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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 : 6159C
Bodisen Biotech Inc
17 November 2009
Bodisen Biotech, Inc. reports Unaudited Third Quarter Financial Results
Review & Extracts of the Form10-Q as required by the Securities & Exchange
Commission
Bodisen Biotech, Inc. (the "Company") (London AIM: BODI; OTC Pink Sheets: BBCZ;
website: www.bodisen.com) today announced its third quarter results for the
period ended September 30, 2009 which are extracted from the Company's Form 10-Q
filed with the SEC.
Highlights
* Revenues for the 9 months ended 30 September 2009 were down 18.4% at $3.078m on
the comparable period (2008: $3.721m) impacted by the economic slowdown.
* The Company achieved a pre-tax profit of $274,000 against a loss for the
comparable period (2008: $2.189m).
* Diluted EPS was $0.01 compared with $0.12 in the same period last year.
Results of Operations
Revenue. We generated revenues of $3,078,485 for the nine months ended
September 30, 2009, a decrease of $693,116 or 18.4%, compared to $3,771,601 for
the nine months ended September 30, 2008. The decrease in revenue is primarily
attributable to the overall slowdown in the economy. Also in order to increase
sales volume and to give more customers access our products, we decreased our
product's sales price by 25% in 2009. The decrease in revenue is attributed to
both lower sales volume and lower sales prices.
Gross Profit. We achieved a gross profit of $358,240 for the nine months ended
September 30, 2009, a decrease of $1,093,342 or 75.3%, compared to $1,451,582
for the nine months ended September 30, 2008. The decrease in gross profit was
primarily attributable to a decline in revenue and higher cost of revenues due
to higher material costs. Gross margin (gross profit as a percentage of
revenues), was 11.6% for the nine months ended September 30, 2009, compared to
38.5% for the nine months ended September 30, 2008. The decrease was primarily
attributable to higher material costs and a decrease in the selling price for
our products as mentioned above.
Operating expenses. We incurred net operating expenses of $354,781 for the nine
months ended September 30, 2009, a decrease of $3,440,229 or 90.7%, compared to
$3,795,010 for the nine months ended September 30, 2008. The decrease in our
operating expenses is primarily attributable to a decrease in our general cost
of operations due to the reduction of our revenue during the past few years.
Aggregated selling expenses accounted for $42,934 of our operating expenses for
the nine months ended September 30, 2009, a decrease of $2,127,418 or 98.0%,
compared to $2,170,352 for the nine months ended September 30, 2008. The
decrease in our aggregated selling expenses is primarily attributable to a
decrease in marketing costs. During the nine months ended September 30, 2009 we
also recognized a loss on the disposal of property and equipment of $104,254.
We had no such loss during the nine months ended September 30, 2008. General and
administrative expenses accounted for the remainder of our net operating
expenses of $207,593 for the nine months ended September 30, 2009, a decrease of
$1,417,065 or 87.2% compared to $1,624,658 for the nine months ended September
30, 2008. The decrease in general and administrative expenses is primarily
related to a decrease in our general cost of operations due to the reduction of
our revenue during the past few years, a reduction in personnel resulting in
lower payroll costs and a write off of certain loan receivables during the three
months ended September 30, 2008. No such write offs occurred during the three
months ended September 30, 2009.
Non Operating Income and Expenses. We had total non-operating income of
$271,490 for the nine months ended September 30, 2009, an increase of $117,395
or 76.2%, compared to $154,095 for the nine months ended September 30, 2008.
Total non-operating income includes interest income of $396 for the nine months
ended September 30, 2009 compared to $154,095 for nine months ended September
30, 2008. The decrease in interest income is primarily attributable to less
cash in the bank generating interest income. Also included in non-operating
income (expense) for the nine months ended September 30, 2009 is $(211,639)
related to the loss on the sale of two investments and $484,728 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 $274,949 for the
nine months ended September 30, 2009, an increase of $2,422,742 or 112.8%,
compared to a net loss of $2,147,793 for the nine months ended September 30,
2008. We had earnings (loss) per share of $0.01 and $(0.12) for the nine months
ended September 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:
+------------------------------------+------------------------------------+
| Charles Stanley Securities | |
+------------------------------------+------------------------------------+
| Rick Thompson / Philip Davies / | 020 7149 6000 |
| Carl Holmes | |
+------------------------------------+------------------------------------+
| | |
+------------------------------------+------------------------------------+
| Bodisen Biotech, Inc. | |
+------------------------------------+------------------------------------+
| Bo Chen - Chairman & CEO | |
+------------------------------------+------------------------------------+
| Wang Chunsheng - Chief Operations | 0086 29 8707 4957 |
| Officer | |
+------------------------------------+------------------------------------+
| | |
+------------------------------------+------------------------------------+
| Investor Relations | |
+------------------------------------+------------------------------------+
| Jessica S. Yuan | |
+------------------------------------+------------------------------------+
| Sichenzia Ross Friedman Ference | 001 646 810-0607 |
| LLP | |
+------------------------------------+------------------------------------+
| | JYuan@SRFF.COM |
+------------------------------------+------------------------------------+
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
(LOSS) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
+----------------------------+-------------+-------------+-------------+-------------+
| | Three Months Ended | Nine Months Ended |
| | September 30, | September 30, |
+----------------------------+---------------------------+---------------------------+
| | 2009 | 2008 | 2009 | 2008 |
+----------------------------+-------------+-------------+-------------+-------------+
| | (unaudited) | (unaudited) | (unaudited) | (unaudited) |
+----------------------------+-------------+-------------+-------------+-------------+
| | $ | $ | $ | $ |
+----------------------------+-------------+-------------+-------------+-------------+
| Net Revenue | 472,957 | 1,696,547 | 3,078,485 | 3,771,601 |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Cost of Revenue | 503,530 | 1,028,889 | 2,720,245 | 2,320,019 |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Gross profit/(loss) | (30,573) | 667,658 | 358,240 | 1,451,582 |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Operating expenses: | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Selling expenses | 15,816 | 1,792,173 | 42,934 | 2,170,352 |
+----------------------------+-------------+-------------+-------------+-------------+
| General and administrative | 1,066,009 | 3,395,109 | 207,593 | 1,624,658 |
| expenses | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Loss on disposal of assets | - | - | 104,254 | |
+----------------------------+-------------+-------------+-------------+-------------+
| Total operating expenses | 1,081,825 | 5,187,282 | 354,781 | 3,795,010 |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Profit/(loss) from | (1,112,398) | (4,519,624) | 3,459 | (2,343,428) |
| operations | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Non-operating income | | | | |
| (expense): | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Other income (expense) | (503) | 173,749 | (1,787) | - |
+----------------------------+-------------+-------------+-------------+-------------+
| Interest income | 82 | 13,350 | 396 | 154,095 |
+----------------------------+-------------+-------------+-------------+-------------+
| Interest expense | (60) | - | (208) | - |
+----------------------------+-------------+-------------+-------------+-------------+
| Loss on the sale of | (29) | - | (211,639) | - |
| investment | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Equity income in | 177,826 | - | 484,728 | - |
| investment | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Total | 177,316 | 187,099 | 271,490 | 154,095 |
| non-operating | | | | |
| income | | | | |
| (expense) | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Profit/(loss) before | (935,082) | (4,332,525) | 274,949 | (2,189,333) |
| provision for income taxes | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Provision (benefit) for | - | (354) | - | (41,540) |
| income taxes | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Net income (loss) | (935,082) | (4,332,171) | 274,949 | (2,147,793) |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Other comprehensive | | | | |
| income: | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Foreign currency | 55,167 | 24,124 | 259 | 2,925,857 |
| translation gain | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Unrealised gain (loss) on | (7,161,275) | (4,911,768) | (2,270,145) | (6,769,159) |
| marketable equity security | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Comprehensive income | (8,041,190) | (9,219,815) | (1,994,937) | (5,991,095) |
| (loss) | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Weighted average shares | | | | |
| outstanding : | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Basic | 18,710,250 | 18,362,424 | 18,710,250 | 18,327,768 |
+----------------------------+-------------+-------------+-------------+-------------+
| Diluted | 18,710,250 | 18,362,424 | 18,710,250 | 18,327,768 |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Earnings per share: | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
| Basic | (0.05) | (0.24) | 0.01 | (0.12) |
+----------------------------+-------------+-------------+-------------+-------------+
| Diluted | (0.05) | (0.24) | 0.01 | (0.12) |
+----------------------------+-------------+-------------+-------------+-------------+
| | | | | |
+----------------------------+-------------+-------------+-------------+-------------+
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
+---------------------------------------------+--------------+----+-------------+
| | September | | December |
| | 30, | | 31, |
+---------------------------------------------+--------------+----+-------------+
| | 2009 | | 2008 |
+---------------------------------------------+--------------+----+-------------+
| | (unaudited) | | |
+---------------------------------------------+--------------+----+-------------+
| ASSETS | $ | | $ |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| CURRENT ASSETS: | | | |
+---------------------------------------------+--------------+----+-------------+
| Cash & cash equivalents | 168,922 | | 90,716 |
+---------------------------------------------+--------------+----+-------------+
| Accounts receivable and other | | | |
| receivable, net of allowance | | | |
| for | | | |
+---------------------------------------------+--------------+----+-------------+
| doubtful accounts of | 2,567,356 | | 719,607 |
| $3,355,528 and $6,069,700 | | | |
+---------------------------------------------+--------------+----+-------------+
| Other receivables | 71,734 | | 375,780 |
+---------------------------------------------+--------------+----+-------------+
| Inventory | 1,730,939 | | 2,629,280 |
+---------------------------------------------+--------------+----+-------------+
| Advances to suppliers | 486,926 | | - |
+---------------------------------------------+--------------+----+-------------+
| Prepaid expense and other | 753,698 | | 803,091 |
| current assets | | | |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| Total current | 5,779,575 | | 4,618,474 |
| assets | | | |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| PROPERTY AND EQUIPMENT, net | 12,043,946 | | 5,373,232 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| CONSTRUCTION IN PROGRESS | 10,385,966 | | 17,542,626 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| MARKETABLE SECURITY | 3,921,159 | | 6,191,304 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| INTANGIBLE ASSETS, net | 4,928,706 | | 5,093,073 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| OTHER ASSETS | 2,829,732 | | 3,669,063 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| TOTAL ASSETS | 39,889,084 | | 42,487,772 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| CURRENT LIABILITIES: | | | |
+---------------------------------------------+--------------+----+-------------+
| Accounts payable | 123,654 | | 710,475 |
+---------------------------------------------+--------------+----+-------------+
| Accrued expenses | 85,626 | | 102,556 |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| Total current | 209,280 | | 813,031 |
| liabilities | | | |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| STOCKHOLDERS' EQUITY: | | | |
+---------------------------------------------+--------------+----+-------------+
| Preferred stock, $0.0001 per | | | |
| share; authorized 5,000,000 | | | |
| shares; nil issued and | | | |
| outstanding | | | |
+---------------------------------------------+--------------+----+-------------+
| Common stock, $0.0001 per | 1,871 | | 1,871 |
| share; authorized 30,000,000 | | | |
| shares; issued and outstanding | | | |
| 18,710,250 and 18,710,250 | | | |
+---------------------------------------------+--------------+----+-------------+
| Additional paid-in capital | 33,945,822 | | 33,945,822 |
+---------------------------------------------+--------------+----+-------------+
| Other comprehensive income | 9,171,076 | | 11,440,962 |
+---------------------------------------------+--------------+----+-------------+
| Statutory reserve | 4,314,488 | | 4,314,488 |
+---------------------------------------------+--------------+----+-------------+
| Retained Earnings | (7,753,453) | | (8,028,402) |
+---------------------------------------------+--------------+----+-------------+
| Total | 39,679,804 | | 41,674,741 |
| stockholders' | | | |
| equity | | | |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
| TOTAL LIABILITIES AND | 39,889,084 | | 42,487,772 |
| STOCKHOLDERS' EQUITY | | | |
+---------------------------------------------+--------------+----+-------------+
| | | | |
+---------------------------------------------+--------------+----+-------------+
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
+---------------------------------------+-------------+---+--------------+
| | Nine Months Ended September |
| | 30, |
+---------------------------------------+--------------------------------+
| | 2009 | | 2008 |
+---------------------------------------+-------------+---+--------------+
| | (unaudited) | | (unaudited) |
+---------------------------------------+-------------+---+--------------+
| | $ | | $ |
+---------------------------------------+-------------+---+--------------+
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
+---------------------------------------+-------------+---+--------------+
| Net income (loss) | 274,949 | | (2,147,793) |
+---------------------------------------+-------------+---+--------------+
| Adjustments to reconcile net | | | |
| income (loss) to net cash | | | |
| provided by (used in) | | | |
| operating activities: | | | |
+---------------------------------------+-------------+---+--------------+
| Depreciation and | 557,736 | | 393,329 |
| amortization | | | |
+---------------------------------------+-------------+---+--------------+
| Loss on disposal of | 104,254 | | |
| assets | | | |
+---------------------------------------+-------------+---+--------------+
| Loss on the sale of | 211,610 | | |
| investment | | | |
+---------------------------------------+-------------+---+--------------+
| Allowance (recovery) of | (928,014) | | (3,648,443) |
| bad debts | | | |
+---------------------------------------+-------------+---+--------------+
| Common stock issued for | - | | 60,000 |
| services | | | |
+---------------------------------------+-------------+---+--------------+
| Value of warrants issued | - | | 25,800 |
| for services | | | |
+---------------------------------------+-------------+---+--------------+
| Equity income in | (484,728) | | |
| investment | | | |
+---------------------------------------+-------------+---+--------------+
| (Increase) / decrease in | | | |
| assets: | | | |
+---------------------------------------+-------------+---+--------------+
| Accounts | (918,350) | | (1,141,823) |
| receivable | | | |
+---------------------------------------+-------------+---+--------------+
| Other receivables | 303,819 | | 1,700,911 |
+---------------------------------------+-------------+---+--------------+
| Inventory | 1,276,509 | | (1,495,506) |
+---------------------------------------+-------------+---+--------------+
| Advances to | (486,562) | | 8,288,420 |
| suppliers | | | |
+---------------------------------------+-------------+---+--------------+
| Prepaid expense | 49,356 | | 867,351 |
+---------------------------------------+-------------+---+--------------+
| Other assets | - | | (120,431) |
+---------------------------------------+-------------+---+--------------+
| Increase / (decrease) in | | | |
| current liabilities: | | | |
+---------------------------------------+-------------+---+--------------+
| Accounts payable | (586,759) | | (364,008) |
+---------------------------------------+-------------+---+--------------+
| Accrued expenses | (16,917) | | 17,444 |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| Net cash provided by (used in) | (643,097) | | 2,435,251 |
| operating activities | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
+---------------------------------------+-------------+---+--------------+
| Acquisition of property | - | | (50,639) |
| and equipment | | | |
+---------------------------------------+-------------+---+--------------+
| Additions to | (15,287) | | (5,098,387) |
| construction in progress | | | |
+---------------------------------------+-------------+---+--------------+
| Acquisition of other | - | | (333,292) |
| assets | | | |
+---------------------------------------+-------------+---+--------------+
| Repayment of loans | - | | 2,551,054 |
| receivable | | | |
+---------------------------------------+-------------+---+--------------+
| Proceeds from sale of | 735,656 | | - |
| assets | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| Net cash provided by (used in) | 720,369 | | (2,931,264) |
| investing activities | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| Effect of exchange rate changes on | 934 | | 231,551 |
| cash and cash equivalents | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| NET INCREASE IN CASH & CASH | 78,206 | | (264,462) |
| EQUIVALENTS | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| CASH & CASH EQUIVALENTS, BEGINNING OF | 90,716 | | 617,406 |
| PERIOD | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| CASH & CASH EQUIVALENTS, END OF | 168,922 | | 352,944 |
| PERIOD | | | |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW | | | |
| INFORMATION: | | | |
+---------------------------------------+-------------+---+--------------+
| Interest paid | - | | - |
+---------------------------------------+-------------+---+--------------+
| Income taxes paid | - | | - |
+---------------------------------------+-------------+---+--------------+
| | | | |
+---------------------------------------+-------------+---+--------------+
| SUPPLEMENTAL NON-CASH INVESTING AND | | | |
| FINANCING ACTIVITIES: | | | |
+---------------------------------------+-------------+---+--------------+
| Transfer of construction in | 7,166,581 | | - |
| process to property and | | | |
| equipment | | | |
+---------------------------------------+-------------+---+--------------+
| Exchange of investment for | | | - |
| inventory | | | |
+---------------------------------------+-------------+---+--------------+
| Transfer of land rights from | | | 3,063,153 |
| other assets to intangible | | | |
| assets | | | |
+---------------------------------------+-------------+---+--------------+
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 nine months ended September 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" (codified in Financial
Accounting Standards ("FASB") Accounting Standards Codification ("ASC") Topic
830),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" (codified in FASB ASC Topic 220).
Note 2 - Summary of Significant Accounting Policies
Reclassifications
Certain amounts in the 2008 consolidated financial statements have been
reclassified to confirm with the 2009 presentation with no effect to previously
reported net income (loss).
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 September 30,
2009 and December 31, 2008, respectively:
+----------------------------+---+--------------+---+--------------+
| | | September | | December 31, |
| | | 30, 2009 | | 2008 |
+----------------------------+---+--------------+---+--------------+
| Operating equipment | $ | 4,650,919 | $ | 1,112,855 |
+----------------------------+---+--------------+---+--------------+
| Vehicles | | 687,791 | | 760,694 |
+----------------------------+---+--------------+---+--------------+
| Office equipment | | 87,552 | | 87,552 |
+----------------------------+---+--------------+---+--------------+
| Buildings | | 8,656,077 | | 5,120,667 |
+----------------------------+---+--------------+---+--------------+
| | | 14,082,339 | | 7,081,768 |
+----------------------------+---+--------------+---+--------------+
| Less accumulated | | (2,038,393) | | (1,708,536) |
| depreciation | | | | |
+----------------------------+---+--------------+---+--------------+
| | $ | 12,043,946 | $ | 5,373,232 |
+----------------------------+---+--------------+---+--------------+
Depreciation expense for the three and nine months ended September 30, 2009 and
2008 was $206,863 and $393,492 and $91,836 and $265,009, respectively.
On September 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 $10,385,966 and $17,542,626 respectively. During
the nine months ended September 30, 2009, $7,166,581 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") (codified in FASB ASC Topic 360), 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 September 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"
(codified in FASB ASC Topic 820). 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 September 30, 2009.
+-------------------------------------------+---+-------------+---+---------+---+---------+
| Description | | Level 1 | | Level 2 | | Level 3 |
+-------------------------------------------+---+-------------+---+---------+---+---------+
| | | | | | | |
+-------------------------------------------+---+-------------+---+---------+---+---------+
| Assets | | | | | | |
+-------------------------------------------+---+-------------+---+---------+---+---------+
| Marketable securities | $ | 12,506,434 | $ | - | $ | - |
+-------------------------------------------+---+-------------+---+---------+---+---------+
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 and nine
months ended September 30, 2009 and 2008 were insignificant.
Stock-Based Compensation
The Company accounts for its stock-based compensation in accordance with SFAS
No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123"
(codified in FASB ASC Topic 718). The Company recognizes in the statement of
operations the grant-date fair value of stock options and other equity-based
compensation issued to employees and non-employees. There were 536,000 options
outstanding at September 30, 2009.
Income Taxes
The Company utilizes SFAS No. 109, "Accounting for Income Taxes" (codified in
FASB ASC Topic 740), 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 $8,117,263 and
$8,117,004 at September 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 nine months ended
September 30, 2009 and 2008, other comprehensive income in the consolidated
statements of operations and other comprehensive income included translation
gains of $259 and $2,925,857, respectively.
Basic and Diluted Earnings Per Share
Earnings per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings per share" (codified in
FASB ASC Topic 260). SFAS No. 128 superseded Accounting Principles Board Opinion
No.15 (APB 15). Earnings (loss) per share for all periods presented has been
restated to reflect the adoption of SFAS No. 128. Basic net loss per share is
based upon the weighted average number of common shares outstanding. Diluted net
loss per share is based on the assumption that all dilutive convertible shares
and stock options were converted or exercised. Dilution is computed by applying
the treasury stock method. Under this method, options and warrants are assumed
to be exercised at the beginning of the period (or at the time of issuance, if
later), and as if funds obtained thereby were used to purchase common stock at
the average market price during the period.
The following is a reconciliation of the number of shares (denominator) used in
the basic and diluted earnings per share computations for the three and nine
months ended September 30, 2009 and 2008:
+------------------+------------+--+--------+--+------------+---+--------+
| Three Months | September 30, 2009 | | September 30, 2008 |
| Ended | | | |
+------------------+------------------------+--+-------------------------+
| | | | Per | | | | Per |
| | | | Share | | | | Share |
+------------------+------------+--+--------+--+------------+---+--------+
| | Shares | | Amount | | Shares | | Amount |
+------------------+------------+--+--------+--+------------+---+--------+
| Basic earnings | 18,710,250 |$ | (0.05) | | 18,362,424 | $ | (0.24) |
| per share | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
| Effect of | - | | - | | - | | - |
| dilutive stock | | | | | | | |
| options/warrants | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
| Diluted | 18,710,250 |$ | (0.05) | | 18,362,424 | $ | (0.24) |
| earnings per | | | | | | | |
| share | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
+------------------+------------+--+--------+--+------------+---+--------+
| Nine Months | September 30, 2009 | | September 30, 2008 |
| Ended | | | |
+------------------+------------------------+--+-------------------------+
| | | | Per | | | | Per |
| | | | Share | | | | Share |
+------------------+------------+--+--------+--+------------+---+--------+
| | Shares | | Amount | | Shares | | Amount |
+------------------+------------+--+--------+--+------------+---+--------+
| Basic earnings | 18,710,250 |$ | 0.01 | | 18,327,768 | $ | (0.12) |
| per share | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
| Effect of | - | | - | | - | | - |
| dilutive stock | | | | | | | |
| options/warrants | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
| Diluted | 18,710,250 |$ | 0.01 | | 18,327,768 | $ | (0.12) |
| earnings per | | | | | | | |
| share | | | | | | | |
+------------------+------------+--+--------+--+------------+---+--------+
Statement of Cash Flows
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows" (codified in FASB ASC Topic 230), 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" (codified in FASB ASC
Topic 280) 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
On July 1, 2009, the Company adopted Accounting Standards Update ("ASU") No.
2009-01, "Topic 105 - Generally Accepted Accounting Principles - amendments
based on Statement of Financial Accounting Standards No. 168 , "The FASB
Accounting Standards Codification(TM) and the Hierarchy of Generally Accepted
Accounting Principles" ("ASU No. 2009-01"). ASU No. 2009-01 re-defines
authoritative US GAAP for nongovernmental entities to be only comprised of the
FASB Accounting Standards Codification(TM) ("Codification") and, for SEC
registrants, guidance issued by the SEC. The Codification is a reorganization
and compilation of all then-existing authoritative US GAAP for nongovernmental
entities, except for guidance issued by the SEC. The Codification is amended to
effect non-SEC changes to authoritative US GAAP. Adoption of ASU No. 2009-01
only changed the referencing convention of US GAAP in Notes to the Consolidated
Financial Statements.
In April 2009, the Financial Accounting Standards Board ("FASB") issued FSP No.
SFAS 157-4, "Determining Fair Value When the Volume and Level of Activity for
the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly" ("FSP No. SFAS 157-4"). FSP No. SFAS 157-4, which is
codified in FASB ASC Topics 820-10-35-51 and 820-10-50-2, provides additional
guidance for estimating fair value and emphasizes that even if there has been a
significant decrease in the volume and level of activity for the asset or
liability and regardless of the valuation technique(s) used, the objective of a
fair value measurement remains the same. The Company adopted FSP No. SFAS 157-4
beginning April 1, 2009. This FSP had no material impact on the Company's
financial position, results of operations or cash flows.
In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, "Recognition and
Presentation of Other-Than-Temporary Impairments," which is codified in FASB ASC
Topic 320-10. 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. This FSP 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. The Company adopted FSP No. SFAS 115-2
and SFAS 124-2 beginning April 1, 2009. This FSP had no material impact on the
Company's financial position, results of operations or cash flows.
In April 2009, the FASB issued FSP No. SFAS 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments," which is codified in
FASB ASC Topic 825-10-50. 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. These additional
disclosures are required beginning with the quarter ending June 30, 2009.
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events," codified in FASB
ASC Topic 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
No. 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 No. 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 No. 165 requires that public entities evaluate
subsequent events through the date that the financial statements are issued. The
Company has evaluated subsequent events through November 13, 2009.
In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets - an amendment of FASB Statement No. 140," codified as FASB
ASC Topic 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 No. 166 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. SFAS No. 166 is effective for fiscal years
beginning after November 15, 2009. The Company does not believe the adoption of
SFAS No. 166 will have an impact 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)," codified as FASB ASC Topic 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 No.
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 No. 167 requires an
ongoing reassessment of whether a company is the primary beneficiary of a
variable interest entity. SFAS No. 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 No. 167 is
effective for fiscal years beginning after November 15, 2009. The Company does
not believe the adoption of SFAS No. 167 will have an impact on its financial
condition, results of operations or cash flows.
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 September 30, 2009 and December 31, 2008 consisted of the
following:
+----------------------------+---+------------+---+--------------+
| | | September | | December 31, |
| | | 30, 2009 | | 2008 |
+----------------------------+---+------------+---+--------------+
| Raw Material | $ | 490,978 | $ | 1,290,591 |
+----------------------------+---+------------+---+--------------+
| Packaging | | 92,615 | | 100,926 |
+----------------------------+---+------------+---+--------------+
| Finished Goods | | 1,147,346 | | 1,237,761 |
+----------------------------+---+------------+---+--------------+
| | $ | 1,730,939 | $ | 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 September 30, 2009 and December 31, 2008, the fair value of this investment
was $12,506,434 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
$6,315,130 and $(6,769,159) for the nine months ended September 30, 2009 and
2008, respectively; which is included in other comprehensive income (loss). At
September 30, 2009, this represented a 4.9% 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, Shanxi Jaili Pharmaceutical Co. Ltd
("Jaili"). 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 nine
months ended September 30, 2009 of $484,728. The Company's 28.8% interest of
Jaili's net assets is $3,843,639 which is $1,013,907 more than the carrying
amount on the accompanying balance sheet of $2,829,732. The difference is due to
the writedown the Company took on this investment in 2008.
Note 7- Intangible Assets
Net intangible assets at September 30, 2009 and December 31, 2008 were as
follows:
+-------------------------------------------+--+-------------+---+-------------+
| | | September | | December |
| | | 30, 2009 | | 31, 2008 |
+-------------------------------------------+--+-------------+---+-------------+
| Rights to use land | $ | 5,015,160 | $ | 5,061,427 |
| | | | | |
+-------------------------------------------+--+-------------+---+-------------+
| Fertilizers proprietary technology rights | | 1,173,600 | | 1,173,600 |
| | | | | |
+-------------------------------------------+--+-------------+---+-------------+
| | | 6,188,760 | | 6,235,027 |
+-------------------------------------------+--+-------------+---+-------------+
| Less Accumulated amortization | | (1,260,054) | | (1,141,954) |
+-------------------------------------------+--+-------------+---+-------------+
| | $ | 4,928,706 | $ | 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 nine month
period ended September 30, 2009 and 2008 amounted to $164,244 and $128,320,
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 | (100,000) | | $5.00 | | |
+----------------------------------+-------------+--+----------+---+-----------+
| Exercised | - | | - | | |
+----------------------------------+-------------+--+----------+---+-----------+
| Outstanding, September 30, 2009 | 436,000 | | $1.18 | $ | 0 |
+----------------------------------+-------------+--+----------+---+-----------+
Following is a summary of the status of options outstanding at September 30,
2009:
+------------+---------+-------------+--------------+---------+----------+----------+
| Outstanding Options | | Exercisable Options | |
+----------------------+-------------+-----------------------------------+----------+
| | | | |
+----------------------+-------------+-----------------------------------+----------+
| Exercise | Number | Average | Average | Number | Average | |
| Price | | Remaining | Exercise | | Exercise | |
| | | Contractual | Price | | Price | |
| | | Life | | | | |
+------------+---------+-------------+--------------+---------+----------+----------+
| | | | | | | |
+------------+---------+-------------+--------------+---------+----------+----------+
| $5.80 | 10,000 | 0.24 | $5.80 | 10,000 | $5.80 | |
+------------+---------+-------------+--------------+---------+----------+----------+
| $6.72 | 26,000 | 1.01 | $6.72 | 26,000 | $6.72 | |
+------------+---------+-------------+--------------+---------+----------+----------+
| $0.70 | 400,000 | 1.50 | $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 $45,295 and $0 for the three months ended September 30, 2009 and
2008, respectively. The Company has recorded welfare payable of $0 and $0 at
September 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 Companys registered capital;
iii. Allocations of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Companys "Statutory common welfare
fund", which is established for the purpose of providing employee facilities and
other collective benefits to the Companys 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 nine months ended September 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 - $7,639; 2010 - $30,556; 2011 -
$30,556; 2012 - $30,556; and 2013 - $3,726.
Note 12 - Current Vulnerability Due to Certain Concentrations
Three vendors provided 36.6%, 13.4% and 10.7% of the Company's raw materials for
the nine months ended September 30, 2009 and four vendors provided 55.00%,
23.98%, 15.86%, and 1.18%, of the Company's raw materials for the nine months
ended September 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 1,031,884 (2,063,768 pre stock
split) 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 1,031,884 shares at a repurchase price of $3.80 per share, for an
aggregate repurchase price of $3,921,159.
As of October 29, 2009, the Utah court had lifted the injunction preventing us
from selling our shares in China Natural Gas and allowed for the certificate
representing the 1,031,884 shares to be transferred to Ji Xiang. The Company is
working with counsel to effect transfer of the shares through a U.S. transfer
agent in accordance with the settlement agreement among the parties. The
pending lawsuit in Utah will be dismissed immediately upon transfer of the
shares to Ji Xiang and will thereafter have no further potential effect or
impact upon the operation or financial condition of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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