May 9, 2006
Mr. Qiong Wang
Chief Executive Officer
Bodisen Biotech, Inc.
North Part of Xinquia Road, Yang Ling AG
High-Tech Industries Demonstration Zone
People`s Republic of China 712100
Re: Bodisen Biotech, Inc.
Registration Statement on Form SB-2
Filed April 10, 2006
File No. 333-133177
Form 10-KSB for the Fiscal Year Ended December 31, 2005
Filed March 28, 2006
File No. 01-32616
Dear Mr. Wang:
We have limited our review of the above filing to only the
areas upon which we have issued comments. Where indicated, we
think
you should revise your documents in response to these comments.
If
you disagree, we will consider your explanation as to why our
comment
is inapplicable or a revision is unnecessary. Please be as
detailed
as necessary in your explanation. In some of our comments, we may
ask you to provide us with supplemental information so we may
better
understand your disclosure. After reviewing this information, we
may
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. Please note that we will not be in a position to declare the
pending registration statement effective until all comments have
been
addressed, including those issued on your Form 10-KSB for the
fiscal
year ended December 31, 2005.
Form SB-2
Selling Stockholders, page 24
2. You state that "[o]ther than as set forth in the following
table,
the selling stockholders have not held any position or office or
had
any other material relationship with [you] or any of [your]
predecessors or affiliates within the past three years (emphasis
added)." Please clarify the meaning of the carve-out since it
does
not appear that any relevant disclosure is set forth in the table.
3. In this regard, you also state that "...except as set forth
below,
the selling stockholders are not registered broker-dealers
(emphasis
added)." Again, this exception is unclear since it does not
appear
that any such disclosure is set forth below. Please revise or
advise.
4. Please confirm whether any selling shareholder is a registered
broker-dealer or affiliate of a registered broker-dealer. If a
registered broker-dealer, please identify the selling shareholder
as
an underwriter unless the securities you are registering on its
behalf compensated the shareholder for investment banking
services.
If any selling shareholder is an affiliate of a registered broker-
dealer, please confirm to us that the shareholder purchased the
securities you are registering on its behalf in the ordinary
course
of business, and that at the time of the purchase of the
securities
to be resold, the shareholder had no agreements or understandings,
directly or indirectly, with any party to distribute the
securities.
Otherwise, identify the selling shareholder as an underwriter. We
may have additional comments.
Form 10-KSB for the Fiscal Year Ended December 31, 2005
Description of Business, page 4
Business
5. We note that your sole operating subsidiary and all of your
assets
are located in the People`s Republic of China. We further note
your
disclosure within Note 14 on page F-16 regarding restrictions on
your
ability to pay dividends. Please provide parent-only condensed
financial statements as required by Rule 5-04 of Regulation S-X.
Refer also to the September 27, 2004 Highlights of the AICPA
International Practices Task Force meeting, located at:
http://cpcaf.aicpa.org/NR/rdonlyres/8B71F811-51B5-48D0-BD62-
E6546A098346/0/2004_0927_IPTF_HLs.pdf.
History
6. Please revise your disclosure, under this heading, within your
Management`s Discussion and Analysis, and in the notes to your
financial statements, to clearly explain the sequence of events
that
led to the formation of your business in its present state. In
this
regard, it is not clear from your initial discussion under this
section how your resulting corporate structure was achieved due to
your reference to numerous entities and transactions that took
place
from 2001 through 2005. Please ensure that your revised
discussion
begins with an explanation surrounding your historical formation
and
then proceeds with an explanation, in the proper sequence, of how
you
acquired each of the entities you identify in your disclosure.
You
may find that including a chart that depicts your corporate
structure
will aid the reader in their understanding of your disclosure.
Please address each of the following items when preparing your
revised discussion as requested:
* With respect to placement of the second paragraph, please
explain
how Yang Ling and BII fit into your corporate structure, as it
does
not appear that you have explained the sequence of events that
lead
to their inclusion in your business.
* Please add discussion to clearly explain your accounting
treatment
for each of the transactions you describe, including merger,
purchase
and sale transactions you reference under this heading.
* Please revise your disclosure to clearly explain the difference
between Yang Ling, as identified within the second paragraph under
this heading, and "Yang Ling," as identified within the fourth
paragraph under the same heading. In this regard, we note your
use
of quotations to identify Yang Ling Bodisen Biology Science and
Technology Development Company Limited as "Yang Ling" in the
fourth
paragraph.
* We note your statement that on "February 25, 2004, the Company
sold
Stratabid.com Online to Derrek Wasson, the Company`s former CEO."
Please tell us where and how you have reported this sale within
your
financial statements.
* We note your reference to "The Group" and the "Directors."
Please
define these terms in the first instance that they are used within
your filing.
Market for Registrant`s Common Equity, Related Stockholder Matters
and Small Business Issuer Purchases of Equity Securities, page 9
Dividends
7. Please expand your disclosure to indicate your restrictions
with
respect to declaring and paying cash dividends on your common
stock.
In this regard, we note your disclosure within Note 14 on page F-
16.
Management`s Discussion and Analysis or Plan of Operation, page 9
Significant Accounting Policies, page 10
8. We note that your presentation under this heading is similar to
a
discussion typically presented under a heading entitled Critical
Accounting Policies. Due to the nature of your disclosure, please
refer to the Commission`s Cautionary Advice Regarding Disclosure
About Critical Accounting Policies (Release Nos. 33-8040; 34-
45149;
FR-60), at http://www.sec.gov/rules/other/33-8040.htm, regarding
disclosures surrounding accounting estimates and assumptions that
may
be material due to the levels of subjectivity and judgment
involved.
Please include an enhanced discussion and analysis of your
critical
accounting estimates and assumptions that:
* supplements, but does not duplicate, the description of
accounting
policies in the notes to the financial statements; and
* provides greater insight into the quality and variability of
information regarding financial condition and operating
performance.
Please confirm that you will take such guidance into consideration
in
preparation of this disclosure in your future filings.
Intangible assets
9. We note your reference to goodwill under this heading. Please
explain where you have reported goodwill that requires impairment
analysis or revise as appropriate.
Year Ended December 31, 2005 compared to Year Ended December 31,
2004, page 12
10. We note your statement that "Operating expenses include
general
and administrative expenses of $1,496,309 for the twelve months
ended
December 31, 2005 and relate to cost of maintaining the company`s
facilities, salaries and research and development." Please tell
us
whether or not you have included deprecation relating to property,
plant and equipment in your determination of Gross profit. In
this
regard, please note that this measure should reflect the full
absorption costing principle and include all costs and expenses
associated directly with or allocated to your products sold. As
such, these costs and expenses should include inventoriable costs
of
assets incident to or necessary for production or manufacturing,
including applicable depreciation, depletion and amortization.
Although the guidance in SAB Topic 11:B accommodates the separate
presentation of multiple components attributable to cost of sales,
it
is not permissible to similarly report a measure of gross profit
excluding such amounts. Any depreciation and amortization expense
that is related to cost of sales may be displayed on a separate
line
item, however this item must appear before presenting gross profit
and be reflected in that metric. Please modify your presentation
as
necessary.
Liquidity and Capital Resources, page 12
11. We note your statement that "we believe our cash and cash
equivalents and cash generated from operations will satisfy our
working capital needs, capital expenditures and other liquidity
requirements associated with our operations." Please expand your
discussion to clearly identify your liquidity needs on both a
short-
term and long-term basis and clarify whether your statement
references your liquidity outlook for the short or long-term
management of your business. You may wish to refer to the
previously
mentioned guidance, under Section IV, of the Commission`s Guidance
Regarding Management`s Discussion and Analysis of Financial
Condition
and Results of Operations (Release Nos. 33-8350, 34-48960, and FR-
72).
Report of Independent Registered Public Accounting Firm, page F-1
12. We note that your auditors are located in Los Angeles,
California. Since your assets, liabilities, and business
activities
relate to operations located in China, please tell us how the
audit
of the operations in China, including the associated assets and
liabilities, was conducted. Please include a statement as to
whether
or not another auditor was involved in the audit of these
operations
and, if so, the name of the firm.
Consolidated Statements of Income and Other Comprehensive Income,
page F-3
13. Please expand your MD&A to include an explanation the nature
of
the negative balance presented for interest income in 2005 of
($121,410).
Consolidated Statement of Stockholders` Equity, page F-4
14. Based on your discussion in Note 1, it appears that you
entered
into recapitalization transactions during 2003 and 2004. However,
it
is unclear what entity is represented in the beginning balance as
of
January 1, 2004. Please note that we would expect the beginning
number of shares to represent the number of common shares of the
accounting acquiree prior to the recapitalization. In this
regard,
it is our understanding that the historical financial statements
of
the accounting acquirer are not restated, except to present, for
all
periods, the common stock and paid-in capital of the accounting
acquiree. Please provide a detailed schedule that reflects the
composition of the balances presented for January 1, 2004.
Note 1 - Organization and Basis of Presentation, page F-6
15. As previously requested under the History heading above,
please
revise this discussion to clearly explain the sequence of events
that
led to the formation of your business in its present state.
Please
ensure that you address the following items as well:
* Disclose how you accounted for each of the transactions
identified.
If these transactions involved reverse mergers or
recapitalizations,
clearly explain to the reader which entity was the accounting
acquirer and which entity was the accounting acquiree and whose
historical financial statements are presented in the filing.
Please
note that the comparative historical figures presented subsequent
to
a recapitalization should represent those of the accounting
acquirer/legal acquiree. In addition, the footnotes should
clearly
explain, if true, that the historical financial statements are a
continuation of the financial statements of the accounting
acquirer,
not the accounting acquiree.
* Expand your discussion to clearly explain the relevance of your
disclosure within the first paragraph as this appears to be your
first reference to Yang Ling Bodisen Biology Science and
Technology
Development Company Limited ("BBST"). Please expand your
disclosure
under the History discussion on page 4 to ensure that the reader
understands how BBST fits into the sequence of events leading to
your
current corporate structure.
* Please support your statement that "The financial statements of
the
legal acquirer are not significant; therefore, no pro forma
financial
information is submitted" by citing the accounting literature you
are
relying on to support your presentation.
* We note your statement that "On February 24, 2004, BII
consummated
a merger agreement with Strabid.com, Inc. ("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 Statrabid, with BHI being the
surviving entity." Please tell us how this stock exchange is
reflected in your Consolidated Statement of Stockholders` Equity
on
page F-4. In addition, contrast this disclosure with page 5,
where
you indicate that the Company issued "3 million shares of its
Common
Stock to the holders of BII shares."
* We note, with respect to your discussion of the reverse
acquisition
between Stratabid and BII that you recorded this transaction as a
recapitalization and that "The financial statements of legal
acquirer
are not significant; therefore, no pro forma financial information
is
submitted." Please cite the accounting literature you are relying
on
to support your presentation.
* We note that you incurred expenses of $651,000 relating to the
private placement in March 2005. Please confirm, if true, that
none
of these expenses were paid directly to the investor in the
convertible instrument or otherwise advise. In this regard, the
Task
Force observed, in paragraph 22 of EITF 00-27, that "(a) issuance
costs are limited to incremental and direct costs incurred with
parties other than the investor in the convertible instrument and
(b)
any amounts paid to the investor when the transaction is
consummated
represent a reduction in the proceeds received by the issuer (not
issuance costs)."
* Please clarify what you mean by the statement that "The net
proceeds from this offering were sent to China towards capital
contribution of the registration of a wholly-owned Bodisen
subsidiary
by the name of "Yang ling Bodisen Agricultural Technology Co.,
Ltd.
("Agricultural")."
Note 2 - Summary of Significant Accounting Policies, page F-7
Segment Reporting, page F-10
16. We note your statement that "SFAS 131 has no effect on the
Company`s consolidated financial statements as the Company
consists
of one reportable business segment." Please expand your
disclosure
to indicate the factors used to identify your reportable segments,
including the basis of organization and whether operating segments
have been aggregated in accordance with paragraph 26 of SFAS 131.
In
addition, please explain the basis for your conclusion that you
have
one operating segment, based on the guidance in SFAS 131.
Furthermore, please provide the disclosure required by paragraph
37
of SFAS 131 for your three product lines.
Note 4 - Advances to officers, page F-11
17. We note that you advanced monies to four officers on a short-
term
basis during 2005. Please confirm, if true, (i) that a loan
document
exists between the Company and each of the officers and (ii) that
the
loan agreements have been filed as an exhibit under Item 13 of
Form
10-KSB (refer to 10(i)(A) under the Instructions to Item
601(b)(4)(iii) for electronic filers under Regulation S-B). In
addition, please tell us how you have complied with Section 13(k)
under the Securities Exchange Act of 1934 with respect to personal
loans to executives or otherwise advise.
Note 18 - Merger Agreement, page F-17
18. Please tell us how you accounted for the return by Mr. Wasson
of
750,000 common shares to Stratabid for cancellation and the
forgiveness of all debt owed by Stratabid to Mr. Wasson.
Controls and Procedures, page 15
19. You state that there were no "significant changes" in your
internal control over financial reporting. Please note that Item
308(c) of Regulation S-B requires that you disclose any change in
your internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of
Exchange
Act Rules 13a-15 or 15d-15 that occurred during the fourth fiscal
quarter that has "materially affected, or is reasonably likely to
materially affect, the small business issuer`s internal control
over
financial reporting." See also Regulation S-B, paragraph 4(d) of
Exhibit 31. Please review your disclosure and revise as
appropriate.
Exhibits 31.1 and 31.2
20. We note that the wording of your certifications pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 does not precisely
match the language set forth in the Act. In this regard, your
certifications include references throughout the certification to
both annual and quarterly reports and your paragraph 5 appears to
contain outdated certification language. Refer to Item 601(b)(31)
of
Regulation S-B for the exact text of the required Section 302
certification, and amend your exhibits as appropriate.
Closing Comments
As appropriate, please amend the above filings in response
to
these comments. You may wish to provide us with a marked copy of
the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested information. Detailed cover letters greatly
facilitate
our review. Please understand that we may have additional
comments
after reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Please contact Jennifer Goeken at (202) 551-3721 or, in her
absence, Jill Davis, Branch Chief, at (202) 551-3683 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Jason Wynn at (202) 551-3756 or, in his
absence, me at (202) 551-3740 with any other questions. Direct
all
correspondence to the following ZIP code: 20549-7010.
Sincerely,
H. Roger Schwall
Assistant Director
cc: J. Wynn
J. Goeken
J. Davis
via facsimile
Marc J. Ross, Esq.
Sichenzia Ross Friedman Ference LLP
(212) 930-9725
Mr. Qiong Wang
Bodisen Biotech, Inc.
May 9, 2006
page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF CORPORATION FINANCE
MAIL STOP 7010