x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
Delaware
|
98-0381367
|
(State
or Other Jurisdiction
|
(IRS
Employer
|
of
Incorporation or Organization)
|
Identification
No.)
|
Page
|
||||
|
|
Number
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
|||
Item
1.
|
Financial
Statements
|
|||
Consolidated
Balance Sheet as of September 30, 2007 (unaudited)
|
2
|
|||
|
||||
Consolidated
Statements of Operations and Other Comprehensive Income
|
|
|||
(Loss)
for the three and nine months ended September 30,
|
|
|||
2007
and 2006 (unaudited)
|
3
|
|||
|
||||
Consolidated
Statements of Cash Flows for the
|
|
|||
nine
months ended September 30, 2007 and 2006 (unaudited)
|
4
|
|||
|
||||
Notes
to Consolidated Financial Statements (unaudited)
|
5
|
|||
|
||||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition
|
|
||
and
Results of Operations
|
17
|
|||
|
||||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
23
|
||
|
||||
Item
4.
|
Controls
and Procedures
|
24
|
||
|
||||
PART
II.
|
OTHER
INFORMATION
|
25
|
||
|
||||
Item
1.
|
Legal
Proceedings
|
25
|
||
|
||||
Item
1A.
|
Risk
Factors
|
25
|
||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
25
|
||
|
||||
Item
3.
|
Defaults
Upon Senior Securities
|
25
|
||
|
||||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
25
|
||
|
||||
Item
5.
|
Other
Information
|
25
|
||
|
||||
Item
6.
|
Exhibits
|
25
|
||
SIGNATURES
|
|
26
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(unaudited)
|
|||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
& cash equivalents
|
$
|
962,534
|
$
|
11,824,327
|
|||
Accounts
receivable, net of allowance for
|
|||||||
doubtful
accounts of $901,621 and $659,653
|
24,729,956
|
18,875,368
|
|||||
Other
receivable
|
2,130,282
|
888,230
|
|||||
Inventory
|
1,258,339
|
1,794,585
|
|||||
Advances
to suppliers
|
8,853,953
|
12,662,139
|
|||||
Prepaid
expense and other current assets
|
4,452,306
|
195,821
|
|||||
Total
current assets
|
42,387,370
|
46,240,470
|
|||||
PROPERTY
AND EQUIPMENT, net
|
5,249,471
|
5,195,283
|
|||||
CONSTRUCTION
IN PROGRESS
|
7,481,447
|
3,669,807
|
|||||
MARKETABLE
SECURITY
|
14,239,999
|
6,500,869
|
|||||
INTANGIBLE
ASSETS, net
|
2,032,211
|
2,054,346
|
|||||
OTHER
ASSETS
|
3,698,060
|
3,553,433
|
|||||
LOAN
RECEIVABLE
|
2,297,236
|
1,982,410
|
|||||
TOTAL
ASSETS
|
$
|
77,385,794
|
$
|
69,196,618
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
989,106
|
$
|
1,022,352
|
|||
Accrued
expenses
|
136,217
|
347,948
|
|||||
Total
current liabilities
|
1,125,323
|
1,370,300
|
|||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Preferred
stock, $0.0001 per share; authorized 5,000,000 shares;
|
|||||||
nil
issued and outstanding
|
|||||||
Common
stock, $0.0001 per share; authorized 30,000,000 shares;
|
|||||||
issued
and outstanding 18,310,250 and 18,310,250
|
1,831
|
1,831
|
|||||
Additional
paid-in capital
|
33,860,062
|
33,860,062
|
|||||
Other
comprehensive income
|
15,688,846
|
5,431,910
|
|||||
Statutory
reserve
|
4,314,488
|
4,314,488
|
|||||
Retained
earnings
|
22,395,244
|
24,218,027
|
|||||
Total
stockholders' equity
|
76,260,471
|
67,826,318
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
77,385,794
|
$
|
69,196,618
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||
|
|
|
|
|
|||||||||
Net
Revenue
|
$
|
2,314,059
|
$
|
12,713,217
|
$
|
10,494,694
|
39,630,766
|
||||||
|
|||||||||||||
Cost
of Revenue
|
1,207,774
|
7,839,351
|
5,876,565
|
24,108,725
|
|||||||||
|
|||||||||||||
Gross
profit
|
1,106,285
|
4,873,866
|
4,618,129
|
15,522,041
|
|||||||||
|
|||||||||||||
Operating
expenses
|
|||||||||||||
Selling
expenses
|
596,921
|
557,965
|
1,276,208
|
1,703,608
|
|||||||||
General
and administrative expenses
|
2,879,530
|
1,154,673
|
5,423,524
|
2,005,635
|
|||||||||
Total
operating expenses
|
3,476,451
|
1,712,638
|
6,699,732
|
3,709,243
|
|||||||||
|
|||||||||||||
Income
(loss) from operations
|
(2,370,166
|
)
|
3,161,228
|
(2,081,603
|
)
|
11,812,798
|
|||||||
|
|||||||||||||
Non-operating
income (expense):
|
|||||||||||||
Other
income (expense)
|
(639,729
|
)
|
(31,771
|
)
|
(143
|
)
|
500,604
|
||||||
Interest
income
|
83,418
|
60,835
|
262,870
|
118,129
|
|||||||||
Interest
expense
|
(1,531
|
)
|
(247
|
)
|
(3,907
|
)
|
(679,165
|
)
|
|||||
|
|||||||||||||
Total
non-operating income (expense)
|
(557,842
|
)
|
28,817
|
258,820
|
(60,432
|
)
|
|||||||
|
|||||||||||||
Net
income (loss)
|
(2,928,008
|
)
|
3,190,045
|
(1,822,783
|
)
|
11,752,366
|
|||||||
|
|||||||||||||
Other
comprehensive income
|
|||||||||||||
Foreign
currency translation gain (loss)
|
859,916
|
662,012
|
2,517,806
|
780,115
|
|||||||||
Unrealized
gain (loss) on marketable equity security
|
5,200,695
|
165,102
|
7,739,130
|
(928,695
|
)
|
||||||||
|
|||||||||||||
Comprehensive
Income (loss)
|
$
|
3,132,603
|
$
|
4,017,159
|
$
|
8,434,153
|
$
|
11,603,786
|
|||||
|
|||||||||||||
Weighted
average shares outstanding :
|
|||||||||||||
Basic
|
18,310,250
|
18,176,917
|
18,310,250
|
17,859,878
|
|||||||||
Diluted
|
18,310,250
|
18,303,299
|
18,310,250
|
18,002,639
|
|||||||||
|
|||||||||||||
Earnings
per share:
|
|||||||||||||
Basic
|
$
|
(0.16
|
)
|
$
|
0.18
|
$
|
(0.10
|
)
|
$
|
0.66
|
|||
Diluted
|
$
|
(0.16
|
)
|
$
|
0.17
|
$
|
(0.10
|
)
|
$
|
0.65
|
Nine
Months Ended September 30,
|
|
||||||
|
|
2007
|
|
2006
|
|||
(unaudited)
|
(unaudited)
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income (loss)
|
$
|
(1,822,783
|
)
|
$
|
11,752,366
|
||
Adjustments
to reconcile net income (loss) to net cash
|
|||||||
provided
by (used in) operating activities:
|
|||||||
Depreciation
and amortization
|
354,753
|
335,842
|
|||||
Amortization
of debt discounts
|
-
|
603,886
|
|||||
Exchange
gain (loss)
|
-
|
(16,828
|
)
|
||||
Value
of vested option issued to directors
|
-
|
7,523
|
|||||
Allowance
for bad debts
|
210,095
|
-
|
|||||
(Increase)
/ decrease in assets:
|
|||||||
Accounts
receivable
|
(5,469,096
|
)
|
(12,336,536
|
)
|
|||
Other
receivable & Loan Receivable
|
(1,407,655
|
)
|
(4,968,421
|
)
|
|||
Inventory
|
598,013
|
(246,935
|
)
|
||||
Advances
to suppliers
|
4,243,485
|
(3,599,885
|
)
|
||||
Prepaid
expense
|
(4,159,646
|
)
|
-
|
||||
Other
assets
|
-
|
3,960
|
|||||
Increase
/ (decrease) in current liabilities:
|
|||||||
Accounts
payable
|
(57,313
|
)
|
99,935
|
||||
Other
payable
|
-
|
3,374,315
|
|||||
Accrued
expenses
|
(221,025
|
)
|
51,735
|
||||
Net
cash provided by (used in) operating activities
|
(7,731,172
|
)
|
(4,939,043
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Acquisition
of property and equipment
|
(91,381
|
)
|
(386,268
|
)
|
|||
Additions
to construction in progress
|
(3,582,845
|
)
|
(789,911
|
)
|
|||
Investments
|
-
|
(735,536
|
)
|
||||
Payments
for other assets
|
(44,168
|
)
|
-
|
||||
Net
cash used in investing activities
|
(3,718,394
|
)
|
(1,911,715
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Payments
on note payable
|
-
|
(5,000,000
|
)
|
||||
Proceeds
from issuance of common stock
|
-
|
26,682,511
|
|||||
Payment
of offering costs
|
-
|
(6,132,707
|
)
|
||||
Proceeds
from the exercise of warrants
|
-
|
220,160
|
|||||
Net
cash provided by financing activities
|
-
|
15,769,964
|
|||||
Effect
of exchange rate changes on cash and cash equivalents
|
587,773
|
27,832
|
|||||
NET
INCREASE /(DECREASE) IN CASH & CASH
EQUIVALENTS
|
(10,861,793
|
)
|
8,947,038
|
||||
CASH
& CASH EQUIVALENTS, BEGINNING OF PERIOD
|
11,824,327
|
6,276,897
|
|||||
CASH
& CASH EQUIVALENTS, END OF PERIOD
|
$
|
962,534
|
$
|
15,223,935
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||
Interest
paid
|
$
|
-
|
$
|
112,500
|
|||
Income
taxes paid
|
$
|
-
|
$
|
-
|
Operating
equipment
|
10
years
|
Vehicles
|
8
years
|
Office
equipment
|
5
years
|
Buildings
|
30
years
|
2007
|
2006
|
||||||
Operating
equipment
|
$
|
996,212
|
$
|
946,252
|
|||
Vehicles
|
703,248
|
597,239
|
|||||
Office
equipment
|
79,510
|
74,944
|
|||||
Buildings
|
4,610,371
|
4,426,559
|
|||||
6,389,341
|
6,044,994
|
||||||
Less
accumulated depreciation
|
(1,139,870
|
)
|
(849,711
|
)
|
|||
$
|
5,249,471
|
$
|
5,195,283
|
2007
|
2006
|
||||||
Raw
Material
|
$
|
838,013
|
$
|
1,257,883
|
|||
Packaging
|
169,956
|
161,923
|
|||||
Finished
Goods
|
433,244
|
550,280
|
|||||
Consumables
|
326
|
395
|
|||||
1,441,539
|
1,970,481
|
||||||
Less
Obsolescence Reserve
|
(183,200
|
)
|
(175,896
|
)
|
|||
$
|
1,258,339
|
$
|
1,794,585
|
|
in
November, 2021 - prepayment for next 8 years commencing on November
2021
and
|
·
|
in
November, 2029 - prepayment of remaining 7 years commencing on November
2029
|
2007
|
2006
|
||||||
Prepaid
Lease (for 15 years)
|
$
|
2,548,704
|
$
|
2,569,818
|
|||
Current
portion
|
180,440
|
173,246
|
|||||
Long-term
portion
|
$
|
2,368,264
|
$
|
2,396,572
|
2007
|
2006
|
||||||
Rights
to use land
|
$
|
1,824,350
|
$
|
1,741,386
|
|||
Fertilizers
proprietary technology rights
|
1,067,688
|
1,052,120
|
|||||
|
2,793,506
|
||||||
Less
Accumulated amortization
|
(859,827
|
)
|
(739,160
|
)
|
|||
$
|
2,032,211
|
$
|
2,054,346
|
Options
outstanding
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic Value
|
||||||||
Outstanding,
December 31, 2006
|
136,000
|
$
|
5.39
|
$
|
50,000
|
|||||
Granted
|
-
|
-
|
||||||||
Forfeited
|
-
|
-
|
||||||||
Exercised
|
-
|
-
|
||||||||
Outstanding,
September 30, 2007
|
136,000
|
$
|
5.39
|
$
|
0
|
Outstanding
Options
|
Exercisable
Options
|
||||||||||||||||||
|
|
||||||||||||||||||
Exercise
Price
|
Number
|
Average
Remaining Contractual Life
|
Average
Exercise Price
|
Number
|
Average
Exercise Price
|
||||||||||||||
|
|
|
|
|
|
||||||||||||||
$
|
5.00
|
100,000
|
1.68
|
$
|
5.00
|
100,000
|
$
|
5.00
|
|||||||||||
$
|
5.80
|
10,000
|
2.25
|
$
|
5.80
|
10,000
|
$
|
5.80
|
|||||||||||
$
|
6.72
|
26,000
|
3.02
|
$
|
6.72
|
26,000
|
$
|
6.72
|
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.
|
Three
Months Ended September 30,
|
|||||||||||||||||||
2007
|
2006
|
||||||||||||||||||
Per
|
Per
|
||||||||||||||||||
Income
|
Shares
|
Share
|
Income
|
Shares
|
Share
|
||||||||||||||
Basic
earnings per share
|
|||||||||||||||||||
Net
income (loss)
|
$
|
(2,928,008
|
)
|
$
|
3,190,045
|
||||||||||||||
Weighted
shares outstanding
|
18,310,250
|
18,176,917
|
|||||||||||||||||
$
|
(0.16
|
)
|
$
|
0.18
|
|||||||||||||||
Diluted
earnings per share
|
|||||||||||||||||||
Net
income (loss)
|
$
|
(2,928,008
|
)
|
$
|
3,190,045
|
||||||||||||||
Weighted
shares outstanding
|
18,310,250
|
18,176,917
|
|||||||||||||||||
Effect
of dilutive securities
|
|||||||||||||||||||
Options
|
-
|
75,544
|
|||||||||||||||||
Warrants
|
-
|
50,838
|
|||||||||||||||||
18,310,250
|
18,303,299
|
||||||||||||||||||
$
|
(0.16
|
)
|
$
|
0.17
|
Nine
Months Ended September 30,
|
|||||||||||||||||||
2007
|
2006
|
||||||||||||||||||
Per
|
Per
|
||||||||||||||||||
Income
|
Shares
|
Share
|
Income
|
Shares
|
Share
|
||||||||||||||
Basic
earnings per share
|
|||||||||||||||||||
Net
income (loss)
|
$
|
(1,822,783
|
)
|
$
|
11,752,366
|
||||||||||||||
Weighted
shares outstanding
|
18,310,250
|
17,859,878
|
|||||||||||||||||
$
|
(0.10
|
)
|
$
|
0.66
|
|||||||||||||||
Diluted
earnings per share
|
|||||||||||||||||||
Net
income (loss)
|
$
|
(1,822,783
|
)
|
$
|
11,752,366
|
||||||||||||||
Weighted
shares outstanding
|
18,310,250
|
17,859,878
|
|||||||||||||||||
Effect
of dilutive securities
|
|||||||||||||||||||
Options
|
-
|
82,476
|
|||||||||||||||||
Warrants
|
-
|
60,285
|
|||||||||||||||||
18,310,250
|
18,002,639
|
||||||||||||||||||
$
|
(0.10
|
)
|
$
|
0.65
|
· |
Our
delisting from the Amex.
As described in our current report on Form 8-K dated March 28, 2007
(the
“March 2007 Form 8-K”), including the Exhibit thereto, the Amex delivered
notice to us confirming that it intended to strike our common stock
from
the Amex. As described in the March 2007 Form 8-K, the precise basis
for
the Amex delisting determination called into question certain disclosures
(or the failure to make certain disclosures) in the reports that
we filed
or submitted under the Exchange Act. Although we do not accept any
of the
determinations or any related factual or legal conclusions of the
staff of
the Amex regarding our company, our Chief Executive Officer and Chief
Financial Officer cannot make a determination at this time that our
disclosure controls and procedures were effective as of the end of
the
period covered by this report.
|
· |
Our
inability to timely file this quarterly report on Form
10-Q.
Effective disclosure controls and procedures ensure that management
receives information as appropriate to allow timely decisions regarding
required disclosures. Because of the substantial time and resources
that
we have devoted to our investigation of the conclusions of the staff
of
the Amex regarding our company as set out in the March 2007 8-K,
information required to be disclosed in this quarterly report on
Form 10-Q
was not accumulated and communicated to our management as appropriate
to
allow timely decisions regarding the disclosures required in this
quarterly report. For this reason, we were not able to file this
quarterly
report within the time period prescribed and our management is not
able to
make a determination at this time that our disclosure controls and
procedures were effective as of the end of the period covered by
this
report.
|
· |
Our
inability to complete the Management’s Annual Report on Internal Control
over Financial Reporting.
For the reasons described in the Form 10-K under “Internal Control over
Financial Reporting,” our management’s assessment of our internal controls
over financial reporting was substantially delayed and was not complete
as
of the date of the Form 10-K. Because we were not able to complete
this
report within the time period prescribed and include such report
in the
Form 10-K, our management is not able to make a determination at
this time
that our disclosure controls and procedures were effective as of
the end
of the period covered by this
report.
|
(a) |
Exhibits
|
3.1
|
Certificate
of Incorporation (incorporated by reference to Company’s Form SB-2 filed
September 3, 2002)
|
|
3.2
|
By-Laws
(incorporated by reference to Company’s Form SB-2 filed September 3,
2002).
|
|
10.1
|
Bodisen
Biotech, Inc. 2004 Stock Option Plan (incorporated by reference to
Company’s Form 10-KSB filed March 31, 2005)
|
|
10.2
|
Form
of Bodisen Biotech, Inc. Nonstatutory Stock Option Agreement (incorporated
by reference to Company’s Form 10-KSB filed March 31,
2005)
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
promulgated under the Securities and Exchange Act of 1934, as
amended
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d
14(a),
promulgated under the Securities and Exchange Act of 1934, as
amended
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|
|
Bodisen
Biotech, Inc.
|
|||
|
|
|
||
November
21, 2007
|
By:
|
/s/ Bo
Chen
|
||
|
Bo
Chen
Chairman,
Chief Executive Officer and President
(Principal
Executive Officer)
|
|
|
|
||
November
21, 2007
|
By:
|
/s/ Junyan
Tong
|
||
|
JunYan
Tong
Chief
Financial Officer
(Principal
Financial and Accounting
Officer)
|