AgriSolar Solutions, Inc.

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.  

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.

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.   

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.

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