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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bodisen | LSE:BODI | London | Ordinary Share | COM STK USD0.0001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMBODI
RNS Number : 5070X
Bodisen Biotech Inc
17 August 2009
17 August 2009
Bodisen Biotech, Inc.
Results for the six month period ended 30 June 2009
Bodisen Biotech, Inc. (the "Company") (OTC Pink Sheets: BBCZ; London AIM: BODI;
website: www.bodisen.com) announces its six month unaudited results for the
period ended 30 June 2009 which are extracted from the Company's 10-Q filed with
the SEC.
Financial highlights
* Net Revenue for the six month period increased 25.6% to $2.605m up from $2.075m
for the comparable period.
* Net income for the period was $1.210m for the period compared to $2.18m for the
comparable period, which reflects the impact of bad debt recoveries in 2008.
Result of Operations
Six months ended June 30, 2009 compared to six months ended June 30, 2008
Revenue. We generated revenues of $2,605,528 for the six months ended June 30,
2009, an increase of $530,474 or 25.6%, compared to $2,075,054 for the six
months ended June 30, 2008. The increase in revenue is primarily attributable
to a decrease in our products price which resulted in a large increase in our
sales volume.
Gross Profit. We achieved a gross profit of $388,813 for the six months ended
June 30, 2009, a decrease of $395,111 or 50.4%, compared to $783,924 for the six
months ended June 30, 2008. The decrease in gross profit was primarily
attributable to an increase in our raw material costs. Gross margin (gross
profit as a percentage of revenues), was 14.9% for the six months ended June 30,
2009 compared to 37.8% for the six months ended June 30, 2008. The decrease was
primarily attributable to higher raw material costs.
Operating expenses. We incurred net operating expenses of $645,207 for the six
months ended June 30, 2009, a decrease of $1,099,422 or 63.0%, compared to
$1,744,629 for the six months ended June 30, 2008. The decrease in our
operating expenses is primarily attributable to a decrease in our general cost
of operations due to the reduction in our revenues during the past few years.
Aggregated selling expenses accounted for $27,118 of our operating expenses for
the six months ended June 30, 2009, a decrease of $351,061 or 92.8%, compared to
$378,179 for the six months ended June 30, 2008. The decrease in our aggregated
selling expenses is primarily attributable to a decrease in marketing costs.
During the six months ended June 30, 2009 we also recognized a loss on the
disposal of property and equipment of $104,254. We had no such loss during the
six months ended June 30, 2008. General and administrative expenses accounted
for the remainder of our net operating expenses of $513,835 for the six months
ended June 30, 2009, a decrease of $852,615 or 62.4%, compared to $1,366,450 for
the six months ended June 30, 2008. The decrease in general and administrative
expenses is primarily related to a general cost of operations due to the
reduction in our revenues during the past few years.
Non Operating Income and Expenses. We had total non-operating income of
$1,466,425 for the six months ended June 30, 2009, a decrease of $1,637,472 or
52.8%, compared to $3,103,897 for the six months ended June 30, 2008. Other
income was $1,370,967 for the six months ended June 30, 2009 compared to
$2,963,152 for six months ended June 30, 2008. The decrease in other income is
primarily attributable to the large bad debt recoveries recognized during the
six months ended June 30, 2008. The bad debt recoveries were $1,372,251 and
$3,136,901 for the six months ended June 30, 2009 and 2008, respectively. Total
non-operating income includes interest income of $314 for the six months ended
June 30, 2009 compared to $140,745 of interest income for the six months ended
June 30, 2008. The decrease in interest income in 2009 is primarily
attributable to less cash in the bank generating interest income. Also included
in non-operating income (expense) for the six months ended June 30, 2009 is
$(211,610) related to the loss on the sale of two investments and $306,902 in
equity income of another investment that we account for under the equity method.
Net Income. For the foregoing reasons, we had a net income of $1,210,031 for
the six months ended June 30, 2009, a decrease of $974,347 or 44.6%, compared to
$2,184,378 for the six months ended June 30, 2008. We had earnings per share of
$0.06 and $0.12 for the six months ended June 30, 2009 and 2008, respectively.
About Bodisen Biotech, Inc.
Bodisen Biotech, Inc. is a manufacturer of liquid and organic compound
fertilizers, pesticides, insecticides and agricultural raw material certified by
the Petroleum Chemical Industry Administrative office of China (Chemical
Petroleum Production Administrative Bureau), Shaanxi provincial government and
Chinese government. The company is headquartered in Shaanxi province and is a
Delaware corporation. The company files annual and periodic reports with the
U.S. Securities and Exchange Commission, which are accessible at www.sec.gov.
Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on the current expectations or beliefs of
Bodisen Biotech, Inc. management and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements.
Enquiries:
Bodisen Biotech, Inc.
Bo Chen 0086 29 8707 4957
Charles Stanley Securities
Richard Thompson / Philip Davies 020 7149 6000
CONSOLIDATED BALANCE SHEET
June 30, 2009
+----------------------------------------+---------------------------+---------------------------+
| | June 30, 2009 | June 30, 2008* |
+----------------------------------------+---------------------------+---------------------------+
| | $ | $ |
+----------------------------------------+---------------------------+---------------------------+
| ASSETS | | |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| CURRENT ASSETS: | | |
+----------------------------------------+---------------------------+---------------------------+
| Cash & | 84,112 | 526,940 |
| cash | | |
| equivalents | | |
+----------------------------------------+---------------------------+---------------------------+
| Accounts | 3,247,194 | 1,772,146 |
| receivable, | | |
| net of | | |
| allowance | | |
| for | | |
| doubtful | | |
| accounts of | | |
| $2,906,801 | | |
| and | | |
| $23,863,766 | | |
+----------------------------------------+---------------------------+---------------------------+
| Other | 407,454 | 4,082,359 |
| receivables | | |
+----------------------------------------+---------------------------+---------------------------+
| Inventory | 1,907,000 | 1,924,224 |
+----------------------------------------+---------------------------+---------------------------+
| Advances | 398,977 | 9,245,625 |
| to | | |
| suppliers | | |
+----------------------------------------+---------------------------+---------------------------+
| Prepaid | 739,601 | 5,414,476 |
| expense | | |
| and other | | |
| current | | |
| assets | | |
+----------------------------------------+---------------------------+---------------------------+
| | ------------------------- | ------------------------- |
+----------------------------------------+---------------------------+---------------------------+
| Total current assets | 6,784,338 | 22,965,770 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| PROPERTY & EQUIPMENT, net | 12,212,016 | 5,518,793 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| CONSTRUCTION IN PROGRESS | 10,394,027 | 8,291,463 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| MARKETABLE SECURITY | 11,082,434 | 12,382,608 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| INTANGIBLE ASSETS, net | 4,976,701 | 2,104,163 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| OTHER ASSETS | 2,648,199 | 3,947,304 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| | ------------------------- | ------------------------- |
+----------------------------------------+---------------------------+---------------------------+
| TOTAL ASSETS | 48,097,715 | 57,892,658 |
+----------------------------------------+---------------------------+---------------------------+
| | ============== | ============== |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| LIABILITIES AND STOCKHOLDERS' EQUITY | | |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| CURRENT LIABILITIES: | | |
+----------------------------------------+---------------------------+---------------------------+
| Accounts | 294,679 | 894,916 |
| payable | | |
+----------------------------------------+---------------------------+---------------------------+
| Accrued | 82,042 | 181,231 |
| expenses | | |
+----------------------------------------+---------------------------+---------------------------+
| | ------------------------- | ------------------------- |
+----------------------------------------+---------------------------+---------------------------+
| Total current liabilities | 376,721 | 1,076,147 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
| STOCKHOLDERS' EQUITY | | |
+----------------------------------------+---------------------------+---------------------------+
| Preferred stock, $0.0001 per share; | | |
| authorised 5,000,000 shares; nil | | |
| issued and outstanding | | |
+----------------------------------------+---------------------------+---------------------------+
| Common stock, $0.0001 per share; | 1,871 | 1,871 |
| authorised 30,000,000 shares; issued | | |
| and outstanding 18,710,250 and 18, | | |
| 710,250 shares | | |
+----------------------------------------+---------------------------+---------------------------+
| Additional paid in capital | 33,945,822 | 33,860,062 |
+----------------------------------------+---------------------------+---------------------------+
| Other comprehensive income | 16,277,184 | 17,565,117 |
+----------------------------------------+---------------------------+---------------------------+
| Statutory reserve | 4,314,488 | 4,314,488 |
+----------------------------------------+---------------------------+---------------------------+
| Retained earnings | (6,818,371) | 1,075,013 |
+----------------------------------------+---------------------------+---------------------------+
| | ------------------------- | ------------------------- |
+----------------------------------------+---------------------------+---------------------------+
| Total stockholders' equity | 47,720,994 | 56,816,511 |
+----------------------------------------+---------------------------+---------------------------+
| | | |
+----------------------------------------+---------------------------+---------------------------+
+--------------------------------------+----------------+----------------+
| TOTAL LIABILITIES AND STOCKHOLDERS' | 48,097,715 | 57,892,658 |
| EQUITY | | |
+--------------------------------------+----------------+----------------+
| | ============== | ============== |
+--------------------------------------+----------------+----------------+
* The 2008 balance sheet figures are taken from the SEC 10-Q for the quarterly
period ended 30 June 2008.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | Three Month Periods | Six Month Periods Ended |
| | Ended | June 30 |
| | June 30 | |
+-------------------------------------------+-----------------------------------------+-----------------------------------------+
| | 2009 | 2008 | 2009 | 2008 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | $ | $ | $ | $ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Net revenue | 1,070,493 | 1,166,535 | 2,605,528 | 2,075,054 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Cost of revenue | 893,431 | 723,842 | 2,216,715 | 1,291,130 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Gross profit | 177,062 | 442,693 | 388,813 | 783,924 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Operating expenses: | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Selling | 14,872 | 195,920 | 27,118 | 378,179 |
| expenses | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| General | 361,353 | 707,106 | 513,835 | 1,366,450 |
| and | | | | |
| administrative | | | | |
| expenses | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Loss | 92,340 | - | 104,254 | - |
| on | | | | |
| disposal | | | | |
| of | | | | |
| assets | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Total operating expenses | 468,565 | 903,026 | 645,207 | 1,744,629 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Loss from operations | (291,503) | (460,333) | (256,394) | (960,705) |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Non-operating Income (expense): | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Other | 888,170 | 751,093 | 1,370,967 | 2,963,152 |
| income | | | | |
| (expense) | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Interest | 122 | 84,497 | 314 | 140,745 |
| income | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Interest | (73) | - | (148) | - |
| expense | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Loss | (81,363) | - | (211,610) | - |
| on the | | | | |
| sale | | | | |
| of | | | | |
| investment | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Equity | 147,259 | - | 306,902 | - |
| income | | | | |
| in | | | | |
| investment | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Total | 954,115 | 835,590 | 1,466,425 | 3,103,897 |
| non-operating | | | | |
| income | | | | |
| (expense) | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Loss before provision for income | 662,612 | 375,257 | 1,210,031 | 2,143,192 |
| taxes | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Provision (benefit) for income | - | (41,186) | - | (41,186) |
| taxes | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Net income | 662,612 | 416,443 | 1,210,031 | 2,184,378 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Other comprehensive income | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Foreign | (558) | 1,001,703 | (54,908) | 2,901,733 |
| currency | | | | |
| translation | | | | |
| gain (loss) | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Unrealised | 5,613,449 | 1,424,000 | 4,891,130 | (1,857,391) |
| gain | | | | |
| (loss) on | | | | |
| marketable | | | | |
| equity | | | | |
| security | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ------------------ | ------------------ | ------------------ | ------------------ |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Comprehensive Income | 6,275,503 | 2,842,146 | 6,046,253 | 3,228,720 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ========== | ========== | ========== | ========== |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Weighted average shares | | | | |
| outstanding: | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Basic | 18,710,250 | 18,310,250 | 18,710,250 | 18,310,250 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ========== | ========== | ========== | ========== |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Diluted | 18,710,250 | 18,310,250 | 18,710,250 | 18,310,250 |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | ========== | ========== | ========== | ========== |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+-------------------------------------------+--------------------+--------------------+--------------------+--------------------+
+------------------------------------+------------+------------+------------+------------+
| Earnings per share: | | | | |
+------------------------------------+------------+------------+------------+------------+
| Basic | 0.04 | 0.02 | 0.06 | 0.12 |
+------------------------------------+------------+------------+------------+------------+
| | ========== | ========== | ========== | ========== |
+------------------------------------+------------+------------+------------+------------+
| Diluted | 0.04 | 0.02 | 0.06 | 0.12 |
+------------------------------------+------------+------------+------------+------------+
| | ========== | ========== | ========== | ========== |
+------------------------------------+------------+------------+------------+------------+
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended June 30, 2008 and 2009
+----------------------------------------------+------------------------+------------------------+
| | Six Month Periods Ended |
| | June 30, |
+----------------------------------------------+-------------------------------------------------+
| | 2009 | 2008 |
+----------------------------------------------+------------------------+------------------------+
| | $ | $ |
+----------------------------------------------+------------------------+------------------------+
| CASH FLOWS FROM OPERATING ACTIVITIES: | | |
+----------------------------------------------+------------------------+------------------------+
| Net Income | 1,210,031 | 2,184,378 |
+----------------------------------------------+------------------------+------------------------+
| Adjustments to reconcile net income | | |
| to net cash used in operating | | |
| activities: | | |
+----------------------------------------------+------------------------+------------------------+
| Depreciation and | 296,110 | 249,464 |
| amortisation | | |
+----------------------------------------------+------------------------+------------------------+
| Loss on disposal of assets | 104,254 | - |
+----------------------------------------------+------------------------+------------------------+
| Loss on the sale of | 211,610 | - |
| investment | | |
+----------------------------------------------+------------------------+------------------------+
| Recovery of bad debts | (1,372,251) | (3,136,901) |
+----------------------------------------------+------------------------+------------------------+
| Equity income in | (306,902) | - |
| investment | | |
+----------------------------------------------+------------------------+------------------------+
| (Increase) / decrease in | | |
| assets: | | |
+----------------------------------------------+------------------------+------------------------+
| Accounts | (1,157,526) | 2,051,191 |
| receivable | | |
+----------------------------------------------+------------------------+------------------------+
| Other receivables | (32,201) | (1,684,248) |
+----------------------------------------------+------------------------+------------------------+
| Inventory | 1,097,828 | (651,759) |
+----------------------------------------------+------------------------+------------------------+
| Advances to | (399,168) | 1,092,778 |
| suppliers | | |
+----------------------------------------------+------------------------+------------------------+
| Prepaid expense | 62,424 | 132,114 |
+----------------------------------------------+------------------------+------------------------+
| Other assets | - | (154,344) |
+----------------------------------------------+------------------------+------------------------+
| Increase/(decrease) in | | |
| current liabilities: | | |
+----------------------------------------------+------------------------+------------------------+
| Accounts payable | (415,572) | (375,204) |
+----------------------------------------------+------------------------+------------------------+
| Accrued expenses | (20,399) | - |
+----------------------------------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+----------------------------------------------+------------------------+------------------------+
| Net cash used in operating activities | (721,762) | (292,531) |
+----------------------------------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+----------------------------------------------+------------------------+------------------------+
| | | |
+----------------------------------------------+------------------------+------------------------+
| CASH FLOWS FROM INVESTING ACTIVITIES | | |
+----------------------------------------------+------------------------+------------------------+
| Acquisition of property | - | (47,933) |
| and equipment | | |
+----------------------------------------------+------------------------+------------------------+
| Additions to construction | (15,285) | (70,430) |
| in progress | | |
+----------------------------------------------+------------------------+------------------------+
| Proceeds from other assets | 735,656 | 96,093 |
+----------------------------------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+----------------------------------------------+------------------------+------------------------+
| Net cash provided by (used in) investing | 720,371 | (22,270) |
| activities | | |
+----------------------------------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+----------------------------------------------+------------------------+------------------------+
| | | |
+----------------------------------------------+------------------------+------------------------+
| Effect of exchange rate changes on cash and | (5,213) | 224,335 |
| cash equivalents | | |
+----------------------------------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+----------------------------------------------+------------------------+------------------------+
| NET DECREASE IN CASH & CASH EQUIVALENTS | (6,604) | (90,466) |
+----------------------------------------------+------------------------+------------------------+
| | | |
+----------------------------------------------+------------------------+------------------------+
| CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD | 90,716 | 617,406 |
+----------------------------------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+----------------------------------------------+------------------------+------------------------+
| CASH & CASH EQUIVALENTS, END OF PERIOD | 84,112 | 526,940 |
+----------------------------------------------+------------------------+------------------------+
| | ============ | ============ |
+----------------------------------------------+------------------------+------------------------+
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW | | |
| INFORMATION: | | |
+----------------------------------------------+------------------------+------------------------+
| Interest paid | - | - |
+----------------------------------------------+------------------------+------------------------+
| | ============ | ============ |
+----------------------------------------------+------------------------+------------------------+
| Income taxes paid | - | - |
+----------------------------------------------+------------------------+------------------------+
| | ============ | ============ |
+----------------------------------------------+------------------------+------------------------+
| | | |
+----------------------------------------------+------------------------+------------------------+
+----------------------------------------------+--------------+--------------+
| SUPPLEMENTAL NON-CASH INVESTING AND | | |
| FINANCING ACTIVITES: | | |
+----------------------------------------------+--------------+--------------+
| Transfer of construction in process | 7,143,372 | - |
| to property and equipment | | |
+----------------------------------------------+--------------+--------------+
| | ============ | ============ |
+----------------------------------------------+--------------+--------------+
| Exchange of investment for | 378,789 | - |
| inventory | | |
+----------------------------------------------+--------------+--------------+
| | ============ | ============ |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
NOTES
Note 1 - Organization and Basis of Presentation
Organization and Line of Business
Yang Ling Bodisen Biology Science and Technology Development Company Limited
("BBST") was founded in the People's Republic of China on August 31, 2001. BBST,
located in Yang Ling Agricultural High-Tech Industries Demonstration Zone, is
primarily engaged in developing, manufacturing and selling pesticides and
compound organic fertilizers in the People's Republic of China.
On February 24, 2004, Bodisen International, Inc. ("BII"), the non-operative
holding company of BBST (accounting acquirer) consummated a merger agreement
with Stratabid.com, Inc. (legal acquirer) ("Stratabid"), a Delaware corporation,
to exchange 12,000,000 shares of Stratabid to the stockholders of BII, in which
BII merged into Bodisen Holdings, Inc. (BHI), an acquisition subsidiary of
Stratabid, with BHI being the surviving entity. As a part of the merger,
Stratabid cancelled 3,000,000 shares of its issued and outstanding stock owned
by its former president and declared a stock dividend of three shares on each
share of its common stock outstanding for all stockholders on record as of
February 27, 2004.
Stratabid was incorporated in the State of Delaware on January 14, 2000 and
before the merger, was a start- up stage Internet based commercial mortgage
origination business based in Vancouver, BC, Canada.
The exchange of shares with Stratabid has been accounted for as a reverse
acquisition under the purchase method of accounting because the stockholders of
BII obtained control of Stratabid. On March 1, 2004, Stratabid was renamed
Bodisen Biotech, Inc. (the "Company"). Accordingly, the merger of the two
companies has been recorded as a recapitalization of the Company, with the
Company (BII) being treated as the continuing entity. The historical financial
statements presented are those of BII.
As a result of the reverse merger transaction described above the historical
financial statements presented are those of BBST, the operating entity.
In March 2005, Bodisen Biotech Inc. completed a $3 million convertible debenture
private placement through an institutional investor. Approximately $651,000 in
incremental and direct expenses relating to this private placement has been
amortized over the term of the convertible debenture. None of the expenses were
paid directly to the institutional investor. The net proceeds from this offering
were invested as initial start-up capital in a newly created wholly-owned
Bodisen subsidiary by the name of "Yang Ling Bodisen Agricultural Technology
Co., Ltd. ("Agricultural"). In June 2005, Agricultural completed a transaction
with Yang Ling Bodisen Biology Science and Technology Development Company
Limited ("BBST"), Bodisen Biotech, Inc.'s operating subsidiary in China, which
resulted in Agricultural owning 100% of BBST.
In June 2006, BBST created another wholly owned subsidiary in the Uygur
autonomous region of Xinjiang, China by the name of Bodisen Agriculture Material
Co. Ltd. ("Material").
Basis of Presentation
The unaudited consolidated financial statements have been prepared by Bodisen
Biotech, Inc. (the "Company"), pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments) which
are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote disclosures
normally present in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted pursuant to such rules and regulations. These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes included in the Company's Annual
Report on Form 10-K. The results of the three months ended June 30, 2009 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 2009.
Foreign Currency Translation
The accounts of the Company's Chinese subsidiaries are maintained in the Chinese
Yuan Renminbi (RMB) and the accounts of the U.S. parent company are maintained
in the U.S. Dollar (USD). The accounts of the Chinese subsidiaries were
translated into USD in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 52, "Foreign Currency Translation," with the RMB as the
functional currency for the Chinese subsidiaries. According to the Statement,
all assets and liabilities were translated at the exchange rate on the balance
sheet date, stockholders' equity are translated at the historical rates and
statement of operations items are translated at the weighted average exchange
rate for the period. The resulting translation adjustments are reported under
other comprehensive income in accordance with SFAS No. 130, "Reporting
Comprehensive Income".
Note 2 - Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
It is possible that accounting estimates and assumptions may be material to the
Company due to the levels of subjectivity and judgment involved.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.
Accounts Receivable
The Company maintains reserves for potential credit losses for accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. Reserves are recorded based on the
Company's historical collection history.
Advances to Suppliers
The Company advances to certain vendors for purchase of its material. The
advances to suppliers are interest free and unsecured.
Inventories
Inventories are valued at the lower of cost (determined on a weighted average
basis) or market. The Management compares the cost of inventories with the
market value and allowance is made for writing down their inventories to market
value, if lower.
Property & Equipment and Capital Work In Progress
Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method for substantially all assets with estimated lives of:
+----------------------------------+------------------------+
| Operating equipment | 10 years |
+----------------------------------+------------------------+
| Vehicles | 8 years |
+----------------------------------+------------------------+
| Office equipment | 5 years |
+----------------------------------+------------------------+
| Buildings | 30 years |
+----------------------------------+------------------------+
The following are the details of the property and equipment at June 30, 2009 and
December 31, 2008, respectively:
+----------------------------+---+--------------+---+--------------+
| | | June 30, | | December 31, |
| | | 2009 | | 2008 |
+----------------------------+---+--------------+---+--------------+
| Operating equipment | $ | 4,622,357 | $ | 1,112,855 |
+----------------------------+---+--------------+---+--------------+
| Vehicles | | 686,853 | | 760,694 |
+----------------------------+---+--------------+---+--------------+
| Office equipment | | 87,432 | | 87,552 |
+----------------------------+---+--------------+---+--------------+
| Buildings | | 8,644,277 | | 5,120,667 |
+----------------------------+---+--------------+---+--------------+
| | | 14,040,919 | | 7,081,768 |
+----------------------------+---+--------------+---+--------------+
| Less accumulated | | (1,828,903) | | (1,708,536) |
| depreciation | | | | |
+----------------------------+---+--------------+---+--------------+
| | $ | 12,212,016 | $ | 5,373,232 |
+----------------------------+---+--------------+---+--------------+
Depreciation expense for the three and six months ended June 30, 2009 and 2008
was $94,246 and $186,629 and $92,667 and $173,173, respectively.
On June 30, 2009 and December 31, 2008, the Company had "Capital Work in
Progress" representing the construction in progress of the Company's
manufacturing plant amounting $10,394,027 and $17,542,626 respectively. During
the six months ended June 30, 2009, $7,143,372 was transferred from construction
in progress to property and equipment.
Marketable Securities
Marketable securities consist of 1,031,884 (after a 2 for 1 stock split in 2009)
shares of China Natural Gas, Inc. (traded on the NASDAQ: CHNG). This investment
is classified as available-for-sale as the Company plans to hold this investment
for the long-term. This investment is reported at fair value with unrealized
gains and losses included in other comprehensive income. The fair value is
determined by using the securities quoted market price as obtained from stock
exchanges on which the security trades.
Investment income, principally dividends, is recorded when earned. Realized
capital gains and losses are calculated based on the cost of securities sold,
which is determined by the "identified cost" method.
Long-Lived Assets
The Company applies the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal. Based on its
review, the Company believes that, as of June 30, 2009 there were no significant
impairments of its long-lived assets.
Intangible Assets
Intangible assets consist of Rights to use land and Fertilizers proprietary
technology rights. The Company evaluates intangible assets for impairment, at
least on an annual basis and whenever events or changes in circumstances
indicate that the carrying value may not be recoverable from its estimated
future cash flows. Recoverability of intangible assets, other long-lived assets
and, goodwill is measured by comparing their net book value to the related
projected undiscounted cash flows from these assets, considering a number of
factors including past operating results, budgets, economic projections, market
trends and product development cycles. If the net book value of the asset
exceeds the related undiscounted cash flows, the asset is considered impaired,
and a second test is performed to measure the amount of impairment loss.
Fair Value of Financial Instruments
On January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements.
SFAS No. 157 defines fair value, establishes a three-level valuation hierarchy
for disclosures of fair value measurement and enhances disclosures requirements
for fair value measures. The carrying amounts reported in the balance sheets for
receivables and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period of time
between the origination of such instruments and their expected realization and
their current market rate of interest. The three levels are defined as follow:
* Level 1 inputs to the valuation methodology are quoted prices (unadjusted)
for identical assets or liabilities in active markets.
* Level 2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the
asset or liability, either directly or indirectly, for substantially the full
term of the financial instrument.
* Level 3 inputs to the valuation methodology are unobservable and significant
to the fair value measurement.
The following table represents our assets and liabilities by level measured at
fair value on a recurring basis at June 30, 2009.
+-------------------------------------------+---+----------+---+------------+---+---------+
| Description | | Level 1 | | Level 2 | | Level 3 |
+-------------------------------------------+---+----------+---+------------+---+---------+
| | | | | | | |
+-------------------------------------------+---+----------+---+------------+---+---------+
| Assets | | | | | | |
+-------------------------------------------+---+----------+---+------------+---+---------+
| Marketable securities | $ | - | $ | 11,082,434 | $ | - |
+-------------------------------------------+---+----------+---+------------+---+---------+
Revenue Recognition
The Company's revenue recognition policies are in compliance with Staff
accounting bulletin (SAB) 104. Sales revenue is recognized at the date of
shipment to customers when a formal arrangement exists, the price is fixed or
determinable, the delivery is completed, no other significant obligations of the
Company exist and collectability is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue.
Advertising Costs
The Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising takes place. Advertising costs for the three months
ended June 30, 2009 and 2008 were insignificant.
Stock-Based Compensation
The Company adopted SFAS No. 123 (Revised 2004), Share Based Payment ("SFAS No.
123R"), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, for all share-based payments granted prior to and not yet vested
as of January 1, 2006 and share-based compensation based on the grant-date
fair-value determined in accordance with SFAS No. 123R for all share-based
payments granted after January 1, 2006. SFAS No. 123R eliminates the ability to
account for the award of these instruments under the intrinsic value method
prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and allowed under the original provisions of SFAS No.
123. Prior to the adoption of SFAS No. 123R, the Company accounted for our stock
option plans using the intrinsic value method in accordance with the provisions
of APB Opinion No. 25 and related interpretations.
Income Taxes
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
In March 2005, Bodisen Biotech Inc. formed Agricultural. Under Chinese law, a
newly formed wholly owned subsidiary of a foreign company enjoys an income tax
exemption for the first two years and a 50% reduction of normal income tax rates
for the following 3 years. In order to extend such tax benefits, in June 2005,
Agricultural completed a transaction with BBST, which resulted in Agricultural
owning 100% of BBST.
Foreign Currency Transactions and Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Certain statements, however, require
entities to report specific changes in assets and liabilities, such as gain or
loss on foreign currency translation, as a separate component of the equity
section of the balance sheet. Such items, along with net income, are components
of comprehensive income. The functional currency of the Company's Chinese
subsidiaries is the Chinese Yuan Renminbi. Translation gains of $8,062,096 and
$8,117,004 at June 30, 2009 and December 31, 2008, respectively are classified
as an item of other comprehensive income in the stockholders' equity section of
the consolidated balance sheet. During the six months ended June 30, 2009 and
2008, other comprehensive income in the consolidated statements of operations
and other comprehensive income included translation gains (loss) of $(54,908)
and $2,901,733, respectively.
Basic and Diluted Earnings Per Share
Earnings per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings per share." SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings (loss)
per share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
The following is a reconciliation of the number of shares (denominator) used in
the basic and diluted earnings per share computations for the three and six
months ended June 30, 2009 and 2008:
+------------------+------------+--+--------+--+------------+--+--------+
| Three Months | June 30, 2009 | | June 30, 2008 |
| Ended | | | |
+------------------+------------------------+--+------------------------+
| | | | Per | | | | Per |
| | | | Share | | | | Share |
+------------------+------------+--+--------+--+------------+--+--------+
| | Shares | | Amount | | Shares | | Amount |
+------------------+------------+--+--------+--+------------+--+--------+
| Basic earnings | 18,710,250 |$ | 0.04 | | 18,310,250 |$ | 0.02 |
| per share | | | | | | | |
+------------------+------------+--+--------+--+------------+--+--------+
| Effect of | - | | - | | - | | - |
| dilutive stock | | | | | | | |
| options/warrants | | | | | | | |
+------------------+------------+--+--------+--+------------+--+--------+
| Diluted | 18,710,250 |$ | 0.04 | | 18,310,250 |$ | 0.02 |
| earnings per | | | | | | | |
| share | | | | | | | |
+------------------+------------+--+--------+--+------------+--+--------+
+------------------+------------+--+--------+--+------------+---+--------+
| Six Months | June 30, 2009 | | June 30, 2008 |
| Ended | | | |
+------------------+------------------------+--+-------------------------+
| | | | Per | | | | Per |
| | | | Share | | | | Share |
+------------------+------------+--+--------+--+------------+---+--------+
| | Shares | | Amount | | Shares | | Amount |
+------------------+------------+--+--------+--+------------+---+--------+
| Basic earnings | 18,710,250 |$ | 0.06 | | 18,310,250 | $ | 0.12 |
| per share | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
| Effect of | - | | - | | - | | - |
| dilutive stock | | | | | | | |
| options/warrants | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
| Diluted | 18,710,250 |$ | 0.06 | | 18,310,250 | $ | 0.12 |
| earnings per | | | | | | | |
| share | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
Statement of Cash Flows
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations are
calculated based upon the local currencies. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet.
Segment Reporting
Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure
About Segments of an Enterprise and Related Information" requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company's consolidated financial statements as the
Company consists of one reportable business segment. All revenue is from
customers in People's Republic of China. All of the Company's assets are located
in People's Republic of China.
Recent Accounting Pronouncements
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Values When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly." This FSP provides
guidance on (1) estimating the fair value of an asset or liability when the
volume and level of activity for the asset or liability have significantly
declined and (2) identifying transactions that are not orderly. The FSP also
amends certain disclosure provisions of SFAS No. 157 to require, among other
things, disclosures in interim periods of the inputs and valuation techniques
used to measure fair value. This pronouncement is effective prospectively
beginning April 1, 2009. The adoption of this standard did not have a material
impact on the Company's consolidated results of operations or financial
condition.
In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, "Recognition and
Presentation of Other-Than-Temporary Impairments" (FSP 115-2). This FSP modifies
the requirements for recognizing other-than-temporarily impaired debt securities
and changes the existing impairment model for such securities. The FSP also
requires additional disclosures for both annual and interim periods with respect
to both debt and equity securities. Under the FSP, impairment of debt securities
will be considered other-than-temporary if an entity (1) intends to sell the
security, (2) more likely than not will be required to sell the security before
recovering its cost, or (3) does not expect to recover the security's entire
amortized cost basis (even if the entity does not intend to sell). The FSP
further indicates that, depending on which of the above factor(s) causes the
impairment to be considered other-than-temporary, (1) the entire shortfall of
the security's fair value versus its amortized cost basis or (2) only the credit
loss portion would be recognized in earnings while the remaining shortfall (if
any) would be recorded in other comprehensive income. FSP 115-2 requires
entities to initially apply the provisions of the standard to previously
other-than-temporarily impaired debt securities existing as of the date of
initial adoption by making a cumulative-effect adjustment to the opening balance
of retained earnings in the period of adoption. The cumulative-effect adjustment
potentially reclassifies the noncredit portion of a previously
other-than-temporarily impaired debt security held as of the date of initial
adoption from retained earnings to accumulated other comprehensive income. This
pronouncement is effective April 1, 2009. The adoption of this standard did not
have a material impact on the Company's consolidated results of operations or
financial condition.
In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments." This FSP essentially
expands the disclosure about fair value of financial instruments that were
previously required only annually to also be required for interim period
reporting. In addition, the FSP requires certain additional disclosures
regarding the methods and significant assumptions used to estimate the fair
value of financial instruments.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events ("SFAS 165") [ASC
855-10-05], which provides guidance to establish general standards of accounting
for and disclosures of events that occur after the balance sheet date but
before financial statements are issued or are available to be issued. SFAS 165
also requires entities to disclose the date through which subsequent events were
evaluated as well as the rationale for why that date was selected. SFAS 165 is
effective for interim and annual periods ending after June 15, 2009, and
accordingly, the Company adopted this pronouncement during the second quarter of
2009. SFAS 165 requires that public entities evaluate subsequent events through
the date that the financial statements are issued. The Company has evaluated
subsequent events through the time of filing these financial statements with the
SEC on August 10, 2009.
In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of
Financial Assets - an amendment of FASB Statement No. 140 ("SFAS 166") [ASC
860], which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. SFAS 166 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. SFAS 166 is effective for fiscal years
beginning after November 15, 2009. The Company has not completed its assessment
of the impact SFAS 166 will have on its financial condition, results of
operations or cash flows.
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R) ("SFAS 167") [ASC 810-10], which modifies how a company determines
when an entity that is insufficiently capitalized or is not controlled through
voting (or similar rights) should be consolidated. SFAS 167 clarifies that the
determination of whether a company is required to consolidate an entity is
based on, among other things, an entity's purpose and design and a company's
ability to direct the activities of the entity that most significantly
impact the entity's economic performance. SFAS 167 requires an ongoing
reassessment of whether a company is the primary beneficiary of a
variable interest entity. SFAS 167 also requires additional disclosures about a
company's involvement in variable interest entities and any significant changes
in risk exposure due to that involvement. SFAS 167 is effective for fiscal years
beginning after November 15, 2009. The Company has not completed its assessment
of the impact SFAS 167 will have on its financial condition, results of
operations or cash flows.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification(TM) and the Hierarchy of Generally Accepted Accounting Principles a
Replacement of FASB Statement No. 162 ("SFAS 168"). This Standard establishes
the FASB Accounting Standards Codification(TM) (the "Codification") as the
source of authoritative accounting principles recognized by the FASB to
be applied by nongovernmental entities in the preparation of financial
statements in conformity with US GAAP. The Codification does not change current
US GAAP, but is intended to simplify user access to all authoritative US GAAP by
providing all the authoritative literature related to a particular topic in one
place. The Codification is effective for interim and annual periods ending after
September 15, 2009, and as of the effective date, all existing accounting
standard documents will be superseded. The Codification is effective in the
third quarter of 2009, and accordingly, the Quarterly Report on Form 10-Q for
the quarter ending September 30, 2009 and all subsequent public filings will
reference the Codification as the sole source of authoritative literature.
Note 3 - Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Bodisen Biotech, Inc., its 100% wholly-owned subsidiaries Bodisen Holdings, Inc.
(BHI), Yang Ling Bodisen Agricultural Technology Co., Ltd (Agricultural), which
was incorporated in March 2005, and Sinkiang Bodisen Agriculture Material Co.,
Ltd. (Material), which was incorporated in June 2006, as well as the accounts of
Agricultural's 100% wholly- owned subsidiary Yang Ling Bodisen Biology Science
and Technology Development Company Limited (BBST). All significant inter-company
accounts and transactions have been eliminated in consolidation.
Note 4 - Inventory
Inventory at June 30, 2009 and December 31, 2008 consisted of the following:
+----------------------------+---+------------+---+--------------+
| | | June 30, | | December 31, |
| | | 2009 | | 2008 |
+----------------------------+---+------------+---+--------------+
| Raw Material | $ | 747,790 | $ | 1,290,591 |
+----------------------------+---+------------+---+--------------+
| Packaging | | 92,366 | | 100,926 |
+----------------------------+---+------------+---+--------------+
| Finished Goods | | 1,066,844 | | 1,237,761 |
+----------------------------+---+------------+---+--------------+
| | $ | 1,907,000 | $ | 2,629,278 |
+----------------------------+---+------------+---+--------------+
Note 5 - Marketable Security
During 2005, the Company purchased 1,031,884 (after 2 for 1 split in 2009)
shares of China Natural Gas, Inc. (traded on the NASDAQ: CHNG) for $2,867,346.
At June 30, 2009 and December 31, 2008, the fair value of this investment was
$11,082,434 and $6,191,304, respectively. As a result of the change in fair
value of this investment the Company recorded an unrealized gain/loss of
$4,891,130 and $(1,857,391) for the six months ended June 30, 2009 and 2008,
respectively; which is included in other comprehensive income (loss). At June
30, 2009, this represented a 7.1% interest in China Natural Gas, Inc. The CEO of
China Natural Gas was a former board member of the Company. See Note 13 for
litigation regarding these shares of common stock of China Natural Gas, Inc.
Note 6 -Other Long-term Assets
During 2006, the Company acquired a 19.5% and a 19.8% interest in two local
companies by investing a total amount of $1,156,861 in cash. One of these
investments was sold during the first quarter of 2009 for $732,550 resulting in
a loss of $130,247 and the other was sold during the second quarter of 2009 in
exchange for inventory valued at $378,789 resulting in a loss of $81,363.
During 2008, the Company exchanged $3,291,264 of receivables for a 28.8%
ownership interest in a Chinese company. The Company has written down the value
of this investment by $987,860 at December 31, 2008. This investment is
accounted for under the equity method and the Company recorded equity income in
this investment for the six months ended June 30, 2009 of $306,902.
Note 7- Intangible Assets
Net intangible assets at June 30, 2009 and December 31, 2008 were as follows:
+-------------------------------------------+--+------------+--+--+------------+
| | | June 30, | | | December |
| | | 2009 | | | 31, 2008 |
+-------------------------------------------+--+------------+--+--+------------+
| Rights to use land |$ | 5,023,724 | |$ | 5,061,427 |
+-------------------------------------------+--+------------+--+--+------------+
| Fertilizers proprietary technology rights | | 1,172,000 | | | 1,173,600 |
| | | | | | |
+-------------------------------------------+--+------------+--+--+------------+
| | | 6,195,724 | | | 6,235,027 |
+-------------------------------------------+--+------------+--+--+------------+
| Less Accumulated amortization | | (1,219,023 |) | | (1,141,954 |
+-------------------------------------------+--+------------+--+--+------------+
| |$ | 4,976,701 | |$ | 5,093,073 |
+-------------------------------------------+--+------------+--+--+------------+
The Company's office and manufacturing site is located in Yang Ling Agricultural
High-Tech Industries Demonstration Zone in the province of Shanxi, People's
Republic of China. The Company leases land per a real estate contract with the
government of People's Republic of China for a period from November 2001 through
November 2051. Per the People's Republic of China's governmental regulations,
the Government owns all land.
During July 2003, the Company leased another parcel of land per a real estate
contract with the government of the People's Republic of China for a period from
July 2003 through June 2053.
The Company has recognized the amounts paid for the acquisition of rights to use
land as intangible asset and amortizing over a period of fifty years. The
"Rights to use land" is being amortized over a 50 year period.
The Company acquired Fluid and Compound Fertilizers proprietary technology
rights with a life ending December 31, 2011. The Company is amortizing
Fertilizers proprietary technology rights over a period of ten years.
On July 15, 2008, the Company entered into a 50 year land rights agreement.
Amortization expense for the Company's intangible assets for the six month
period ended June 30, 2009 and 2008 amounted to $109,481 and $76,291,
respectively.
Note 8 - Stock Options and Warrants
Stock Options
Following is a summary of the stock option activity:
+----------------------------------+-------------+--+----------+---+-----------+
| | Options | | Weighted | | Aggregate |
| | outstanding | | Average | | Intrinsic |
| | | | Exercise | | Value |
| | | | Price | | |
| | | | | | |
+----------------------------------+-------------+--+----------+---+-----------+
| Outstanding, December 31, 2008 | 536,000 | | $1.89 | $ | 0 |
+----------------------------------+-------------+--+----------+---+-----------+
| Granted | - | | - | | |
+----------------------------------+-------------+--+----------+---+-----------+
| Forfeited | - | | - | | |
+----------------------------------+-------------+--+----------+---+-----------+
| Exercised | - | | - | | |
+----------------------------------+-------------+--+----------+---+-----------+
| Outstanding, June 30, 2009 | 536,000 | | $1.89 | $ | 0 |
+----------------------------------+-------------+--+----------+---+-----------+
Following is a summary of the status of options outstanding at June 30, 2009:
+------------+----------+-------------+--------------+----------+------------+----------+
| Outstanding Options | | Exercisable Options | |
+-----------------------+-------------+--------------------------------------+----------+
| | | | |
+-----------------------+-------------+--------------------------------------+----------+
| Exercise | Number | Average | Average | Number | Average | |
| Price | | Remaining | Exercise | | Exercise | |
| | | Contractual | Price | | Price | |
| | | Life | | | | |
+------------+----------+-------------+--------------+----------+------------+----------+
| | | | | | | |
+------------+----------+-------------+--------------+----------+------------+----------+
| $5.00 | 100,000 | 0.18 | $5.00 | 100,000 | $5.00 | |
+------------+----------+-------------+--------------+----------+------------+----------+
| $5.80 | 10,000 | 0.75 | $5.80 | 10,000 | $5.80 | |
+------------+----------+-------------+--------------+----------+------------+----------+
| $6.72 | 26,000 | 1.50 | $6.72 | 26,000 | $6.72 | |
+------------+----------+-------------+--------------+----------+------------+----------+
| $0.70 | 400,000 | 1.75 | $0.70 | 400,000 | $0.70 | |
+------------+----------+-------------+--------------+----------+------------+----------+
Note 9 - Employee Welfare Plans
The Company has established its own employee welfare plan in accordance with
Chinese law and regulations. The Company makes annual contributions of 14% of
all employees' salaries to employee welfare plan. The total expense for the
above plan were $0 and $0 for the three months ended June 30, 2009 and 2008,
respectively. The Company has recorded welfare payable of $0 and $0 at June 30,
2009 and December 31, 2008, respectively, which is included in accrued expenses
in the accompanying consolidated balance sheet.
Note 10 - Statutory Common Welfare Fund
As stipulated by the Company Law of the People's Republic of China (PRC), net
income after taxation can only be distributed as dividends after appropriation
has been made for the following:
(i) Making up cumulative prior years' losses, if any;
(ii) Allocations to the "Statutory surplus reserve" of at least 10% of income
after tax, as determined under PRC accounting rules and regulations, until the
fund amounts to 50% of the Company's registered capital;
(iii) Allocations of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Company's "Statutory common welfare
fund", which is established for the purpose of providing employee facilities and
other collective benefits to the Company's employees; and
(iv) Allocations to the discretionary surplus reserve, if approved in the
stockholders' general meeting.
Pursuant to the new Corporate Law effective on January 1, 2006, there is now
only one "Statutory surplus reserve" requirement. The reserve is 10 percent of
income after tax, not to exceed 50 percent of registered capital.
The Company has appropriated $0 and $0 as reserve for the statutory surplus
reserve and welfare fund for the six months ended June 30, 2009 and 2008,
respectively.
Note 11 - Factory Location and Lease Commitments
The Company's principal executive offices are located at North Part of Xinquia
Road, Yang Ling Agricultural High-Tech Industries Demonstration Zone Yang Ling,
Shaanxi province, People's Republic of China. BBST owns two factories, which
includes three production lines, an office building, one warehouse, and two
research labs and, is located on 10,900 square meters of land. These leases
require monthly rental payments of $2,546 and the leases expire in 2013. Future
payments under these leases is as follows: 2009 - $15,278; 2010 - $30,556; 2011
- $30,556; 2012 - $30,556; and 2013 - $3,726.
Note 12 - Current Vulnerability Due to Certain Concentrations
Three vendors provided 49.36%, 11.46% and 12.63% of the Company's raw materials
for the six months ended June 30, 2009 and two vendors provided 82.6% and 12.5%,
of the Company's raw materials for the six months ended June 30, 2008.
The Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, by the general state of
the PRC's economy. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
Note 13 - Litigation
From time to time, we may become involved in various lawsuits and legal
proceedings that arise in the ordinary course of business. Litigation is,
however, subject to inherent uncertainties, and an adverse result in these or
other matters may arise from time to time that may harm our business. Other than
the matters described below, we are currently not aware of any such legal
proceedings or claims that we believe would or could have, individually or in
the aggregate, a material adverse affect on our business, financial condition,
results of operations or liquidity.
In late 2006, various shareholders of our company filed eight purported class
actions in the U.S. District Court for the Southern District of New York against
our company and certain of our officers and directors (among others), asserting
claims under the federal securities laws. The complaints contain allegations
about our prior financial disclosures and our internal controls and a prior,
now-terminated relationship with a financial advisor. The complaints did not
specify an amount of damages that plaintiffs seek.
The eight actions were Stephanie Tabor vs. Bodisen, Inc., et al., Case No.
06-13220 (filed November 2006), Fraser Laschinger vs. Bodisen, Inc., et al.,
Case No. 06-13254 (filed November 2006), Anthony DeSantis vs. Bodisen, Inc., et.
al., Case No. 06-13454 (filed November 2006), Yuchen Zhou vs. Bodisen, Inc., et.
al., Case No. 06-13567 (filed November 2006), William E. Cowley vs. Bodisen,
Inc., et. al., Case No. 06-13739 (filed December 2006), Ronald Stubblefield vs.
Bodisen, Inc., et. al., Case No. 06-14449 (filed December 2006), Adam Cohen vs.
Bodisen, Inc., et. al., Case No. 06-15179 (filed December 2006) and Lawrence M.
Cohen vs. Bodisen, Inc., et. al., Case No. 06-15399 (filed December 2006). In
2007, the Court consolidated each of the actions into a single proceeding. On
September 26, 2008, the Court entered a judgment in favor of the Company and
closed the case.
In 2007, Ji Xiang, a shareholder of China Natural Gas (and son of its Chairman
and CEO) instituted litigation in the Chinese court system in Shaanxi province
challenging the validity of our ownership of 2,063,768 shares of China Natural
Gas common stock. We obtained these shares in September 2005 in a share transfer
agreement and assert that we have fully performed our obligations under the
agreement and are entitled to own the shares. The parties in the Chinese
litigation have submitted their evidence and now await a decision from the
Chinese court. [Also, in January 2008, the same shareholder instituted
litigation in the State of Utah District Court, Salt Lake County, against
Yangling Bodisen Biotech Development Co. Ltd. and Interwest Transfer Co. (China
Natural Gas's transfer agent) seeking to prevent us from selling our shares in
China Natural Gas. Plaintiff has obtained an order from the Utah court
provisionally preventing us from selling the China Natural Gas shares pending a
decision on the merits of the underlying dispute. In May 2009, Ji Xiang and
Yangling entered into a settlement agreement through mediation in the Supreme
Court of Shaanxi province. Pursuant to the settlement agreement, Xiang Ji agreed
to withdraw the lawsuit he filed against Yangling in the State of Utah District
Court, Salt Lake County, and Yangling agreed to sell back to Ji Xiang the
2,063,768 shares.
While Yangling is working to resolve the dispute in accordance with the
settlement agreement, an adverse outcome could have a material adverse effect on
our business, financial condition, results of operations or liquidity.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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