “SEC”), as posted on the SEC’s website, www.sec.gov : (collectively, the “SEC Documents”) under the Company’s name. The SEC Documents constitute all of the documents and reports that the Company was required to file with the SEC pursuant to the Securities Act of 1933, as amended (“Securities Act”), and the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the rules and regulations promulgated thereunder by the SEC. All the Company Existing Financial Statements included in the Company’s annual and quarterly reports filed with the SEC (all such statements being referred to collectively as the “Company Existing Financial Statements”), together with the notes thereto, have been prepared in accordance with U.S. generally accepted accounting principles applied on a basis consistent throughout all periods presented. These Company Existing Financial Statements present fairly the financial position of the Company as of the dates and for the periods indicated. The books of account and other financial records of the Company have been maintained in accordance with good business practices.

Securities Purchase Agreement

Page 3 of 21

(b)

Since the date of the latest Company Existing Financial Statements (the “Most Recent Date”), there has been no material adverse change in the condition, financial or otherwise, net worth, prospects or results of operations of the Company. Without limiting the foregoing, since the Most Recent Date:

(i)

the Company has not sold, leased, transferred or assigned any of its assets, tangible or intangible, other than in the ordinary course of business;

(ii)

the Company has not entered into any agreement, Contract, commitment, lease or license (or series of related agreements, Contracts, commitments, leases and licenses);

(iii)

no party (including the Company) has accelerated, terminated, modified or canceled any agreement, Contract, lease or license (or series of related agreements, Contracts, leases and licenses) to which the Company is a party or by which the Company or its assets are bound;

(iv)

the Company has not made any capital expenditure (or series of related capital expenditures) of whatever nature;

(v)

the Company has not made any capital investments in, any loans to, or any acquisitions of the securities or assets of any other person (or a series of related capital investments, loans and acquisitions);

(vi)

declared or paid any dividends or made any other distribution to its stockholders whether or not upon or in respect of any shares of its capital stock;

(vii)

redeemed or otherwise acquired any shares of its capital stock (except upon the exercise of outstanding options) or any option, warrant or right relating thereto;

(viii)

except as disclosed on Schedule C , the Company has not issued any notes, bonds or other debt securities, or created, incurred, assumed or guaranteed any liabilities, obligations or indebtedness for borrowed money or capitalized lease obligation;

(ix)

the Company has not canceled, compromised, waived or released any right or claim (or series of related rights and claims) or material indebtedness;

(x)

except as disclosed on Schedule C , the Company has not made any loans to, or entered into any other transactions with, any of its directors, officers, or employees; and

(xi)

the Company has not committed to do any of the foregoing.

2.5

Further Financial Matters . The Company does not have any (a) assets of any kind or (b) liabilities or obligations, whether secured or unsecured, accrued, determined, absolute or contingent, asserted or unasserted or otherwise, which are required to be reflected or reserved in a balance sheet or the notes thereto under generally accepted accounting principles, and which are not reflected in the Company Existing Financial Statements.

2.6

Taxes . The Company has filed all United States federal, state, county, local and foreign, national, provincial and local returns and reports which were required to be filed on or prior to the Closing Date hereof in respect of all income, withholding, franchise, payroll, excise, property, sales, use, value-added or other taxes or levies, imposts, duties, license and registration fees, charges, assessments or

Securities Purchase Agreement

Page 4 of 21

withholdings of any nature whatsoever (together, “Taxes”), and has paid all Taxes (and any related penalties, fines and interest) which have become due pursuant to such returns or reports or pursuant to any assessment which has become payable, or, to the extent its liability for any Taxes (and any related penalties, fines and interest) has not been fully discharged, the same have been properly reflected as a liability on the books and records of the Company and adequate reserves therefor have been established. All such returns and reports filed on or prior to the date hereof have been properly prepared and are true, correct (and to the extent such returns reflect judgments made by the Company, as the case may be, such judgments were reasonable under the circumstances) and complete in all material respects. The amount shown on the Company’s most recent balance sheet in the Company Existing Financial Statements as provision for taxes is sufficient in all material respects to pay all accrued and unpaid federal, state, local and foreign taxes for the period then ended and all prior periods. No tax return or tax return liability of the Company has been audited or, is presently under audit. The Company has not given or been requested to give waivers of any statute of limitations relating to the payment of any Taxes (or any related penalties, fines and interest). There are no claims pending or, to the knowledge of the Seller, threatened, against the Company for past due Taxes. All payments for withholding taxes, unemployment insurance and other amounts required to be paid for periods prior to the date hereof to any governmental authority in respect of employment obligations of the Company, including, without limitation, amounts payable pursuant to the Federal Insurance Contributions Act, have been paid or shall be paid prior to the Closing and have been duly provided for on the books and records of the Company and in the Company Existing Financial Statements. All such amounts and penalties are set forth in the Company’s most recent balance sheet in the Company Existing Financial Statements.

2.7

Liabilities; No Defaults.

(a)

Company Liabilities . Other than those liabilities disclosed on Schedule C (the “Company Liabilities”), the Company does not have any obligations or liabilities of any nature (matured or unmatured, fixed or contingent).

(b)

Except for certain liabilities disclosed on Schedule C , neither the Company, nor, to the Seller’s knowledge, any other person or entity, is in breach of, or in default under any Contract, agreement, arrangement, commitment or plan to which the Company is a party, and no event or action has occurred, is pending or is threatened, which, after the giving of notice, passage of time or otherwise, would constitute or result in such a breach or default by the Company or, to the knowledge of the Seller, any other person or entity. The Company has not received any notice of default under any Contract, agreement, arrangement, commitment or plan to which it is a party, which default has not been cured to the satisfaction of, or duly waived by, the party claiming such default on or before the date hereof.

2.8

Real Property. The Company does not own or lease any real property.

2.9

Compliance.

(a)

To the knowledge of the Seller, the Company is not conducting its business or affairs in violation of any applicable federal, state or local law, ordinance, rule, regulation, court or administrative order, decree or process, or any requirement of insurance carriers. The Company has not received any notice of violation or claimed violation of any such law, ordinance, rule, regulation, order, decree, process or requirement.

(b)

To the knowledge of the Seller, the Company is in compliance with all applicable federal, state, local and foreign laws, rules and regulations. There are no claims, notices, actions, suits, hearings, investigations, inquiries or proceedings pending or, to the knowledge of the Seller, threatened

Securities Purchase Agreement

Page 5 of 21

against the Company, and there are no past or present conditions that the Company has reason to believe are likely to give rise to any liability or other obligations of the Company under any circumstances.

2.10

Permits and Licenses . The Company has all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as are reasonably necessary to conduct its business and to own, lease, use, operate and occupy its assets, at the places and in the manner now conducted and operated. The Company has not received any written or oral notice or claim pertaining to the failure to obtain any material permit, certificate, license, approval or other authorization required by any federal, state or local agency or other regulatory body, the failure of which to obtain would materially and adversely affect its business.

2.11

Litigation.

(a)

Other than as disclosed in the Company’s reports and filings with the SEC or herein, there is no claim, dispute, action, suit, inquiry, proceeding or investigation pending or, to the knowledge of the Seller, threatened, against or affecting the business of the Company, or challenging the validity or propriety of the transactions contemplated by this Agreement, at law or in equity or admiralty or before any federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality, nor has any such claim, dispute, action, suit, proceeding or investigation been pending or threatened during the 12 month period preceding the date hereof;

(b)

There is no outstanding judgment, order, writ, ruling, injunction, stipulation or decree of any court, arbitrator or federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality, against or affecting the business of the Company; and

(c)

Other than as disclosed in the Company’s reports and filings with the SEC or herein, the Company has not received any written or verbal inquiry from any federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality concerning the possible violation of any law, rule or regulation or any matter disclosed in respect of its business.

2.12

Articles of Incorporation and By-laws; Minute Books . Copies of the Company’s Articles of Incorporation and its By-laws have been provided to the Buyers. Such copies of the Articles of Incorporation and By-laws (or similar governing documents) of the Company, and all amendments to each as provided are true, correct and complete. The minute books of the Company as forwarded to the Buyers contain true, correct and complete records of all meetings and consents in lieu of meetings of its Board of Directors (and any committees thereof), or similar governing bodies, since the time of its organization. The stock books of the Company as forwarded to the Buyer are true, correct and complete.

2.13

Employee Benefit Plans. The Company does not maintain, nor has the Company maintained in the past, any employee benefit plans (“as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), or any plans, programs, policies, practices, arrangements or contracts (whether group or individual) providing for payments, benefits or reimbursements to employees, officers or consultants of the Company, former employees, officers or consultants of the Company, their beneficiaries and dependents under which such employees, officers or consultants, former employees, officers or consultants, their beneficiaries and dependents are covered through an employment relationship with the Company, any entity required to be aggregated in a controlled group or affiliated service group with the Company for purposes of ERISA or the Internal Revenue Code of 1986 (the “Code”) (including, without limitation, under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at any relevant time (“Benefit Plans”).

Securities Purchase Agreement

Page 6 of 21

2.14

Patents; Trademarks and Intellectual Property Rights. The Company does not own or possess any patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, Internet web site(s) or proprietary rights of any nature. The business conducted by the Company has not and will not cause the Company to infringe or violate any of the patents, trademarks, service marks, trade names, copyrights, mask-works, licenses, trade secrets, processes, data, know-how or other intellectual property rights of any other person.

2.15

Brokers . Neither the Company nor the Seller has agreed to or incurred any obligation or other liability that could be claimed against the Company, Seller or Buyers or any other person for any finder’s fee, brokerage commission or similar payment.

2.16

Quotation on OTCBB . The Company’s Common Stock is currently eligible for quotation on the OTC Bulletin Board (the “Bulletin Board”), under the symbol VTOK.OB and the Company has not received any notices that its Common Stock will not be eligible for quotation on the Bulletin Board.

2.17

Affiliate Transactions . Except as disclosed on Schedule C , no officer, director, employee or other affiliate of the Company (or any of the relatives or affiliates of any of the aforementioned persons) is a party to any agreement, Contract, commitment or transaction with the Company or affecting the business of the Company, or has any interest in any property, whether real, personal or mixed, or tangible or intangible, used in or necessary to the Company which will subject the Company to any liability or obligation from and after the Closing Date.

2.18

Compliance . The Company has complied with the requirements of the Exchange Act and the Securities Act, and is current in its filings under the Exchange Act and the Securities Act.

2.19

Filings . None of the filings made by the Company under the Exchange Act or the Securities Act contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

2.20

Consents . No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission (“Governmental Entity”) is required by or with respect to the Seller in connection with the execution and delivery of this Agreement and any related agreements to which the Seller is a party or the consummation of the transactions contemplated hereby and thereby, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities laws.

2.21

Schedules . All lists or other statements, information or documents set forth in, or attached to any Schedule provided pursuant to this Agreement or delivered hereunder shall be deemed to be representations and warranties by the Seller with the same force and effect as if such lists, statements, information and documents were set forth herein. Any list, statement, document or any information set forth in, or attached to any Schedule provided pursuant to this Agreement or delivered hereunder shall not be deemed to constitute disclosure for the purposes of any other Schedule provided pursuant to this Agreement unless specific cross reference is made and shall survive after closing.

2.22

Environmental Matters . The Company has never: (i) operated any underground storage tanks at any property that the Company has at any time owned, operated, occupied or leased; or (ii) illegally released any material amount of any substance that has been designated by any Governmental Entity or by applicable foreign, federal, state, or local law to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, petroleum, and

Securities Purchase Agreement

Page 7 of 21

urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws), but excluding office and janitorial supplies properly and safely maintained.

2.23

Representations and Warranties . The representations and warranties of the Seller included in this Agreement and any list, statement, document or information set forth in, attached to any Schedule provided pursuant to this Agreement or delivered hereunder, are true and complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein not misleading, under the circumstance under which they were made and shall survive after closing as set forth herein.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BUYERS

Each of the Buyers hereby represents and warrants to the Seller, severally and not jointly, that now and as of the Closing:

3.1

Authority Relative to this Agreement . Such Buyer has the requisite power and/or authority to enter into this Agreement and carry out his/her obligations hereunder. This Agreement has been duly and validly executed and delivered by the Buyer and constitutes a valid and binding obligation of the Buyer, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.

3.2

Buyer Representation Regarding the Securities . Such Buyer understands that the Shares are “restricted securities” as defined in Rule 144 under the Securities Act of 1933, and such Buyer is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other persons regarding the distribution of such Shares (this representation and warranty not limiting such Buyer’s right to sell the Shares pursuant to a registration statement filed under the Securities Act or otherwise in compliance with applicable federal and state securities laws). The Buyer is acquiring the Shares hereunder in the ordinary course of its business. The Buyer does not have any agreement or understanding, directly or indirectly, with any person to distribute any of the Shares.

3.3

Experience of the Buyer. Such Buyer, either alone or together with its representatives, have such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. The Buyer is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

3.4

General Solicitation . The Buyer is not receiving the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

Securities Purchase Agreement

Page 8 of 21

ARTICLE IV

COVENANTS OF THE SELLER

4.1

Resignation and Appointment of the Company’s Officers and Directors. Effective as of the Closing Date, or such later date as agreed to between the Buyers and Seller: (i) the Seller will cause the Company’s officers to resign and be duly replaced by the Buyer’s designees; and (ii) the Seller will cause the Company’ directors to resign and be duly replaced by Buyer’s director designees.

4.2

Payment of Company Liabilities . Except for those liabilities set forth on Schedule D which shall remain as obligations of the Company subsequent to the Closing Date, on or before the Closing Date, the Seller shall have caused all other Company Liabilities to have been paid, transferred, or assumed. To the extent that Buyer declines to purchase the notes from the individuals to whom the Schedule D liabilities are owed within six months from date of Closing, the Seller agrees that it shall cause the Schedule D liabilities to have been paid, transferred, or assumed.

4.3

Annual Report . In the event that the Company has not filed its annual report on Form 10-K with the SEC for the fiscal year ended September 30, 2009 prior to Closing, Seller shall cause the Company to provide all relevant information to Buyers for purposes of completing and filing such annual report, and Seller shall promptly upon request, cause the Company to provide Buyers with any additional documentation reasonably requested to carry out the completion and filing of the annual report on Form 10-K for the fiscal year ended September 30, 2009.

4.4

Tax Return . In the event that the Company has not filed its Tax Return on Form 1120 with the Internal Revenue Service for the fiscal year ended September 30, 2009 prior to Closing, Seller shall cause the Company to provide all relevant information to Buyers for purposes of completing and filing such Tax Return, and Seller shall promptly upon request, cause the Company to provide Buyers with any additional documentation reasonably requested to carry out the completion and filing of the Tax Return for the fiscal year ended September 30, 2009.

ARTICLE V

COVENANTS OF BUYERS

5.1

Payment of Certain Company Liabilities Prior to Closing . Buyers agree that prior to Closing, pursuant to the terms of the Escrow Agreement, upon written request by the Seller or the Company, by and through their representative, Gordon Beckstead, the Escrow Agent shall release a portion of the Cash Portion of the Purchase Price up to but not to exceed thirty-five thousand dollars (US $35,000), for the specific purposes of: i) paying the Company’s auditor, Cordovano and Honeck, LLP, for the purpose of completing the audit of the Company’s financial statements for the fiscal year ended September 30, 2009; and ii) paying all fees due and owing to the Company’s transfer agent, Computershare, Inc.

ARTICLE VI

DELIVERIES & CONDITIONS

6.1

Items to be delivered to the Buyers at the Closing by the Seller . The Buyers’ obligations to purchase the Shares hereunder is conditioned on the following closing conditions and deliveries:

Securities Purchase Agreement

Page 9 of 21

(a)

Delivery by the Seller of the following:

(i)

copies of the Company’s Articles of Incorporation and amendments thereto, By-laws and amendments thereto;

(ii)

all minutes and resolutions of the board of directors and of the stockholders (and meetings of stockholders) in possession of the Company;

(iii)

stockholder list of the Company;

(iv)

all tax returns in possession of the Company;

(v)

Acknowledgments signed by all Company creditors indicating that, except for the Company Liabilities listed on Schedule D, all Company Liabilities identified on Schedule C have been either paid, transferred or assumed by Seller;

(vi)

all applicable schedules hereto;

(vii)

Letters of resignation from the Company’s current officers and directors to be effective upon Closing and confirming that they have no claim against the Company in respect of any outstanding remuneration or fees of whatever nature to be effective upon closing and after the appointments;

(viii)

Executed board resolutions authorizing and approving the actions to be performed by the Company hereunder and appointing designees of the Buyers as members of the board of directors or officers of the Company as set forth in Schedule E;

(ix)

A duly executed copy of this Agreement;

(x)

The Share Certificates

(xi)

Good standing and existence certificates for the Company from the State of Colorado;

(xii)

Executed Certificate of Officers of V2K International, Inc; and

(xiii)

Any other document reasonably requested by the Buyers that the Buyers deem necessary for the consummation of this transaction.

(b)

The Buyers are satisfied with their due diligence investigation of the Company, in their sole discretion;

(c)

The Buyers’ designees for the officer and director positions of the Company shall have been duly appointed; and

(d)

The representations and warranties set forth in Article 2 of this Agreement shall be true and correct in all material respects.

6.2

Items to be delivered at Closing by Buyers. The Seller’s obligations to sell the Shares hereunder are conditioned on the following closing conditions and deliveries by the Buyers:

(a)

All applicable exhibits and schedules hereto;

Securities Purchase Agreement

Page 10 of 21

(b)

A duly executed copy of this Agreement;

(c)

Any other document reasonably requested by the Seller that it deems necessary for the consummation of this transaction ;

(d)

The Cash Portion of the Purchase Price; and

(e)

The executed Promissory Note.

ARTICLE VII

TERMINATION

7.1

Termination . This Agreement may be terminated:

(a)

at any time before, or at, Closing by written notice of the Buyers;

(b)

prior to the Closing by any Party at any time if any provision (including, but not limited to, the representations and warranties) of this Agreement that is applicable to or required to be performed by the other Party shall be materially untrue or shall become incapable of being accomplished or if any conditions set forth in Article 6 hereof have not been fully satisfied as of the Closing Date;

Upon termination of this Agreement for any reason, in accordance with the terms and conditions set forth in this paragraph, each Party shall bear its own costs and expenses. Any amounts advanced by Buyers pursuant to Section 5.1 shall not be recoverable from Seller, unless the Agreement was terminated as a result of Seller’s breach of this Agreement.

ARTICLE VIII

INDEMNIFICATION

8.1

Indemnification .

(a)

Obligation of Seller to Indemnify . Seller agrees to indemnify, defend and hold harmless Buyers (and their directors, officers, employees, affiliates, stockholders, debenture holders, agents, attorneys, successors and assigns) from and against all losses, liabilities, damages, deficiencies, costs or expenses (including interest, penalties and reasonable attorneys’ and consultants’ fees and disbursements) (collectively, “Losses”) based upon, arising out of or otherwise in respect of any (i) inaccuracy in any representation or warranty of the Seller contained in this Agreement or (ii) breach by the Seller of any covenant or agreement contained in this Agreement.

(b)

Obligation of Buyers to Indemnify . Buyers agree to indemnify, defend and hold harmless Seller (and its directors, officers, employees, affiliates, stockholders, debenture holders, agents, attorneys, successors and assigns) from and against all losses, liabilities, damages, deficiencies, costs or expenses (including interest, penalties and reasonable attorneys’ and consultants’ fees and disbursements) (collectively, “Losses”) based upon, arising out of or otherwise in respect of any (i) inaccuracy in any representation or warranty of the Buyers contained in this Agreement or (ii) breach by the Buyers of any covenant or agreement contained in this Agreement.

(c)

Notice and Opportunity to Defend . (a) Promptly after receipt by any person entitled to indemnity under this Agreement (an “Indemnitee”) of notice of any demand, claim or

Securities Purchase Agreement

Page 11 of 21

circumstances which, with the lapse of time, would or might give rise to a claim or the commencement (or threatened commencement) of any action, proceeding or investigation (an “Asserted Liability”) that may result in a Loss, the Indemnitee shall give notice thereof (the “Claims Notice”) to any other party (or parties) who is or may be obligated to provide indemnification pursuant to Section 8.1 (the “Indemnifying Party”). The Claims Notice shall describe the Asserted Liability in reasonable detail and shall indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnitee.

(d)

The Indemnifying Party may elect to compromise or defend, at its own expense and by its own counsel, any Asserted Liability. If the Indemnifying Party elects to compromise or defend such Asserted Liability, it shall within 30 days after the date the Claims Notice is given (or sooner, if the nature of the Asserted Liability so requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the compromise of, or defense against, such Asserted Liability. If the Indemnifying Party elects not to compromise or defend the Asserted Liability, fails to notify the Indemnitee of its election as herein provided or contests its obligation to indemnify under this Agreement, the Indemnitee may pay, compromise or defend such Asserted Liability and all reasonable expenses incurred by the Indemnitee in defending or compromising such Asserted Liability, all amounts required to be paid in connection with any such Asserted Liability pursuant to the determination of any court, governmental or regulatory body or arbitrator, and amounts required to be paid in connection with any compromise or settlement consented to by the Indemnitee, shall be borne by the Indemnifying Party. Except as otherwise provided in the immediately preceding sentence, the Indemnitee may not settle or compromise any claim over the objection of the Indemnifying Party. In any event, the Indemnitee and the Indemnifying Party may participate, at their own expense, in (but the Indemnitee may not control) the defense of such Asserted Liability. If the Indemnifying Party chooses to defend any claim, the Indemnitee shall make available to the Indemnifying Party any books, records or other documents within its control that are necessary or appropriate for such defense.

ARTICLE IX

MISCELLANEOUS

9.1

Survival of Representations, Warranties and Agreements . All representations, warranties and statements made by a Party in this Agreement or in any document or certificate delivered pursuant hereto shall survive the Closing Date. Each of the Parties hereto is executing and carrying out the provisions of this Agreement in reliance upon the representations, warranties and covenants and agreements contained in this Agreement or at the Closing of the transactions herein provided for and not upon any investigation which it might have made or any representation, warranty, agreement, promise or information, written or oral, made by the other Party or any other person other than as specifically set forth herein.

9.2

Access to Books and Records . During the course of this transaction through Closing, the Seller agrees to cause the Company to make available for inspection all Company corporate books, records and assets, and otherwise afford the Buyers and their respective representatives, reasonable access to all documentation and other information concerning the business, financial and legal conditions of the Company for the purpose of conducting a due diligence investigation thereof. Such due diligence investigation shall be for the purpose of satisfying each Party as to the business, financial and legal condition of the Company for the purpose of determining the desirability of consummating the proposed transaction. The Parties further agree to keep confidential and not use for their own benefit, except in accordance with this Agreement any information or documentation obtained in connection with any such investigation.

Securities Purchase Agreement

Page 12 of 21

9.3

Further Assurances . If, at any time after the Closing, the Parties hereby mutually agree that any further deeds, assignments or assurances in law or any other things are necessary, desirable or proper to complete the transactions contemplated hereby in accordance with the terms of this Agreement or to vest, perfect or confirm, of record or otherwise, the title to any property or rights of the Parties hereto, the Parties agree that their proper officers and directors shall execute and deliver all such proper deeds, assignments and assurances in law and do all things necessary, desirable or proper to vest, perfect or confirm title to such property or rights and otherwise to carry out the purpose of this Agreement, and that the proper officers and directors the Parties are fully authorized to take any and all such action.

9.4

Notice . All communications, notices, requests, consents or demands given or required under this Agreement shall be in writing and shall be deemed to have been duly given when delivered to, or received by prepaid registered or certified mail or recognized overnight courier addressed to, or upon receipt of a facsimile sent to, the Party for whom intended, as follows, or to such other address or facsimile number as may be furnished by that Party by notice in the manner provided herein:

If to the Seller:

7853 E. Arapahoe Court

Suite 3100

Centennial, CO 80112

Tel: 303-202-1120

Fax: 303-202-5201

With a copy to:

Dill Dill Carr Stonbraker & Hutchings, PC

Attn: Fay M. Matsukage

455 Sherman St., Suite 300

Denver CO 80203

Tel: 303-282-4105

Fax: 303-777-3823

If to Buyers:

At the addresses specified on Schedule B

With a copy to:

Frascona, Joiner, Goodman and Greenstein

Attn: Gary S. Joiner, Esq.

4750 Table Mesa Drive

Boulder, Colorado 80305-5575

Tel: 303-494-3000

Fax: 303-494-6309

9.5

Entire Agreement . This Agreement, the Exhibits and Schedules hereto and any instruments and agreements to be executed pursuant to this Agreement, set forth the entire understanding of the Parties hereto with respect to its subject matter, merges and supersedes all prior and contemporaneous understandings with respect to its subject matter and may not be waived or modified, in whole or in part, except by a writing signed by each of the Parties hereto. No waiver of any provision of this Agreement in any instance shall be deemed to be a waiver of the same or any other provision in any other instance.

Securities Purchase Agreement

Page 13 of 21

Failure of any Party to enforce any provision of this Agreement shall not be construed as a waiver of its rights under such provision.

9.6

Successors and Assigns . This Agreement shall be binding upon, enforceable against and inure to the benefit of, the Parties hereto and their respective heirs, administrators, executors, personal representatives, successors and assigns, and nothing herein is intended to confer any right, remedy or benefit upon any other person. This Agreement may not be assigned by the Seller except with the prior written consent of the Buyers. This Agreement and all of the obligations of the Seller may be assigned by the Buyers without the prior notice to the Seller or written consent of the Seller and upon assignment, all of the rights and obligations of Buyer shall be the rights and obligations of the Buyers’ designated assignee.

9.7

Governing Law . This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Colorado, USA that are applicable to agreements made and fully to be performed in such state, without giving effect to conflicts of law principles.

9.8

Attorneys Fees . If any legal action, arbitration or other proceeding is brought for the enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees and other costs incurred therein, in addition to any other relief to which it or they may be entitled.

9.9

Independent Advice . The Parties acknowledge and agree that the law firm of Frascona, Joiner, Goodman and Greenstein, P.C., represents only the Buyers in connection with the preparation of this Agreement and the transactions contemplated hereby, and has not offered the Seller any advice regarding the advisability of entering into this Agreement. Each party executing this Agreement further acknowledges and agrees that such person:

(a)

Has been advised to retain independent legal, tax, and accounting advice of their own choosing for purposes of representing their individual interests with respect to the subject matter hereof;

(b)

Has been given reasonable time and opportunity to obtain such advice; and

(c)

Has obtained such independent advice as they have deemed necessary and appropriate in the circumstances at his or her own expense.

9.10

Construction . Headings contained in this Agreement are for convenience only and shall not be used in the interpretation of this Agreement. References herein to Articles, Sections and Exhibits are to the articles, sections and exhibits, respectively, of this Agreement. The Schedules hereto are hereby incorporated herein by reference and made a part of this Agreement. As used herein, the singular includes the plural, and the masculine, feminine and neuter gender each includes the others where the context so indicates.

9.11

Severability . If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, this Agreement shall be interpreted and enforceable as if such provision were severed or limited, but only to the extent necessary to render such provision and this Agreement enforceable.

9.12

Confidentiality; Public Disclosure . Each of the parties hereto hereby agrees that the information obtained pursuant to the negotiation and execution of this Agreement shall be treated as confidential and not be disclosed to third parties who are not agents of one of the Parties to this Agreement.

Securities Purchase Agreement

Page 14 of 21

9.13

Notification of Certain Matters. Each Party shall give prompt notice to the other of (i) the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which is likely to cause any representation or warranty of such party contained in this Agreement to be untrue or inaccurate and (ii) any failure of such Party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided , however , that the delivery of any notice pursuant to this Section shall not limit or otherwise affect any remedies available to the Party receiving such notice. Further, disclosure pursuant to this Section shall not be deemed to amend or supplement the Schedules hereto or prevent or cure any misrepresentations, breach of warranty or breach of covenant.

9.14

Currency . The parties hereto agree that all monetary amounts set forth herein are referenced in United States dollars, unless otherwise stated.

9.15

Counterparts . This Agreement may be executed in counterparts and by facsimile signatures. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. All such counterparts shall together constitute one and the same instrument.

Securities Purchase Agreement

Page 15 of 21

IN WITNESS WHEREOF, each of the Parties hereto has executed this Agreement as of the date first set forth above.

SELLER:

LOTUS HOLDINGS, LLC

By:

/s/ Samuel Smith

Name: Samuel Smith

Title:

President

BUYERS:

[Signatures set forth on Schedule A]

Securities Purchase Agreement

Page 16 of 21

Schedule A

Buyers




Colorado	20-5614030
(State or other jurisdiction of incorporation)	(IRS Employer Identification Number)

90 Madison Street, Suite 701 Denver, CO 80206
(Address of principal executive offices)
303-329-3008
(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report




Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]


		Page Number

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of December 31, 2011 (unaudited) and March 31, 2011	1

	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended December 31, 2011 and 2010 (unaudited)	2

	Condensed Consolidated Statements of Stockholders’ Equity for the nine months ended December 31, 2011 (unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2011 and 2010 (unaudited)	4

	Notes to Condensed Consolidated Financial Statements (unaudited)	5 – 16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	32

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Submission of Matters to a Vote of Security Holders	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

SIGNATURES		34


Agrisolar Solutions, Inc.
Condensed Consolidated Balance Sheets
December 31, 2011 and March 31, 2011

	December 31, 2011		March 31, 2011
	(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	$	466,700	$	1,241,620
Accounts receivable, net		11,333,880		7,565,075
Inventories, net		2,277,752		715,828
Prepayments and other receivables		614,403		238,971
Total current assets		14,692,735		9,761,494
Non-current assets:
Intangible asset, net		9,512		10,768
Plant and equipment, net		1,312,007		1,320,434
Total Assets	$	16,014,254		11,092,696

Liabilities And Stockholders’ Equity
Current liabilities:
Accounts payable, trade	$	6,199,585	$	2,165,425
Amount due to a stockholder		955,844		948,391
Short-term borrowings		923,060		669,701
Promissory note, related party		500,000		500,000
Notes payable		75,000		100,000
Income tax payable		110,424		80,741
Dividends payable		115,591		47,957
Accrued liabilities and other payables		2,001,366		1,431,932
Total liabilities		10,880,870		5,944,147

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.001 par value, 30,000,000 shares authorized:
Series AA Preferred stock, 10,000,000 shares authorized, 4,163,012 and 4,234,441 shares issued and outstanding as of December 31, 2011 and March 31, 2011, respectively, $0.35 stated value		1,457,054		1,482,054
Series AAA Preferred stock, 10,000,000 shares authorized, 4,269,507 and 2,895,429 shares issued and outstanding as of December 31, 2011 and March 31, 2011, respectively, $0.35 stated value		1,494,170		1,013,400
Common stock, $0.001 par value; 200,000,000 shares authorized; 63,826,486 and 63,755,057 shares issued and outstanding, as of December 31, 2011 and March 31, 2011, respectively		63,826		63,755
Treasury stock, 172,712 common shares, at cost, as of December 31, 2011 and March 31, 2011		(350,000)		(350,000)
Additional paid-in capital		4,429,200		4,404,271
Statutory reserves		171,559		82,570
Accumulated other comprehensive income		236,516		122,122
Accumulated deficit		(2,368,941)		(1,669,623)
Total stockholders’ equity		5,133,384		5,148,549
Total Liabilities And Stockholders’ Equity	$	16,014,254	$	11,092,696


Agrisolar Solutions, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Three and Nine Months Ended December 31, 2011 and 2010
(Unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2011		2010		2011		2010
Revenue, net	$	4,153,789	$	1,790,117	$	11,093,806	$	7,622,563
Cost of revenue (inclusive of depreciation)		2,786,105		1,284,141		7,878,026		5,163,353
Gross profit		1,367,684		505,976		3,215,780		2,459,210

Operating expenses:
Sales and marketing		512,983		188,011		1,142,195		529,409
General and administrative		733,843		291,051		2,365,996		1,059,082
Total operating expenses		1,246,826		479,062		3,508,191		1,588,491

Income (loss) income from operations		120,858		26,914		(292,411)		870,719

Other income (expense):
Interest income		48		113		578		485
Interest expense		(46,688)		(27,716)		(143,416)		(117,213)
Subsidy income		23,308		-		23,308		73,504
Loss on extinguishment of debt		-		-		-		(440,000)
Total other expense, net		(23,332)		(27,603)		(119,530)		(483,224)

Income (loss) before income taxes		97,526		(689)		(411,941)		387,495

Income tax expense		69,416		5,778		130,753		122,216

Net income (loss)		28,110		(6,467)		(542,694)		265,279

Dividend on preferred stock		23,832		12,258		67,635		35,358

Net income (loss) attributable to common stockholders		4,278		(18,725)		(610,329)		229,921

Other comprehensive income:
Foreign currency translation gain		30,151		49,075		114,394		70,422
Comprehensive income (loss)	$	34,429	$	30,350	$	(495,935)	$	300,343

Net income (loss) per share – Basic	$	0.00	$	(0.00)	$	(0.01)	$	0.00
Net (loss) income per share – Diluted	$	0.00	$	(0.00)	$	(0.01)	$	0.00

Weighted average common stock outstanding – Basic		63,818,549		59,553,379		63,776,221		59,428,935
Weighted average common stock outstanding – Diluted		72,250,618		80,401,582		63,776,221		77,688,042


	Three Months December 31,				Nine Months December 31,
	2011		2010		2011		2010
Net (loss) income attributable to common shareholders	$	4,278	$	(18,725)	$	(610,329)	$	229,921
Weighted average common shares outstanding – Basic		63,818,549		59,553,379		63,776,221		59,428,935
Plus: incremental shares from assumed conversions
- Convertible shares from preferred stock		8,432,069		5,718,797		-		4,027,625
- Warrants to purchase common stock		-		15,129,406		-		14,231,482
Weighted average common shares outstanding – Diluted		72,250,618		80,401,582		63,776,221		77,688,042

Net (loss) income per share – Basic	$	0.00	$	(0.00)	$	(0.01)	$	0.00
Net (loss) income per share – Diluted	$	0.00	$	(0.00)	$	(0.01)	$	0.00


	December 31,		March 31,
	2011		2011
Accounts receivable, trade
- Billed	$	5,282,516	$	2,343,570
- Accrued		7,432,139		5,324,635
		12,714,655		7,668,205
Less: allowances for doubtful accounts and returns		(1,380,775)		(103,130)
Accounts receivable, net	$	11,333,880	$	7,565,075



Expected life (in years)	5
Volatility	108.6%
Risk free interest rate	1.14%
Dividend yield (on common stock)	0.0%


	Number of warrants		Exercise price range per share		Weighted average exercise price per share		Weighted average grant-date fair value per share
Balance as of April 1, 2011		15,137,703	$	0.25-0.70	$	0.32	$	0.08
Warrants issued in connection with conversion of Series AA Preferred Stock		35,715		0.70		0.70	$	0.12
Balance as of December 31, 2011		15,173,418	$	0.25-0.70	$	0.32	$	0.08




Regulation S-K Number	Exhibit
3.1	Articles of Incorporation ⁽¹⁾
3.2	Bylaws ⁽¹⁾
3.3	Articles of Amendment filed June 6, 2008 ⁽²⁾
3.4	Articles of Amendment filed January 8, 2010 ⁽³⁾
3.5	Articles of Amendment filed May 7, 2010 ⁽⁴⁾
3.6	Articles of Amendment filed December 9, 2010 ⁽⁵⁾
10.3 10.4 10.5 31.1	Securities Purchase Agreement dated November 9, 2009, between Lotus Holdings, LLC., as Seller and Fuwaysun Technology, Ltd., as Buyer.* Promissory Note dated December l0, 2009, between Fuwaysun Technology, Ltd., as Maker, and Stan Battat, as Holder. * Acknowledgement Regarding Payment Deferral dated May 20, 2010, executed by Liang Chao Wei. * Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101	SCH XBRL Schema Document.*
101	CAL XBRL Taxonomy Extension Calculation Linkbase Document.*
101	LAB XBRL Taxonomy Extension Label Linkbase Document.*
101	PRE XBRL Taxonomy Extension Presentation Linkbase Document.*
101	DEF XBRL Taxonomy Extension Definition Linkbase Document.*



(1)	Filed as an exhibit to the registrant’s registration statement on Form SB-2, file number 333-141201, filed March 9, 2007
(2)	Filed as an exhibit to the registrant’s current report on Form 8-K dated June 6, 2008, file number 333-141201, filed June 12, 2008.
(3)	Filed as an exhibit to the registrant’s current report on Form 8-K dated January 8, 2010, file number 333-141201, filed January 11, 2010.
(4)	Filed as an exhibit to the registrant’s current report on Form 8-K dated May 7, 2010, file number 333-141201, filed May 12, 2010.
(5)	Filed as an exhibit to the registrant’s current report on Form 8-K dated December 9, 2010, filed number 333-141201, filed on December 20, 2010, file number
*	filed herewith

Endnotes