UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest reported): February 24, 2004
STRATABID.COM, INC.
(Exact name of registrant as specified in charter)
Delaware 333-99101 98-0381367
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
North Part of Xinquia Road, Yang Ling Agricultural
High-Tech Industries Demonstration Zone
Yang Ling, People's Republic of China 712100
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 011-86-29-87074957
Item 1. Change of Control of Registrant
The Acquisition
On February 11, 2004, Stratabid.com, Inc. (the "Company") entered into an
Agreement and Plan of Merger with Bodisen Acquisition Corp., a Delaware
corporation wholly-owned by the Company ("Subsidiary"), Bodisen International,
Inc., a Delaware corporation ("Bodisen") and the shareholders of Bodisen.
Bodisen has one wholly-owned subsidiary in Shaanxi, China, Yang Ling Bodisen
Biology Science and Technology Development Company Limited ("Yang Ling"). Under
the terms of the agreement, Stratabid.com acquired 100 percent of Bodisen's
stock in exchange for the issuance by Stratabid.com of three million shares of
its common stock to the holders of Bodisen. The new shares constitute
approximately 66 percent of the outstanding shares of Stratabid.com, which
intends to change its name to Bodisen Biotech, Inc. The Agreement and Plan of
Merger was closed on February 24, 2004.
Bodisen's Chairman of the Board, Ms. Qiong Wang has been appointed the
Company's Chief Executive Officer, DingXiang Yang has been appointed Chief
Financial Officer and Yongning Zhang has been appointed Secretary. Ms. Qiong
Wang has been appointed director.
About Bodisen
Bodisen is incorporated under the laws of the state of Delaware and is
headquartered in the Shaanxi Province, People's Republic of China. Bodisen
engages in the business of manufacturing and marketing a brand of organic
fertilizer to the five leading agricultural provinces of China. Bodisen produces
numerous proprietary product lines, from pesticides to crop specific fertilizer.
These products are then marketed and sold to farmers throughout the 17 provinces
of China. Bodisen conducts research and development to further improve existing
products and develop new formulas and products.
Industry Overview
The organic fertilizer business in China is still in its infancy. Compared
with traditional chemical fertilizer, organic fertilizer is composed of natural
nutritional elements that enhance soil quality to increase crop yields, without
the chemical side effect of harming soil fertility. In relation to traditional
compound chemical fertilizer, organic compound fertilizer accelerates
reproduction of soil microbes to improve soil quality through the decomposition
of organic material. This soil microbe enhanced by organic fertilizer improves
the soil's retention of nitrogen. Moreover, this application can activate
dormant soil by increasing soil nitrites and moisture content that otherwise is
not enhanced by traditional chemical fertilizers. This process controls the
release of nutritional elements that enhances the quality, quantity and health
of crops. As a result of years of intensive farming, China's soil quality is low
compared to international standards; therefore it has been widely recognized
that organic fertilizer can be more effective than traditional chemical
fertilizer in stabilizing and enhancing soil quality. Based on these facts, and
the fact that organic fertilizer can be widely utilized, the market for organic
fertilizer is rapidly growing and the use of organic fertilizer has become
popular throughout China.
Products
Bodisen maintains over 60 package products, which are broken down into 3
product line categories:
1. Organic Compound Fertilizer has been found in tests conducted by
Bodisen with local area farmers in Shaanxi, which are further
described in the "Marketing" description below, to increase yields
within one planting season in a variety of crops including, wheat,
maize, tobacco and various vegetable and fruit crops.
2
Plants tend to easily absorb organic fertilizer without the side
affects found in synthetic chemical fertilizer products, and this
organic process strengthens photosynthesis, which improves the overall
health of a plant in resisting drought and disease. The International
Organization for Standardization or ISO has qualified Bodisen's
organic compound fertilizer products.
2. Liquid Fertilizer is a series of products which can be applied to
grapes, pears, cucumbers, potatoes, watermelon, apples, oranges,
asparagus, garlic and strawberries. By applying liquid fertilizer
during the early stages of a plants development, plants absorb the key
elements and nutrients of the fertilizer, which strengthen
photosynthesis, improving the overall health of the plant and making
it more resistant to disease. In addition, liquid fertilizer heightens
the color and luster of fruits and vegetables and the overall quality
of the end product.
3. Pesticides and Insecticides.Bodisen's pesticide products can be
applied to fruit trees and vegetable crops and will help eliminate
harmful pests that reduce overall crop yields. A sample of the pests
that bring harm to crops in China include, but are not limited to, the
peach fruit fly, white aphid, red aphid, red mite, cotton bollworm,
maize mite, cabbage butterfly, leaf acaroids, pear mite, grain worm,
wheat moth, and the millet fly.
All of Bodisen's products are mass-produced and distributed to the
wholesalers and distribution centers in the 17 provinces in which Bodisen does
business. The organic compound fertilizer and liquid fertilizer are used mainly
in the first half of each year. The busy periods of the farmers from south China
and north China are different, so the seasonal sales of the organic compound
fertilizer and liquid fertilizer vary. With regards to pesticide, the busy
period for this product is from April to August of each year. Our wholesalers
sell the products to the farmers directly.
Marketing
All three-product lines of Bodisen are sold directly to the farming
community in rural areas or wholesalers through our distribution network. This
consists of 12 established branches each representing 5 sales team responsible
for an assigned territory.
Since Bodisen's inception, the "Bodisen" brand has been aggressively
marketed and promoted, through trade fairs, conventions and the print media.
Bodisen also promotes its product lines through television and radio adverting
in China. Since the end-user for Bodisen's products is the local farmer, Bodisen
utilizes educational seminars to promote products directly to farmers. These
educational seminars are conducted locally in China and explain the advantages
of organic fertilizers and how they may be used to enhance crop yields. Bodisen
markets directly to farmers, which allows Bodisen to collect feedback to help in
preparing and designing products based on the needs of the farmers. Included in
this process is the distribution of free samples that attract attention and
increase brand awareness.
The free samples are made available to allow farmers the opportunity to
test the product and compare it to other fertilizer products. After the farmers
participate in this test, Bodisen announces and promotes the results to
surrounding towns in the test zone. The cost of this is not material and is
often offset by new sales in that test zone. The objective of this test is to
compare Bodisen's products with the similar products of the competitors.
The primary task for sales and marketing is to strengthen the home market
in Shaanxi province and expand the market outside Shaanxi province into new
districts where Bodisen's products are not well established. Bodisen will try to
accomplish this through traditional means, which are to use the market
strategies of price control and the establishment of franchising its
distribution to wholesalers.
3
Bodisen intends to increase marketing in regions where Bodisen's products
are not well known. In addition, Bodisen will promote its products through
national newspapers in China explaining the advantages of the high-tech nature
of its environmental or "green" product lines. In order to enter the untapped
markets of western China, Bodisen will explore selling exclusive franchise
opportunities to new wholesale agents.
Sources and Availability of Raw Materials (Vendors)
There are numerous suppliers and vendors of raw materials in the Shaanxi
Province of China from which Bodisen can choose from in satisfying its
production requirements. We have no contracts with trade vendors and conduct
business on an order-by-order basis, a practice that is typical throughout the
industry in China. We believe that we have very good relations with the
agricultural vendor community.
Customers
All orders for Bodisen's products are informal and are indications of
interest which can be canceled by the customers at anytime and for any reason.
In China, orders of indication are the norm, and are based on the goodwill of a
company's relationships with its customers. All orders that Bodisen signs with
customers are informal indications of interest and no there are no written or
verbal sales contracts with its customers. Signed orders on file with Bodisen
will be filled on a first come-first served basis, as the product is
manufactured and distributed.
Intellectual Property
Bodisen owns a trademark on the "BODISEN" name, which is used on all
Bodisen products. BODISEN is also a recognized trade name in the provinces in
China in which Bodisen conducts business.
Bodisen holds no patents and has not applied for patents on its proprietary
technology or formulas because Bodisen believes application for such patents in
China would result in public knowledge of Bodisen proprietary technology and
formulas, which would be detrimental to its future well-being. Only certain key
executives of Bodisen have knowledge of such proprietary technology and
formulas.
Research and Development
Bodisen's research and development team consists of nine professionals,
which perform administrative and ministerial functions. Much of Bodisen's
research work is done in close cooperation with universities and research labs
in the Yang Ling and Xian metropolitan areas and the cost of such research work
is incurred by such universities and research labs and not by Bodisen.
In 2004, Bodisen plans to spend $130,000.00 on research and development, a
majority of which is dedicated to current experiments to develop new products.
Current Research and Development Projects
Project Ion: The study of metal ions, copper, zinc and maganese in
combination with silver positive ion to control and remove crop disease brought
about by fungus. Bodisen is trying to determine if the combination of these
metal ions will prohibit the release of an intrusive enzyme from fungus that
kills crops in China.
4
Project Fly: The development of a protein abstract from a common fly to
develop bacteria-based pesticides, which may have better effect on plant's
resistance to insects. This project seeks to isolate a series of anti-bacteria
peptides from the proteins of a common fly. This kind of anti-bacteria peptide
could effectively control many pathogens which may prove better than pesticide's
currently available.
Project Amino Acid: Program to build a new compound fertilizer product,
based on a proactive amino acid enzyme.
Project Build: A technique for the manufacturing of organic compound
fertilizer, which could enhance the quality of organic fertilizer products.
Governmental and Environmental Regulation
Through the laws and regulation of the People's Republic of China and
Shaannxi Provincial government, Bodisen's products and services are subject to
material regulation by governmental agencies responsible for the Agricultural
Industry and through the government district where Bodisen is headquartered.
Business and company registrations, along with Bodisen's products, are certified
on a regular basis and must in compliance with the laws and regulations of the
state governments and industry agencies, which are controlled and monitored
through the issuance of licenses. To date, Bodisen has been compliant with all
registrations and requirements for the issuance and maintenance of all licenses
required by the governing bodies. As of December 1, 2003, all license fees and
filings are current. These licenses include:
o PRODUCTION OF ORGANIC COMPOUND FERTILIZER LICENSE. Authorized by the
Shaanxi Soil and Fertilizer Institution. After June 2004, this
production license will be transferred to a Production License
authorized by Ministry of Agriculture, People's Republic of China.
o CERTIFICATE FOR PESTICIDE REGISTRATION. Is required for the production
of liquid fertilizer and issued by Ministry of Agriculture, People's
Republic of China.
o PRODUCTION STANDARD. Registered with Bureau of Quality Controls and
Technology, Shaanxi Provincial Government, Xi'an.
There is no prohibitive cost in obtaining and maintaining these licenses,
as it is illegal to do business without these licenses. As it is an accepted
business practice to operate within the regulations of the issued license, the
issuance of the license is considered acost of doing business and fees
associated with this are minimal. If Bodisen were to lose any of these licenses,
it would only have a limited time to reapply for such licenses and would face
possible regulatory fines. Bodisen is not subject to any environmental controls
or restrictions that require the outlay of capital or the obtaining of a permit
in order to engage in business operations.
Employees
As of December 1, 2003, Bodisen employed a total of 349 employees, 251 on a
full-time basis, 26 of which are clerical, 74 of which are in operations, 5 in
accounting, 128 of which are sales and marketing, 9 of which are administrative
and 9 of which are research and development. Bodisen also employs 98 part-time
employees which are farmers.
5
Competition
The compound fertilizer industry is largely fragmented with most
competitors operating small regional factories, serving local requirements. Most
companies in this industry in China do not promote their products through brand
name recognition.
Bodisen has not yet identified any competition in Shaanxi province that
operates in all three segments (compound, liquid and pesticide) of the organic
fertilizer business. Bodisen's nearest competitor is Tian Bang Shaanxi.
Management believes that the only international company operating in China which
is a competitor to Bodisen is DuPont. Bodisen competes and sells it products in
seventeen provinces throughout China including Shaanxi, Hebei, Shandong,
Liaoning, Jilin, Heilongjiang, Gansu, Sichuan, Henan, Shanxi, Guangxi, Xinjiang,
Inner Mongolia, Ningxia, Qinghai, Yunnan and Hainan.
Description of Property
Bodisen's principal executive offices are located at North Part of Xinquia
Road, Yang Ling Agricultural High-Tech Industries Demonstration Zone Yang Ling,
Shaanzi province, People's Republic of China, 712100 and our telephone number is
011-86-29-87074957. Bodisen 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. Bodisen also leases a warehouse in Yang Ling
near the site of Bodisen's factories. This warehouse is 300 square meters in
area. The rent of the warehouse is $1,500.00 a month from May 20, 2003 to May
20, 2004.
EXECUTIVE OFFICERS
Qiong Wang, Chief Executive Officer
Ms. Qiong Wang has served as the Chairman of the Board of Directors since
founding Yang Ling in September 2001. From 1997 to May 2001, Ms. Wang was the
Chief Executive Officer and President of Shaanxi Bodison Chemical Co., Ltd.,
which became Yang Ling. From May 1996 to December 1997, Ms. Wang was the
President of Yang Ling Kang Yuan Chemical Company. Ms. Wang graduated from
North-West Agronomy College, with a Bachelor of Science degree in 1986.
Dingxiang Yang, Chief Financial Officer
Mr. Yang is a Certified Public Accountant in China. Mr. Yang has been the
Chief Financial Officer of Bodisen since January 2004. From 1997 until 2003, Mr.
Yang was the Head of Accounting Department at ShaanXi Agricultural Corporation,
a government agricultural product distribution firm. Mr. Yang was the Head of
Accounting Department of Xi'An Electric Motor Institute from 1986 until 1997.
Mr. Yang received a Bachelor's degree in accounting from ShaanXi Second
Institute of Commerce in 1986.
Yongning Zhang, Secretary
Mr. Zhang has been the human resources manager since 1999. He received a
Bachelor's degree in business management from ShaanXi Baoji Arts & Sciences
Institute in 1999.
6
Executive Compensation
The following table sets forth in summary form the compensation received by
our Chief Executive Officer and other officers earning in excess of $100,000,
for the last three fiscal years of the Company.
long-term
Name annual compensation compensation awards
and ---------------------------- ----------------------
principal annual securities underlying
position year salary bonus other options/sars
- --------- ---- ------ ----- --------- ----------------------
Derek Wasson 2003 -- -- $32,694 (3) ---
Chief Executive Officer 2002 -- -- $19,047 (3) ---
2001(1) --
Steven Bruk 2001(2) -- -- -- ---
Chief Executive Officer
(1) For the period January 25, 2001 to December 31, 2001.
(2) For the period January 1, 2001 to January 25, 2001
(3) Represents consulting fees paid.
Related Party Transactions
None.
Item 4. Change in Registrant's Certifying Accountant
On February 26, 2004, the Company notified Manning Elliott, Chartered
Accountants ("Elliott"), its independent public accountant, that the Company was
terminating his services, effective as of that date. The Company's Board of
Directors approved such decision.
Elliott's opinion in his report on the Company's financial statements for
the years ended December 30, 2001 and 2002 contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to audit scope or
accounting principle. During the two most recent fiscal years and the subsequent
interim period preceding February 26, 2004 (date of termination), there were no
disagreements with Elliott on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Elliott, would have caused
disagreements in connection with his report on our financial statements for any
such periods.
On February 26, 2004, the Company engaged Kabani & Company, Inc.
("Kabani"), as its independent public accountants. The Company did not
previously consult with Kabani regarding any matter, including but not limited
to:
o the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might
be rendered on the Company's financial statements; or
o any matter that was either the subject matter of a disagreement (as
defined in Item 304(a)(1)(iv) of Regulation S-B and the related
instructions) or a reportable event (as defined in Item 304(a)(1)(v)
of Regulation S-B).
7
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of businesses acquired.
1. Audited Financial Statements of Bodisen, Inc.
2. Pro-forma consolidated financial statements of the Company.
(b) Exhibits.
3. Agreement and Plan of Merger by and among Stratabid.com, Inc.,
Bodisen Acquisition Corp., Bodisen, and the shareholders of
Bodisen, made as of the 11th day of February, 2004. (Previously filed)
4. Letter from Manning Elliott, Chartered Accountants, dated
February 26, 2004. (Previously filed)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRATABID.COM, INC.
Date: June 29, 2004 /s/Qiong Wang
--------------
Qiong Wang,
Chief Executive Officer
8
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Bodisen International, Inc.,
We have audited the accompanying consolidated balance sheets of Bodisen
International Inc, and subsidiary as of December 31, 2003 and 2002, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the years ended December 31, 2003 and 2002. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Bodisen
International Inc, and subsidiary as of December 31, 2003 and 2002, and the
consolidated results of their operations and cash flows for the years ended
December 31, 2003 and 2002 in conformity with accounting principles generally
accepted in the United States of America.
/s/ Kabani & Company, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
Fountain Valley, California
February 5, 2004
9
Exhibit 1
BODISEN INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
ASSETS
2003 2002
--------------- ---------------
CURRENT ASSETS:
Cash & cash equivalents $ 2,974,773 233,182
Accounts receivable, net 1,822,841 2,071,927
Advances to Suppliers 1,933,516 1,662,872
Inventory 715,732 797,270
--------------- -------------
Total current assets 7,446,862 4,765,250
PROPERTY AND EQUIPMENT, net 1,220,587 1,225,490
CAPITAL WORK IN PROGRESS 222,083 217,206
INTANGIBLE ASSETS, net 2,310,148 949,242
--------------- ---------------
$ 11,199,680 $ 7,157,188
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,634,163 $ 1,098,978
Accrued expenses 75,755 -
Unearned revenue 15,888 601,975
Short term loan 1,092,000 12,000
Dividend payable - 180,000
Other payables 14,300 81,423
--------------- ---------------
Total current liabilities 2,832,106 1,974,375
STOCKHOLDERS' EQUITY
Common stock, $0.001 per share; authorized shares 50,000,000;
issued and outstanding 1,500 shares 1 1
Additional paid in capital 6,014,399 4,799,999
Statutory reserve 263,795 66,758
Retained earnings 2,089,379 316,054
--------------- ---------------
Total stockholders' equity 8,367,574 5,182,813
--------------- ---------------
$ 11,199,680 $ 7,157,188
=============== ===============
10
BODISEN INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
--------------- ---------------
Net revenue $ 9,783,784 $ 4,881,350
Cost of revenue 6,706,082 3,582,176
--------------- ---------------
Gross profit 3,077,702 1,299,174
Operating expenses
Selling expenses 573,807 235,077
General and administrative expenses 630,401 384,067
--------------- ---------------
Total operating expenses 1,204,207 619,144
--------------- ---------------
Income from operations 1,873,495 680,030
Non-operating Income (expense):
Other income 55,507 8,119
Interest expense 41,359 (20,565)
--------------- ---------------
Total non-operating income (expense) 96,867 (12,446)
--------------- ---------------
Net income $ 1,970,361 $ 667,583
=============== ===============
Basic and diluted weighted average shares outstanding 1,500 1,500
=============== ===============
Basic and diluted net earning per share $ 1,313.57 $ 445.06
=============== ===============
11
BODISEN INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
Common Stock Additional Retained Total
Number of Paid in Statutory Earnings Stockholders'
shares Amount Capital Reserve (Deficit) Equity
------------ ----------- ----------- ------------- ------------ ---------------
Balance, December 31, 2001 1,500 $4,800,000 $ - $ - $ (104,771) $ 4,695,229
Recapitalization on reverse acquisition - (4,799,999) 4,799,999 - - -
------------ ----------- ----------- ------------- ------------ ---------------
Balance after recapitalization 1,500 1 4,799,999 - (104,771) 4,695,229
Net income for the year ended December 31,
2002 - - - - 667,583 667,583
Allocation to statutory reserve - - - 66,758 (66,758) -
Dividends declared - - - - (180,000) (180,000)
------------ ----------- ----------- ------------- ------------ ---------------
Balance, December 31, 2002 1,500 1 4,799,999 66,758 316,054 5,182,813
Issuance of subsidiary's stock - - 1,214,400 - - 1,214,400
Net income for the year ended December 31, 2003 - - - - 1,970,361 1,970,361
Allocation to statutory reserve - - - 197,036 (197,036) -
------------ ----------- ----------- ------------- ------------ ---------------
Balance, December 31, 2003 1,500 $ 1 $6,014,399 $ 263,794 $ 2,089,379 $ 8,367,574
============ =========== =========== ============= ============ ===============
12
BODISEN INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,970,361 $ 667,583
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 247,958 149,699
(Increase) / decrease in current assets:
Accounts receivable 249,086 288,218
Advances to suppliers (270,645) (893,393)
Inventory 81,538 300,312
Increase / (decrease) in current liabilities:
Accounts payable 535,186 (38,379)
Unearned revenue (586,087) 589,812
Other payables (67,122) 3,423
Accrued expenses 75,754 (130,252)
----------- -----------
Net cash provided by operating activities 2,236,028 937,023
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property & equipment (133,653) (600,666)
Acquisition of rights to use land (1,470,307) -
Capital work in process (4,877) (217,206)
----------- -----------
Net cash used in investing activities (1,608,837) (817,872)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on loan from officers/shareholders - (217,338)
Proceeds from loan 1,080,000 12,000
Issuance of stock by subsidiary 1,214,400 -
Dividend paid (180,000) -
----------- -----------
Net cash provided by (used in) financing activities 2,114,400 (205,338)
----------- -----------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 2,741,591 (86,187)
CASH & CASH EQUIVALENTS, BEGINNING BALANCE 233,182 319,369
----------- -----------
CASH & CASH EQUIVALENTS, ENDING BALANCE $2,974,773 $ 233,182
=========== ===========
13
BODISEN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Bodisen International, Inc. (the "Company") is a Delaware Corporation,
incorporated on November 19, 2003. The Company is authorized to issue of
50,000,000 shares of common stock of $.001 par value and 10,000,000 shares
of preferred stock of $.001 par value. The Company is a non-operative
holding company of Yang Ling Bodisen Biology Science and Technology
Development Company Limited ("BBST"). 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 December 15, 2003, the Company entered in to an agreement with all the
shareholders of BBST to exchange all of the outstanding stock of the
Company for all the issued and outstanding stock of BBST. After the
consummation of the agreement, the former shareholders of BBST own 1500
shares of common stock of the Company, which represent 100% of the
Company's issued and outstanding shares. For U.S. Federal income tax
purpose, the transaction is intended to be qualified as a tax-free
transaction under section 351 of the Internal Revenue Code of 1986, as
amended.
The exchange of shares with BBST has been accounted for as a reverse
acquisition under the purchase method of accounting since the shareholders
of the BBST obtained control of the consolidated entity. Accordingly, the
merger of the two companies has been recorded as a recapitalization of
BBST, with BBST being treated as the continuing entity. The historical
financial statements presented are those of BBST. The continuing company
has retained December 31 as its fiscal year end. The financial statements
of the legal acquirer are not significant; therefore, no pro forma
financial information is submitted.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that 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.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, BBST. All significant
inter-company accounts and transactions have been eliminated in
consolidation. The acquisition of BBST on December 15, 2003, has been
accounted for as a purchase and treated as a reverse acquisition (note 1).
The historical results for the year ended December 31, 2003 include both
the Company (from the acquisition date) and BBST (for full year) while the
historical results for the year ended December 31, 2002 includes only BBST.
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.
14
Accounts Receivable
The Company maintains reserves for potential credit losses on 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
primarily on a specific identification basis. Allowance for doubtful debts
amounted to $64,080 as at December 31, 2003 and 2002.
Advances to suppliers
The Company advances to certain vendors for purchase of its material. The
advances to suppliers amounted to $1,933,516 and $1,662,872 at December 31,
2003 and 2002.
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 the
inventories to there market value, if lower.
Property & Equipment
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:
30 years for building, 10 years for machinery, 5 years for office equipment
and 8 years for vehicles.
Long-lived assets
Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results of
Operations for a Disposal of a Segment of a Business." The Company
periodically evaluates the carrying value of long-lived assets to be held
and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner,
except that fair market values are reduced for the cost of disposal. Based
on its review, the Company believes that, as of December 31, 2003 and 2002,
there were no significant impairments of its long-lived assets.
15
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. Potential impairment of goodwill after July 1,
2002 is being evaluated in accordance with SFAS No. 142. The SFAS No. 142
is applicable to the financial statements of the Company beginning July 1,
2002.
Unearned revenue
Unearned revenue represents amounts received from the customers against
future sales of goods since the Company recognizes revenue on the shipment
of goods (see revenue recognition policy).
Fair value of financial instruments
Statement of financial accounting standard No. 107, Disclosures about fair
value of financial instruments, requires that the Company disclose
estimated fair values of financial instruments. The carrying amounts
reported in the statements of financial position for current assets and
current liabilities qualifying as financial instruments are a reasonable
estimate of fair value.
Revenue Recognition
The Company's revenue recognition policies are in compliance with Staff
accounting bulletin (SAB) 101. 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 collectibility 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 years ended December 31, 2003 and 2002 were insignificant.
Stock-based compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 prescribes accounting and reporting standards
for all stock-based compensation plans, including employee stock options,
restricted stock, employee stock purchase plans and stock appreciation
rights. SFAS No. 123 requires compensation expense to be recorded (i) using
the new fair value method or (ii) using the existing accounting rules
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
stock issued to employees" (APB 25) and related interpretations with
proforma disclosure of what net income and earnings per share would have
been had the Company adopted the new fair value method. The Company uses
the intrinsic value method prescribed by APB 25 and has opted for the
disclosure provisions of SFAS No.123. Through December 31, 2003, the
Company has not granted any stock options.
16
Income Taxes
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred income
taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
According to the Provisional Regulations of the People's Republic of China
on Income Tax, the Document of Reductions and Exemptions of Income Tax for
BBST has been approved by the local tax bureau and the Management
Regulation of Yang Ling Agricultural High-Tech Industries Demonstration
Zone. BBST is exempted from income tax in its first two years of
operations.
Foreign currency transactions and comprehensive income (loss)
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 BBST is
Chinese Renminbi. The unit of Renminbi is in Yuan. Cumulative translation
adjustment amount and translation adjustment gain were insignificant at and
for the year ended December 31, 2003 and 2002.
Basic and diluted net loss per share
Net loss per share is calculated in accordance with the Statement of
financial accounting standards No. 128 (SFAS No. 128), "Earnings per
share". SFAS No. 128 superseded Accounting Principles Board Opinion No.15
(APB 15). Net 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.
Statement of Cash Flows:
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations is
calculated based upon the local currencies. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet.
Segment Reporting
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosure About Segments of an Enterprise and Related Information"
requires use of the "management approach" model for segment reporting. The
management approach model is based on the way a company's management
organizes segments within the company for making operating decisions and
assessing performance. Reportable segments are based on products and
services, geography, legal structure, management structure, or any other
manner in which management disaggregates a company. SFAS 131 has no effect
on the Company's consolidated financial statements as substantially all of
the Company's operations are conducted in one industry segment.
17
Recent Pronouncements
In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections ("SFAS 145"). SFAS 145 rescinds the automatic treatment of
gains or losses from extinguishments of debt as extraordinary unless they
meet the criteria for extraordinary items as outlined in APB Opinion No.
30, Reporting the Results of Operations, Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. SFAS 145 also requires sale-leaseback
accounting for certain lease modifications that have economic effects that
are similar to sale-leaseback transactions and makes various technical
corrections to existing pronouncements. The provisions of SFAS 145 related
to the rescission of FASB Statement 4 are effective for fiscal years
beginning after May 15, 2002, with early adoption encouraged. All other
provisions of SFAS 145 are effective for transactions occurring after May
15, 2002, with early adoption encouraged. The adoption of SFAS 145 did not
have a material effect on the earnings or financial position of the
Company.
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated
with exit or Disposal Activities." This Statement addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred. Under Issue 94-3 a liability for an exit cost as
defined, was recognized at the date of an entity's commitment to an exit
plan. The adoption of SFAS 146 did not have a material effect on the
earnings or financial position of the Company.
In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No.
72 and Interpretation 9 thereto, to recognize and amortize any excess of
the fair value of liabilities assumed over the fair value of tangible and
identifiable intangible assets acquired as an unidentifiable intangible
asset. This statement requires that those transactions be accounted for in
accordance with SFAS No. 141, "Business Combinations," and SFAS No. 142,
"Goodwill and Other Intangible Assets." In addition, this statement amends
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," to include certain financial institution-related intangible
assets. The adoption of SFAS 147 did not have a material effect on the
earnings or financial position of the Company.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that upon
issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective
for financial statements of interim or annual periods ending after December
15, 2002. The adoption of this pronouncement did not have a material effect
on the earnings or financial position of the Company.
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based
Compensation-Transition and Disclosure". SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock Based Compensation", to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this
Statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about
the method of accounting for stock-based employee compensation and the
effect of the method used, on reported results. The Statement is effective
for the Companies' interim reporting period ending January 31, 2003. The
Company does not expect the adoption of SFAS No. 148 would have a material
impact on its financial position or results of operations or cash flows.
18
On April 30, 2003, the FASB issued FASB Statement No. 149 ("SFAS 149"),
"Amendment of Statement 133 on Derivative Instruments and Hedging
Activities". FAS 149 amends and clarifies the accounting guidance on (1)
derivative instruments (including certain derivative instruments embedded
in other contracts) and (2) hedging activities that fall within the scope
of FASB Statement No. 133 ("SFAS 133"), Accounting for Derivative
Instruments and Hedging Activities. SFAS 149 also amends certain other
existing pronouncements, which will result in more consistent reporting of
contracts that are derivatives in their entirety or that contain embedded
derivatives that warrant separate accounting. SFAS 149 is effective (1) for
contracts entered into or modified after June 30, 2003, with certain
exceptions, and (2) for hedging relationships designated after June 30,
2003. The guidance is to be applied prospectively. The Company does not
expect the adoption of SFAS No. 149 to have a material impact on its
financial position or results of operations or cash flows.
On May 15 2003, the FASB issued FASB Statement No. 150 ("SFAS 150"),
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS 150 changes the accounting for certain
financial instruments that, under previous guidance, could be classified as
equity or "mezzanine" equity, by now requiring those instruments to be
classified as liabilities (or assets in some circumstances) in the
statement of financial position. Further, SFAS 150 requires disclosure
regarding the terms of those instruments and settlement alternatives. SFAS
150 affects an entity's classification of the following freestanding
instruments: a) Mandatorily redeemable instruments b) Financial instruments
to repurchase an entity's own equity instruments c) Financial instruments
embodying obligations that the issuer must or could choose to settle by
issuing a variable number of its shares or other equity instruments based
solely on (i) a fixed monetary amount known at inception or (ii) something
other than changes in its own equity instruments d) SFAS 150 does not apply
to features embedded in a financial instrument that is not a derivative in
its entirety. The guidance in SFAS 150 is generally effective for all
financial instruments entered into or modified after May 31, 2003, and is
otherwise effective at the beginning of the first interim period beginning
after June 15, 2003. For private companies, mandatorily redeemable
financial instruments are subject to the provisions of SFAS 150 for the
fiscal period beginning after December 15, 2003. The Company does not
expect the adoption of SFAS No. 150 to have a material impact on its
financial position or results of operations or cash flows.
3. INVENTORIES
Inventories at December 31, 2003 and 2002 were as follows:
2003 2002
----- -----
Raw and packing materials $ 450,967 $ 269,353
Finished goods 429,487 678,742
880,454 948,095
Less allowance for obsolescence (164,722) (150,825)
-------------- -------------
Total $ 715,732 $ 797,270
============== =============
19
4. PROPERTY AND EQUIPMENT
Net property and equipment at December 31, 2003 and 2002 were as follows:
2003 2002
---- ----
Building $ 946,888 $ 942,480
Machinery 328,280 233,000
Furniture and office equipment 21,265 16,828
Vehicles 147,651 118,122
1,444,084 1,310,430
Less Accumulated depreciation (223,497) (84,940)
-------------- -------------
$ 1,220,587 $ 1,225,490
============== =============
Depreciation expense for the years ended December 31, 2003 and December 31,
2002 was $ 138,557 and $50,000.
The Company depreciated its production related assets at a rate double than
the straight line rate due to its excessive usage in the year ended
December 31, 2003. This factor contributed towards the increase in
depreciation by $61,919. The change in estimate resulted in decrease in net
income by $61,919 or $41.27 per share for the year ended December 31, 2003.
5. INTANGIBLE ASSETS
Net intangible assets at December 31, 2003 and 2002 were as follows:
2003 2002
---- ----
Rights to use land $ 1,655,248 $ 184,941
Fertilizers proprietary technology rights 960,000 960,000
--------------- ------------
2,615,248 1,144,941
Less Accumulated amortization (305,100) (195,699)
--------------- ------------
$ 2,310,148 $ 949,242
=============== ============
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 amortization expense of "Rights to use land" for the year ended
December 31, 2003 and 2002 amounted to $13,401 and $3,699 respectively. The
accumulated amortization as at December 31, 2003 was $17,100.
20
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. The
amortization expense of "Fertilizers proprietary technology rights" for the
years ended December 31, 2003 and 2002 amounted to $96,000 and $96,000. The
Accumulated amortization as on December 31, 2003 and 2002 amounted to
$288,000 and $192,000.
Amortization expense for the Company's current amortizable intangible
assets over the next five fiscal years is estimated to be: 2004-$130,000,
2005-$130,000, 2006-$130,000, 2007-$130,000 and 2008-$130,000.
6. DIVIDEND PAYABLE
The Shareholders of the company in their meeting dated May 9, 2003 approved
a dividend of $180,000 for the year ended December 31, 2002.
7. SHORT TERM LOAN
Short term loans consisted of the following at December 31, 2003 and 2002:
2003 2002
---- ----
Note payable to bank, interest rate; 6.84% per annum, $ 480,000 $ -
payable quarterly, original note; $480,000, maturity
date; 1/27/04, secured by assets of the Company.
Note payable to bank, interest rate; 6.84% per annum, 600,000 -
payable quarterly, original note; $600,000, maturity
date; 9/28/04, secured by assets of the Company.
Short term support loan from the Shanxi Technology 12,000 12,000
Bureau of the Government of People's Republic of
China, interest free; secured by assets of the Company
-------------- -------------
$ 1,092,000 $ 12.000
============== =============
8. SHAREHOLDERS' EQUITY
On December 15, 2003, the Company entered in to an agreement to exchange
1500 shares of its common stock for all the issued and outstanding stock of
BBST. After the consummation of the agreement, the former shareholders of
BBST own 1500 shares of common stock of the Company, which represent 100%
of the Company's issued and outstanding shares.
From its inception through its acquisition on December 15, 2003 (see note
1), BBST had issued 49,200,000 shares of its common stock for $6,014,400
including issuance of 9,200,000 shares to various parties for $1,214,400 in
the year ended December 31, 2003.
21
9. RELATED PARTY TRANSACTIONS
A loan of $217,338 from various shareholders of the Company outstanding as
at December 31, 2001 was fully repaid during the year ended December 31,
2002 along with an interest expense of $ 20,249.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The Company prepares its statements of cash flows using the indirect method
as defined under the Financial Accounting Standard No. 95.
The Company paid interest of $ 41,359 and $ 20,249 during the year ended
December 31, 2003 and 2002. The Company did not pay income tax during the
years ended December 31, 2003 and 2002.
11. EMPLOYEE WELFARE PLAN
The Company has established its own employee welfare plan in accordance
with Chinese law and regulations. The Company makes annual pre-tax
contributions of 14% of all employees' salaries. The total expense for the
above plan amounted to $55,813 and $21,000 for the years ended December 31,
2003 and 2002.
12. STATUTORY RESERVE
In accordance with the Chinese Company Law, the company has allocated 10%
of its annual net income, amounting $197,036 and $66,758, as statutory
reserve on December 31, 2003 and 2002.
22
Exhibit 2
STRATABID.COM, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(Unaudited)
The following Unaudited Pro Forma Statement of operations has been derived from
the audited financial statements of Stratabid.com, Inc., a Delaware Corporation
(A) for the year ended December 31, 2003 and the audited financial statements of
Bodisen International, Inc., a Delaware Corporation (B) for the year ended
December 31, 2003. The Pro Forma Statements of Operations reflects the
acquisition of B by a wholly-owned subsidiary of the Company A (a reporting
company) on February 24, 2004 in a acquisition using reverse acquisition method
of accounting and assumes that such acquisition was consummated as of January 1,
2003.
The Pro Forma Statement of Operations and financial conditions should be read in
conjunction with the Financial Statements of A, the Financial Statements of B
and the Notes to the financial statements. The Pro Forma Statements do not
purport to represent what the Company's results of operations and financial
conditions would actually have been if the acquisition of A had occurred on the
d accompanying data, are based on available information and the assumption set
forth in the foot notes below, which management believes are reasonable.
A B Pro Forma Pro Forma
(Historical) (Historical) Adjustment Combined
-------------- ------------- --------------- ----------------
Net Revenue $ 58,256 $ 9,783,784 $ - $ 9,842,040
Cost of revenue - 6,706,082 - 6,706,082
-------------- ------------- ---------------- ----------------
Gross profit 58,256 3,077,702 - 3,135,958
Operating expenses 107,592 1,204,208 - 1,311,800
-------------- ------------- ---------------- ----------------
Loss from operations (49,336) 1,873,494 - 1,824,158
Non-operating income (Expenses) - 96,867 - 96,867
-------------- ------------- ---------------- ----------------
Net gain/loss $ (49,336) $ 1,970,361 $ - $ 1,921,025
============== ============= =============== ================
EARNINGS PER SHARE
Weighted -average number of
shares outstanding 1,567,000 3,000,000 4,567,000
============== ============= ================
Gain/loss per share $ (0.03) $ 0.66 $ 0.42
============== ============= ================
NOTES:
(1) Loss per share data shown above are applicable for both primary and fully
diluted.
(2) Weighted-average number of shares outstanding for the combined entity
includes all shares issued before the acquisition as if outstanding as of
January 1, 2003.
(3) Weighted average number of shares outstanding for combined entity includes
1,567,000 shares of A outstanding shares as of December 31, 2003 and
3,000,000 shares of common stock issued to the shareholders of (B) pursuant
to the stock acquisition and reorganization agreement.
23
STRATABID.COM, INC.
PRO FORMA STATEMENT OF FINANCIAL CONDITIONS
FOR THE PERIOD ENDED DECEMBER 31, 2003
(Unaudited)
The following unaudited Pro Forma Statement of financial conditions has been
derived from the audited financial statements of Stratabid.com, Inc. (A) as of
December 31, 2002 and the audited financial statements of Bodisen International,
Inc. (B) as of December 31, 2003. The unaudited Pro Forma Statements of
financial conditions reflects the acquisition of B by a wholly-owned subsidiary
of A (a reporting company) in a merger using reverse acquisition method of
accounting.
A B Pro Forma Pro Forma
(Historical) (Historical) Investment Adjustment Combined
-------------- ------------- --------------- --------------- -----------
ASSETS
Current Assets $ 14,627 $ 7,446,862 $ - $ - 7,461,489
Property & equipment, net 4,058 1,220,587 - - 1,224,645
Intangible assets, net 1,375.00 2,310,148 - - 2,311,523
Capital work in progress - 222,083 - - 222,083
Investment - acquisition of subsidiary - - 4,500,000(2) (4,500,000)(4) -
-------------- ------------- --------------- ---------------- ------------
TOTAL ASSETS $ 20,060 $ 11,199,680 $ 4,500,000 $ (4,500,000) $11,219,740
============== ============= =============== ================ ============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities $ 21,050 $ 2,832,106 $ - $ - 2,853,156
Stockholders' equity;
Common stock 157 1 300(2) (1)(1) 457
Additional paid in capital 113,211 6,014,399 4,499,700(2) (4,644,357)(4) 5,982,953
Statutory reserve - 263,795 - - 263,795
Donated Capital 30,000 - - - 30,000
Accumulated other comprehensive gain (loss) 818 - - (818)(3) -
Retained earnings (deficit) (145,176) 2,089,379 - 145,176 (3) 2,089,379
-------------- ------------- --------------- ---------------- ------------
Total stockholders' equity (deficit) (990) 8,367,574 4,500,000 (4,500,000) 8,366,584
-------------- ------------- --------------- ---------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 20,060 $ 11,199,680 $ 4,500,000 $ (4,500,000) $11,219,740
============== ============= =============== ================ ============
NOTES;
(1) Elimination of Common stock of (B) before the acquisition
(2) Issuance of shares of common stock to shareholder of (B) valued at
$4,500,000
(3) Elimination of pre-acquisition retained earnings of (B)
(4) Elimination of investment in subsidiary on consolidation
24