SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
AMENDMENT
NO.1
TO
FORM
10-Q
x
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT
OF 1934
For the
quarterly period ended: March 31, 2009
or
o
TRANSITION REPORT PURSUANT TO
SECTION 13 0R 15(D) OF THE SECURITIES EXCHANGE
ACT
OF 1934
For the
transition period from _______ to _______
Commission
File Number: 000-51497
BIO-BRIDGE
SCIENCE, INC.
(Exact
name of small business issuer as specified in its charter)
Delaware
|
|
20-1802936
|
(State
or Other jurisdiction of
|
|
(IRS
Employer
|
incorporation
or organization)
|
|
Identification
No.)
|
|
|
|
1211
West 22nd Street, Suite 615
|
|
|
Oak
Brook, Illinois
|
|
60523
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
630-928-0869
(Issuer's
telephone number including area code)
Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days: Yes
x
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
|
Accelerated filer
o
|
|
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
|
Indicate by
check mark whether the registrant is a shell company: Yes
o
No
x
State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date.
Common
Stock Outstanding as of March 31, 2009: 35,111,009 shares
EXPLANATORY
NOTE
The
purpose of this Amendment No. 1 to Form 10-Q (“Amendment”) is to amend our
initial filing of a Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2009, filed with the Securities and Exchange Commission (“SEC”) on May
15, 2009 (the “Initial Filing”). Defined terms used in this Amendment
but not defined herein have the meanings ascribed to them in the Initial
Filing.
On August
11, 2009, we filed a Current Report on Form 8-K with the SEC disclosing that our
management concluded that an accounting error had been made in the Company’s
historical March 31, 2009 financial statements in relation to the adoption of
provisions of EITF 07-5, "
Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock
”. As
a result, the Company’s financial statements for the quarter ended March 31,
2009 are being restated. In light of the restatement, the financial
statements and other financial information included in the Initial Filing are
being restated in this Amendment.
Unless
specified, the disclosures provided in this document have not been updated for
more current information. Therefore, this Amendment should be read in
conjunction with our other filings made with the SEC subsequent to the date of
the Initial Filing. For updated disclosure regarding our business and
financial condition, please read our periodic filings for the fiscal year ended
December 31, 2008 and the quarterly period ended March 31, 2009.
Bio-Bridge
Science, Inc.
Index to
Form 10-Q
|
|
|
|
Page
|
Item
1.
|
|
Financial
Statements
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of March 31, 2009 (Unaudited, As Restated)
and December 31, 2008
|
|
3
|
|
|
|
|
|
|
|
Unaudited
Condensed Consolidated Statements of Operations for the three month
periods ended March 31, 2009 (As Restated) and 2008
|
|
4
|
|
|
|
|
|
|
|
Unaudited
Condensed Consolidated Statements of Changes in Shareholders' Equity for
the three month period ended March 31, 2009 (As Restated)
|
|
5
|
|
|
|
|
|
|
|
Unaudited
Condensed Consolidated Statements of Cash Flows for the three month
periods ended March 31, 2009 (As Restated) and 2008
|
|
6
|
|
|
|
|
|
|
|
Notes
to Unaudited Condensed Consolidated Financial Statements
|
|
7
|
|
|
|
|
|
Item
2.
|
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operation
|
|
16
|
|
|
|
|
|
Item
3.
|
|
Quantitative
and Qualitative Disclosure About Market Risk
|
|
24
|
|
|
|
|
|
Item
4.
|
|
Controls
and Procedures
|
|
24
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|
|
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|
Part
II
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|
Other
Information
|
|
24
|
|
|
|
|
|
Item
1.
|
|
Legal
Proceedings
|
|
24
|
|
|
|
|
|
Item
1A.
|
|
Risk
Factors
|
|
24
|
|
|
|
|
|
Item
2.
|
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
24
|
|
|
|
|
|
Item
3.
|
|
Defaults
Upon Senior Securities
|
|
24
|
|
|
|
|
|
Item
4.
|
|
Submission
of Matters to a Vote of Security Holders
|
|
24
|
|
|
|
|
|
Item
5.
|
|
Other
Information
|
|
24
|
|
|
|
|
|
Item
6.
|
|
Exhibits
|
|
25
|
|
|
|
|
|
|
|
SIGNATURES
|
|
26
|
BIO-BRIDGE
SCIENCE INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
March
31,
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
(Unaudited)
(As
Restated)
|
|
|
December
31,
2008
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,603,952
|
|
|
$
|
1,486,252
|
|
Accounts
receivable, net of allowance of $12,000 at March 31, 2009 and December 31,
2008
|
|
|
435,843
|
|
|
|
340,633
|
|
Inventories
|
|
|
490,374
|
|
|
|
491,347
|
|
Trading
securities, at fair value
|
|
|
112,005
|
|
|
|
115,634
|
|
Prepaid
expenses and other current assets
|
|
|
202,668
|
|
|
|
38,364
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
2,844,842
|
|
|
|
2,472,230
|
|
|
|
|
|
|
|
|
|
|
Property,
plant, and equipment, net
|
|
|
375,382
|
|
|
|
243,507
|
|
Construction
in progress
|
|
|
2,718,511
|
|
|
|
2,676,938
|
|
Land
use right, net
|
|
|
367,846
|
|
|
|
372,696
|
|
Goodwill
|
|
|
243,248
|
|
|
|
243,248
|
|
|
|
|
|
|
|
|
|
|
Total
Long-term Assets
|
|
|
3,704,987
|
|
|
|
3,536,389
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
6,549,829
|
|
|
$
|
6,008,619
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
245,670
|
|
|
$
|
265,682
|
|
Accrued
expenses and other payables
|
|
|
109,779
|
|
|
|
158,686
|
|
Payable
to contractors
|
|
|
133,830
|
|
|
|
185,929
|
|
Due
to related parties
|
|
|
10,748
|
|
|
|
32,189
|
|
Derivative
liability
|
|
|
1,118,092
|
|
|
|
-
|
|
Total
Current Liabilities
|
|
|
1,618,119
|
|
|
|
642,486
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value, 5,000,000 shares authorized, 4,000,000 shares
issued and outstanding
|
|
|
4,000
|
|
|
|
4,000
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized, 35,111,009 and
34,931,009 shares issued and outstanding, respectively
|
|
|
35,111
|
|
|
|
34,931
|
|
Additional
paid-in capital
|
|
|
11,660,297
|
|
|
|
12,912,545
|
|
Preferred
stock dividend, payable in common shares
|
|
|
30,550
|
|
|
|
137,000
|
|
Subscription
receivable
|
|
|
(1,206,335
|
)
|
|
|
(2,062,670
|
)
|
Stock
to be issued, 5,831,076 and 5,818,276 shares, respectively
|
|
|
4,576,656
|
|
|
|
4,559,056
|
|
Accumulated
other comprehensive gain
|
|
|
259,005
|
|
|
|
259,892
|
|
Accumulated
deficit
|
|
|
(10,984,558)61
|
)
|
|
|
(11,000,931
|
)
|
Total
Shareholders’ Equity
|
|
|
4,374,726
|
|
|
|
4,843,823
|
|
Noncontrolling
interests
|
|
|
556,984
|
|
|
|
522,310
|
|
Total
equity
|
|
|
4,931,710
|
|
|
|
5,366,133
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND EQUITY
|
|
$
|
6,549,829
|
|
|
$
|
6,008,619
|
|
See
accompanying notes to the condensed consolidated financial
statements.
BIO-BRIDGE
SCIENCE INC. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Three Months
Ended March 31,
2009
(as
Restated)
|
|
|
Three Months
Ended March 31,
2008
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
264,129
|
|
|
$
|
2,285
|
|
Cost
of good sold
|
|
|
(162,259
|
)
|
|
|
(891
|
)
|
Gross
profit
|
|
|
101,870
|
|
|
|
1,394
|
|
|
|
|
|
|
|
|
|
|
Research
and development cost
|
|
|
(32,812
|
)
|
|
|
(36,533
|
)
|
Selling
and distribution expenses
|
|
|
(29,341
|
)
|
|
|
(12,329
|
)
|
General
and administrative expenses
|
|
|
(208,533
|
)
|
|
|
(206,561
|
)
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(168,816
|
)
|
|
|
(254,029
|
)
|
|
|
|
|
|
|
|
|
|
Interest
(expense) income
|
|
|
(274
|
)
|
|
|
26
|
|
Change
in fair value of derivative liability
|
|
|
171,277
|
|
|
|
|
|
Unrealized
loss on trading securities
|
|
|
(3,630
|
)
|
|
|
(70,862
|
)
|
Loss
on sale of trading securities
|
|
|
-
|
|
|
|
(9,766
|
)
|
Dividend
income
|
|
|
4,308
|
|
|
|
46,117
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
|
2,865
|
|
|
|
(288,514
|
)
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
(20,967
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss
after income taxes
|
|
|
(18,102)
|
|
|
|
(288,514
|
)
|
|
|
|
|
|
|
|
|
|
Income
attributable to noncontrolling interests
|
|
|
34,674
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to controlling interest
|
|
|
(52,776
|
)
|
|
|
(288,514
|
)
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividends
|
|
|
(55,550
|
)
|
|
|
(90,000
|
)
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to common shareholders
|
|
$
|
(108,326
|
)
|
|
$
|
(378,514
|
)
|
|
|
|
|
|
|
|
|
|
Net
loss per share, attributable to common shareholders, basic and
diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding, basic and diluted
|
|
|
34,973,009
|
|
|
|
34,357,676
|
|
See
accompanying notes to the condensed consolidated financial
statements.
BIO-BRIDGE
SCIENCE INC. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES
IN SHAREHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 (As Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
Dividend
payable
in
|
|
|
Additional
|
|
|
Accumulated
Other
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
Common
Stock
|
|
|
Preferred
stock
|
|
|
Common
|
|
|
Paid-in
|
|
|
Comprehensive
|
|
|
To
be
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
controlling
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
share
|
|
|
Capital
|
|
|
Gain
|
|
|
Issued
|
|
|
Receivable
|
|
|
Deficit
|
|
|
interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
JANUARY 1, 2009
|
|
|
34,931,009
|
|
|
$
|
34,931
|
|
|
|
4,000,000
|
|
|
$
|
4,000
|
|
|
$
|
137,000
|
|
|
$
|
12,912,545
|
|
|
$
|
259,892
|
|
|
$
|
4,559,056
|
|
|
$
|
(2,062,670
|
)
|
|
$
|
(11,000,931
|
)
|
|
$
|
522,310
|
|
|
$
|
5,366,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
effect of change in accounting principle-
January
1, 2009 reclass of conversion feature, warrants, and
and options to derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,414,068
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
124,699
|
|
|
|
-
|
|
|
|
(1,289,369)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of 12,800 shares of common stock for cash, to be issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,600
|
|
|
|
(17,600
|
)
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual
of preferred stock dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,550
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(55,550
|
)
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
of preferred stock dividend
|
|
|
180,000
|
|
|
|
180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(162,000
|
)
|
|
|
161,820
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from previously issued stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
873,935
|
|
|
|
-
|
|
|
|
|
|
|
|
873,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation gain
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(887
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(887
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52,776
|
)
|
|
|
34,674
|
|
|
|
(18,102
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
MARCH 31, 2009
|
|
|
35,111,009
|
|
|
$
|
35,111
|
|
|
|
4,000,000
|
|
|
$
|
4,000
|
|
|
$
|
30,550
|
|
|
$
|
11,660,297
|
|
|
$
|
259,005
|
|
|
$
|
4,576,656
|
|
|
$
|
(1,206,335
|
)
|
|
$
|
(10,984,558
|
)
|
|
$
|
556,984
|
|
|
$
|
4,931,710
|
|
See
accompanying notes to the condensed consolidated financial
statements.
BIO-BRIDGE
SCIENCE INC. AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For Three
Months Ended
March 31, 2009
(As
Restated)
|
|
|
For Three
Months Ended
March 31, 2008
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(18,102
|
)
|
|
$
|
(288,514
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13,552
|
|
|
|
4,986
|
|
Amortization
of land use right
|
|
|
4,779
|
|
|
|
4,560
|
|
Non
cash stock compensation expense
|
|
|
-
|
|
|
|
42,761
|
|
Change
of fair value of derivative liability
|
|
|
(171,277)
|
|
|
|
|
|
Unrealized
loss on trading securities
|
|
|
3,630
|
|
|
|
70,862
|
|
Loss
on sale of trading securities
|
|
|
-
|
|
|
|
9,766
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(95,210
|
)
|
|
|
-
|
|
Inventories
|
|
|
973
|
|
|
|
-
|
|
Prepaid
expense and other assets
|
|
|
(164,304
|
)
|
|
|
5,342
|
|
Accounts
payable
|
|
|
(20,012
|
)
|
|
|
-
|
|
Payable
to contractors
|
|
|
(52,099
|
)
|
|
|
5,046
|
|
Accrued
expenses and other payables
|
|
|
(48,907
|
)
|
|
|
35,944
|
|
Net
Cash Used In Operating Activities
|
|
|
(546,977
|
)
|
|
|
(109,247
|
)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Increase
in construction in progress
|
|
|
(42,085
|
)
|
|
|
(15,602
|
)
|
Purchase
of fixed assets
|
|
|
(145,482
|
)
|
|
|
-
|
|
Proceeds
from sale of trading securities
|
|
|
-
|
|
|
|
300,013
|
|
Net
Cash (Used In) Provided By Investing Activities
|
|
|
(187,567
|
)
|
|
|
284,411
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
873,935
|
|
|
|
-
|
|
Advances
from director
|
|
|
(21,442
|
)
|
|
|
28,494
|
|
Net
Cash Provided By Financing Activities
|
|
|
852,493
|
|
|
|
28,494
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
117,949
|
|
|
|
203,658
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
(249
|
)
|
|
|
(4,190
|
)
|
Cash
and cash equivalents, beginning of period
|
|
|
1,486,252
|
|
|
|
104,372
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
1,603,952
|
|
|
$
|
303,840
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
|
|
|
|
|
|
Interest
Paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Income
taxes Paid
|
|
$
|
33,166
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
NON-CASH FLOW INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Cumulative
effect of change in accounting principle, January 1,2009 for
reclassification of conversion feature and warrants to derivative
liability
|
|
$
|
1,289,369
|
|
|
$
|
-
|
|
Accrual
of preferred stock dividend payable in common stock
|
|
$
|
55,500
|
|
|
$
|
55,500
|
|
Payment
of preferred stock dividend in shares of common stock
|
|
$
|
162,000
|
|
|
$
|
180,000
|
|
See
accompanying notes to the condensed consolidated financial
statements
BIO-BRIDGE
SCIENCE, INC. AND SUBSIDIARIES
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
AS OF MARCH 31, 2009
NOTE
1 - BASIS OF PRESENTATION
The
accompanying unaudited condensed consolidated financial statements of Bio Bridge
Science Inc. and Subsidiaries (the "Company") have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and pursuant to the requirements for
reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller
reporting companies. Accordingly, they do not include all the information and
footnotes required by accounting principles generally accepted in United States
of America for complete financial statements. However, such information reflects
all adjustments (consisting solely of normal recurring adjustments), which are,
in the opinion of management, necessary for the fair presentation of the
consolidated financial position and the consolidated results of operations.
Results shown for interim periods are not necessarily indicative of the results
to be obtained for a full fiscal year.
The
condensed consolidated balance sheet information as of December 31, 2008 was
derived from the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K filed with the SEC on March 31, 2009. These
interim financial statements should be read in conjunction with that
report.
NOTE
2 - ORGANIZATION AND PRINCIPAL ACTIVITIES
Bio-Bridge
Science, Inc. ("the Company") was incorporated in the State of Delaware on
October 26, 2004.
On
December 1, 2004, the Company acquired all of the outstanding shares of
Bio-Bridge Science Corporation ("BBSC"), a Cayman Islands corporation, in
exchange for 29,971,590 shares of its common stock, and as a result, BBSC became
a wholly owned subsidiary of the Company. The acquisition was accounted for as a
reverse merger (recapitalization) with BBSC deemed to be the accounting
acquirer, and the Company the legal acquirer. Accordingly, the historical
financial information presented in the condensed consolidated financial
statements is that of BBSC.
BBSC was
incorporated in the Cayman Islands on February 11, 2002. At the time of the
exchange, BBSC held a 100% interest in Bio-Bridge Science (Beijing) Corp. ("BBS
Beijing"), a wholly-foreign funded enterprise of the People's Republic of China
("PRC") which was established on May 20, 2002. BBS Beijing is currently engaged
in the development and commercialization of several vaccine candidates, such as
HIV-PV vaccine I, cervical cancer vaccine, colon cancer vaccine, in mainland
China.
On July
31, 2008, the Company acquired 51 percent of the outstanding capital interest of
Huhhot Xinheng Baide Biotechnology Co., Ltd. (“XHBD”, see Note
5). XHBD was
incorporated on May 17,
2006 under the laws of the PRC as a limited company, which is similar to a
limited liability company. XHBD is located in the city of Huhhot in
Inner Mongolia of the PRC. The primary operations of the XHBD are the
manufacture and distribution of bovine serum products, which is used in
research, the production of pharmaceuticals, and production of veterinary
medicines. The results of XHBD are included in the accompanying
condensed consolidated financial statements from August 1,
2008.
Going
Concern
Since its
inception, the Company has been primarily engaged in organizational and
pre-operating activities. The Company has generated insignificant revenues and
has incurred accumulated losses of $10,984,558 from February 11, 2002
(Inception) through March 31, 2009. We incurred net losses of $18,102
and $3,538,899 for the three months ended March 31, 2009 and year ended December
31, 2008, respectively. As a result, the Company’s independent
registered public accounting firm, in their report on the Company’s 2008
consolidated financial statements, raised substantial doubt about the Company’s
ability to continue as a going concern.
Our
operations have been funded through issuances of our common stock and preferred
stock whereby we raised an aggregate $8,383,488 from February 11, 2002
(inception) through March 31, 2009. During the first quarter of 2009,
the Company sold 12,800 shares of its common stock to a 123 investors at $1.375
per share for a total consideration of $17,600. During 2008, the
Company sold 5,841,609 shares of its common stock to seven individuals for a
total of $4,244,999. Four of these individuals, who purchased a total
of 5,488,276 shares of common stock for a total of $3,980,000, are members
of our Board of Directors. Some of the sales agreements also included
warrants to purchase common stock.
Based on
our current operating plan, we believe that we have sufficient cash and cash
equivalents to last approximately through June 2010. We will need to obtain
additional financing in addition to the funds already raised through the sale of
equity securities to fund our cash needs and continue our operations beyond June
2010. Additional financing, whether through public or private equity or debt
financing, arrangements with stockholders or other sources to fund operations,
may not be available, or if available, may be on terms unacceptable to us. Our
ability to maintain sufficient liquidity is dependent on our ability to raise
additional capital. If we issue additional equity securities to raise funds, the
ownership percentage of our existing stockholders would be reduced. New
investors may demand rights, preferences or privileges senior to those of
existing holders of our common stock. Debt incurred by us would be senior to
equity in the ability of debt holders to make claims on our assets. The terms of
any debt issued could impose restrictions on our operations. If adequate funds
are not available to satisfy either medium or long-term capital requirements,
our operations and liquidity could be materially adversely affected and we could
be forced to cut back our operations.
NOTE
3 - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
Principles
of Consolidation
The
accompanying condensed consolidated financial statements include the accounts of
Bio-Bridge Science Inc. and our wholly owned subsidiaries, Bio-Bridge Science
Corp., Bio-Bridge Science (Beijing) Corp, Bio-Bridge Science Holding Co. and Bio
Bridge Science (HK), Co. and our 51% owned subsidiary Huhhot Xinheng Baide
Biotechnology Co. Ltd (“XHBD”). Intercompany accounts and transactions have been
eliminated in consolidation.
Change in
accounting principle
Effective
January 1, 2009, the Company adopted Emerging Issues Task Force Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity’s Own Stock” (EITF 07-5). As a result of adopting EITF 07-5,
certain options and warrants and the beneficial conversion feature of the
Company’s convertible preferred stock previously treated as equity are no longer
afforded equity treatment because the strike price of the warrants is
denominated in US dollars, a currency other than the Company’s functional
currency, the Chinese Renminbi. As a result, these instruments are
not considered indexed to the Company’s own stock, and as such, all future
changes in the fair value of these instruments will be recognized currently in
earnings until such time as the options, warrants, or beneficial conversion
feature are exercised or expire (see Notes 4 and 7).
Effective
January 1, 2009, the Company adopted SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements.” This statement amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,”
to establish accounting and reporting standards for a noncontrolling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement clarifies that a noncontrolling interest in a subsidiary is an
ownership in the consolidated entity that should be reported as equity in the
consolidated financial statements. The adoption of SFAS No. 160 did not
have any material impact on the Company’s financial condition and results of
operations. However, it did impact the presentation and disclosure of
noncontrolling (minority) interests in the Company’s condensed consolidated
financial statements. The presentation and disclosure requirements were
retrospectively applied to the condensed consolidated financial
statements. As such, all prior periods presented have been conformed
to current year’s presentation. The noncontrolling (minority)
interest relates to third party shareholders of XHBD, who own 49% of XHBD as of
March 31, 2009.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 periods. Management makes these estimates using the best
information available and the best judgment at the time the estimates are
made, however actual results could differ materially from those
estimates.
Revenue
recognition
The
Company recognizes revenue from the sales of products when persuasive evidence
of an order arrangement exists, delivery has occurred, the sales price is fixed
or determinable and collectibility is reasonably assured. Generally,
these criteria are met at the time the product is shipped to customers when
title and risk of loss have transferred.
Impairment
of Long-Lived Assets
We
account for long-lived assets in accordance with SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. We regularly
evaluate our long-lived assets for indicators of possible impairment whenever
events or changes in business circumstances indicate that the carrying amount of
the assets may not be fully recoverable. An impairment loss would be recognized
when estimated undiscounted future cash flows expected to result from the use of
an asset and its eventual disposition are less than its carrying
amount. Impairment, if any, is measured using discounted cash flows.
In the period ended March 31, 2009, we performed an evaluation of our long-lived
assets and concluded there was no impairment.
Goodwill
Goodwill
is related to the Company's acquisition of Huhhot Xinheng Baide Biotechnology
Co., Ltd on July 31, 2008 (see Note 5). Goodwill and other intangible
assets are accounted for in accordance with the provisions of SFAS No. 142,
“Goodwill and Other Intangible Assets”. Under SFAS 142, goodwill is not
amortized. Rather, goodwill is assessed for impairment at least
annually. The Company tests goodwill by using a two-step
process. In the first step, the fair value of the reporting unit is
compared with the carrying amount of the reporting unit, including
goodwill. If the carrying amount of the reporting unit exceeds its
fair value, goodwill is considered impaired and a second step is performed to
measure the amount of impairment loss, if any. Based on management’s
assessment, there were no indicators of impairment of recorded goodwill at March
31, 2009.
Financial
Assets and Liabilities Measured at Fair Value
Fair
Value Measurements are determined by the Company's adoption of Statement of
Financial Accounting Standards ("SFAS") No. 157, “Fair Value Measurements”
("SFAS 157") as of January 1, 2008, with the exception of the
application of the statement to non-recurring, non-financial assets and
liabilities as permitted. The adoption of SFAS 157 did not have a material
impact on the Company's fair value measurements. SFAS 157 defines
fair value as the price that would be received to sell an asset or paid to
transfer a liability in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants at the
measurement date. SFAS 157 establishes a fair value hierarchy, which
prioritizes the inputs used in measuring fair value into three broad levels as
follows:
Level 1—Quoted
prices in active markets for identical assets or liabilities.
Level 2—Inputs,
other than the quoted prices in active markets, are observable either directly
or indirectly.
Level 3—Unobservable
inputs based on the Company's assumptions.
SFAS 157
requires the use of observable market data if such data is available without
undue cost and effort
The
following table presents certain investments and liabilities of the Company’s
financial assets measured and recorded at fair value on the Company’s condensed
consolidated balance sheets on a recurring basis and their level within the fair
value hierarchy as of March 31, 2009 (unaudited):
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Investment
in trading securities
|
|
$
|
112,005
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
112,005
|
|
Fair
value of options and warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
481,836
|
|
|
|
481,836
|
|
Fair
value of embedded conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
636,256
|
|
|
|
636,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
112,005
|
|
|
$
|
-
|
|
|
$
|
1,118,092
|
|
|
$
|
1,230,097
|
|
Foreign
Currency Translation
The
accompanying condensed consolidated financial statements are presented in United
States dollars. The functional currency of the Company is the Renminbi
(RMB). Capital accounts of the condensed consolidated financial statements are
translated into United States dollars from RMB at their historical exchange
rates when the capital transactions occurred. Assets and liabilities are
translated at the exchange rates as of balance sheet date. Income and
expenditures are translated at the average exchange rate of the
quarter.
|
|
As
of and for the three months ended March 31, 2009
|
|
As
of and for the three months ended March 31, 2008
|
|
|
|
|
|
Period
end RMB : US$ exchange rate
|
|
|
6.8359
|
|
7.0190
|
|
|
|
|
|
|
Average
period RMB : US$ exchange rate
|
|
|
6.8353
|
|
7.1618
|
The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US
dollars at the rates used in translation.
Research
and Development
Research
and development costs are expensed as incurred. For the quarter ended
March 31, 2009 and 2008, research and development expenses totaled $32,812 and
$36,533, respectively.
Comprehensive
Income
Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. The Company’s current
components of comprehensive income consist of foreign currency translation
adjustments:
|
Three
months ended March 31,
|
|
|
|
2009
|
|
|
2008
|
|
Net
loss
|
|
$
|
(18,102
|
)
|
|
$
|
(288,514
|
)
|
Foreign
currency translation gain
(
loss
)
|
|
|
(887
|
)
|
|
|
87,116
|
|
Comprehensive
loss
|
|
$
|
(18,989
|
)
|
|
$
|
(201,398
|
)
|
Loss per
Share
SFAS No.
128, “Earnings Per Share”, requires presentation of basic earnings per share
(“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic
earnings (loss) per share is computed by dividing income (loss) available to
common shareholders by the weighted average number of common shares outstanding
during the period. The diluted earnings per share calculation gives effect
to all potentially dilutive common shares outstanding during the period using
the treasury stock method. Common equivalent shares consist of shares
issuable upon the exercise of stock options or warrants. As of March 31, 2009,
common stock equivalents were composed of options convertible into 2,297,000
shares of the Company's common stock and warrants convertible into 8,864,943
shares of the Company's common stock.
Stock-Based
Compensation
The
Company periodically issues stock options and warrants to employees and
non-employees in capital raising transactions, for services and for financing
costs. The Company adopted SFAS No. 123R effective January 1, 2006, and is using
the modified prospective method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No. 123R
for all share-based payments granted after the effective date and (b) based on
the requirements of SFAS No. 123R for all awards granted to employees prior to
the effective date of SFAS No. 123R that remain unvested on the effective
date. The Company accounts for stock option and warrant grants issued
and vesting to non-employees in accordance with EITF No. 96-18: “Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” and EITF No. 00-18 “Accounting
Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees” whereas the value of the stock compensation is
based upon the measurement date as determined at either a) the date at
which a performance commitment is reached, or b) at the date at which the
necessary performance to earn the equity instruments is complete.
Concentrations
Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist principally of cash and unsecured trade accounts
receivable.
For the
quarter ended March 31, 2009, four customers accounted for 100% of total sales
(38%, 28%, 22% and 12% respectively). At March 31, 2009, five
customers accounted for 100% of total accounts receivable (35%, 24%, 19%, 11%,
and 11%, respectively). At December 31, 2008, three customers
accounted for 100% of accounts receivable (40%, 31%, and 29%,
respectively). There were no sales at March 31, 2008.
Recent
Accounting Pronouncements
In
December 2007, Financial Accounting Standards Board (FASB) Statement 141R,
“Business Combinations (revised 2007)” (SFAS 141R”) was issued. SFAS
141R replaces SFAS 141 “Business Combinations”. SFAS 141R requires
the acquirer of a business to recognize and measure the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree at fair value. SFAS 141R also requires transactions costs related to
the business combination to be expensed as incurred. SFAS 141R applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The effective date, as well as the adoption date
for the Company was January 1, 2009. Although SFAS 141R may impact
our reporting in future financial periods, we have determined that the standard
did not have any impact on our historical consolidated financial statements at
the time of adoption.
In April
2008 the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of
the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
142. This pronouncement requires enhanced disclosures concerning a
company’s treatment of costs incurred to renew or extend the term of a
recognized intangible asset. FST 142-3 is effective for financial statements
issued for fiscal years beginning after December 15, 2008. The
effective date, as well as the adoption date for the Company was January 1,
2009. Although FSP 142-3 may impact our reporting in future financial
periods, we have determined that the standard did not have any impact on our
historical consolidated financial statements at the time of
adoption.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not or are not believed by
management to have a material impact on the Company's present or future
consolidated financial statements.
NOTE
4 – RESTATEMENT OF FINANCIAL STATEMENTS
On August
4, 2009, the management of the Company concluded, with the concurrence of the
Company’s Board of Directors, that an accounting error had been made in the
Company’s historical March 31, 2009 consolidated financial statements in
relation to the adoption of the provisions of EITF 07-5, "Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” and the
recording of certain options and warrants and the beneficial conversion feature
of the Company’s convertible preferred stock previously treated as
equity. The strike price of options and warrants issued by the
Company, and the embedded conversion feature in the Company’s preferred stock
are denominated in US dollars, a currency other than the Company’s functional
currency, RMB. As a result, the options and warrants and embedded
conversion feature are not considered indexed to the Company’s own
stock. In accordance with EITF 07-05, the fair value of certain of
the Company’s options and warrants, and the embedded conversion feature of the
Company’s convertible preferred stock, have been re-characterized as derivative
liabilities effective January 1, 2009. SFAS 133, “Accounting for
Derivative Instruments and Hedging Activities,” requires that the fair value of
these liabilities be re-measured at the end of every reporting period with the
change in value reported in the statement of operations. As a result,
the Company’s consolidated financial statements for the three months ended March
31, 2009 are being restated.
The
effects of the restatement on the Company’s condensed consolidated financial
statements for the three months ended March 31, 2009 are shown below
(unaudited):
|
|
March
31, 2009
|
|
Account
|
|
(As
Initially Reported)
|
|
|
(Adjustment)
|
|
|
(As
Restated) (Unaudited)
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,603,952
|
|
|
$
|
-
|
|
|
$
|
1,603,952
|
|
Accounts
receivable
|
|
|
435,843
|
|
|
|
-
|
|
|
|
435,843
|
|
Inventories
|
|
|
490,374
|
|
|
|
-
|
|
|
|
490,374
|
|
Trading
securities, at fair value
|
|
|
112,005
|
|
|
|
-
|
|
|
|
112,005
|
|
Prepaid
expenses and other current assets
|
|
|
202,668
|
|
|
|
-
|
|
|
|
202,668
|
|
Total
current assets
|
|
|
2,844,842
|
|
|
|
-
|
|
|
|
2,844,842
|
|
Property,
plant, and equipment - net
|
|
|
375,382
|
|
|
|
-
|
|
|
|
375,382
|
|
Construction
in progress
|
|
|
2,718,511
|
|
|
|
-
|
|
|
|
2,718,511
|
|
Land
use right, net
|
|
|
367,846
|
|
|
|
-
|
|
|
|
367,846
|
|
Goodwill
|
|
|
243,248
|
|
|
|
-
|
|
|
|
243,248
|
|
Total
Assets
|
|
$
|
6,549,829
|
|
|
$
|
-
|
|
|
$
|
6,549,829
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
245,670
|
|
|
$
|
-
|
|
|
$
|
245,670
|
|
Accrued
expenses and other payables
|
|
|
109,779
|
|
|
|
-
|
|
|
|
109,779
|
|
Payable
to contractors
|
|
|
133,830
|
|
|
|
-
|
|
|
|
133,830
|
|
Derivative
liability
|
|
|
-
|
|
|
|
1,118,092
|
(1),(2)
|
|
|
1,118,092
|
|
Due
to related parties
|
|
|
10,748
|
|
|
|
-
|
|
|
|
10,748
|
|
Total
current liabilities
|
|
|
500,027
|
|
|
|
1,118,092
|
|
|
|
1,618,119
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
4,000
|
|
|
|
-
|
|
|
|
4,000
|
|
Common
stock
|
|
|
35,111
|
|
|
|
-
|
|
|
|
35,111
|
|
Additional
paid-in capital
|
|
|
13,074,365
|
|
|
|
(1,414,068
|
)
(1)
|
|
|
11,660,297
|
|
Preferred
stock dividend payable
|
|
|
30,550
|
|
|
|
-
|
|
|
|
30,550
|
|
Subscription
receivable
|
|
|
(1,206,335
|
)
|
|
|
-
|
|
|
|
(1,206,335
|
)
|
Stock
to be issued
|
|
|
4,576,656
|
|
|
|
-
|
|
|
|
4,576,656
|
|
Accumulated
other comprehensive gain
|
|
|
259,005
|
|
|
|
-
|
|
|
|
259,005
|
|
Accumulated
deficit
|
|
|
(11,280,534
|
)
|
|
|
295,976
|
(1),(2)
|
|
|
(10,984,558
|
)
|
Total
Bio-Bridge Science Inc. shareholders' equity
|
|
|
5,492,818
|
|
|
|
(1,118,092
|
)
|
|
|
4,374,726
|
|
Noncontrolling
interests
|
|
|
556,984
|
|
|
|
-
|
|
|
|
556,984
|
|
Total
equity
|
|
|
6,049,802
|
|
|
|
(1,118,092
|
)
|
|
|
4,931,710
|
|
Total
liabilities and equity
|
|
$
|
6,549,829
|
|
|
$
|
--
|
|
|
$
|
6,549,829
|
|
|
|
Three
months ended March 31, 2009
|
|
Account
|
|
(As
Initially Reported)
|
|
|
(Adjustment)
|
|
|
(As
Restated) (Unaudited)
|
|
Revenue
|
|
$
|
264,129
|
|
|
$
|
—
|
|
|
$
|
264,129
|
|
Cost
of goods sold
|
|
|
(162,259
|
)
|
|
|
—
|
|
|
|
(162,259
|
)
|
Gross
profit
|
|
|
101,870
|
|
|
|
—
|
|
|
|
101,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development cost
|
|
|
(32,812
|
)
|
|
|
—
|
|
|
|
(32,812
|
)
|
Selling
and distribution expenses
|
|
|
(29,341
|
)
|
|
|
—
|
|
|
|
(29,341
|
)
|
General
and administrative expenses
|
|
|
(208,533
|
)
|
|
|
—
|
|
|
|
(208,533
|
)
|
Loss
from operations
|
|
|
(168,816
|
)
|
|
|
—
|
|
|
|
(168,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(274
|
)
|
|
|
—
|
|
|
|
(274
|
)
|
Change
in fair value of derivative liability
|
|
|
|
|
|
|
171,277
|
(2)
|
|
|
171,277
|
|
Unrealized
loss on trading securities
|
|
|
(3,630
|
)
|
|
|
—
|
|
|
|
(3,630
|
)
|
Dividend
income
|
|
|
4,308
|
|
|
|
—
|
|
|
|
4,308
|
|
Provision
for Income taxes
|
|
|
(20,967
|
)
|
|
|
—
|
|
|
|
(20,967
|
)
|
Loss
after income taxes
|
|
|
(189,379
|
)
|
|
|
171,277
|
|
|
|
(18,102
|
)
|
Income
attributable to noncontrolling interest
|
|
|
34,674
|
|
|
|
-
|
|
|
|
34,674
|
|
Loss
attributable to controlling interest
|
|
|
(224,053
|
)
|
|
|
171,277
|
|
|
|
(52,776
|
)
|
Preferred
stock dividends
|
|
|
(55,550
|
)
|
|
|
—
|
|
|
|
(55,550
|
)
|
Net
loss attributable to common shareholders
|
|
$
|
(279,603
|
)
|
|
$
|
171,277
|
|
|
$
|
(108,326
|
)
|
Net
loss per share attributable to common shareholder, basic and
diluted
|
|
$
|
(0.01
|
)
|
|
|
0.01
|
|
|
$
|
(0.00
|
)
|
Weighted
average shares outstanding, basic and diluted
|
|
|
34,973,009
|
|
|
|
|
|
|
|
34,973,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31, 2009
|
|
|
|
(As
Initially Reported)
|
|
|
(Adjustment)
|
|
|
(As
Restated)
(Unaudited)
|
|
Cash
flow from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(189,379
|
)
|
|
$
|
171,277
|
|
|
$
|
(18,102
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13,552
|
|
|
|
—
|
|
|
|
13,552
|
|
Amortization
of land use right
|
|
|
4,779
|
|
|
|
—
|
|
|
|
4,779
|
|
Change
in fair value of derivative liability
|
|
|
—
|
|
|
|
(171,277)
|
(2)
|
|
|
(171,277)
|
|
Unrealized
loss on trading securities
|
|
|
3,630
|
|
|
|
|
|
|
|
3,630
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(95,210)
|
|
|
|
—
|
|
|
|
(95,210)
|
|
Inventories
|
|
|
973
|
|
|
|
—
|
|
|
|
973
|
|
Prepaid
expense and other assets
|
|
|
(164,304)
|
|
|
|
—
|
|
|
|
(164,304)
|
|
Accounts
payable
|
|
|
(20,012)
|
|
|
|
—
|
|
|
|
(20,012)
|
|
Payable
to contractors
|
|
|
(52,099)
|
|
|
|
—
|
|
|
|
(52,099)
|
|
Accrued
expense and other payables
|
|
|
(48,907)
|
|
|
|
—
|
|
|
|
(48,907)
|
|
Net
cash used in operating activities
|
|
|
(546,977)
|
|
|
|
—
|
|
|
|
(546,977)
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in construction in progress
|
|
|
(42,085
|
)
|
|
|
—
|
|
|
|
(42,085
|
)
|
Purchase
of fixed assets
|
|
|
(145,482
|
)
|
|
|
—
|
|
|
|
(145,482
|
)
|
Net
cash used in investing activities
|
|
|
(187,567
|
)
|
|
|
—
|
|
|
|
(187,567
|
)
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
873,935
|
|
|
|
—
|
|
|
|
873,935
|
|
Advances
from director
|
|
|
(21,442)
|
|
|
|
—
|
|
|
|
(21,442)
|
|
Net
cash provided by financing activities
|
|
|
852,493
|
|
|
|
—
|
|
|
|
852,493
|
|
Net
increase in cash and cash equivalents
|
|
|
117,949
|
|
|
|
—
|
|
|
|
117,949
|
|
Effect
of exchange rates on cash
|
|
|
(249)
|
|
|
|
—
|
|
|
|
(249)
|
|
Cash
and cash equivalents, beginning of period
|
|
|
1,486,252
|
|
|
|
—
|
|
|
|
1,486,252
|
|
Cash
and cash equivalents, end of period
|
|
$
|
1,603,952
|
|
|
$
|
—
|
|
|
$
|
1,603,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
of adjustments:
|
(1)
|
To
record $1,289,369 increase to derivative liability, $124,699 increase to
accumulated deficit for previously recognized stock compensation, and
$1,414,068 decrease to additional paid in capital upon adoption of EITF
07-5
|
|
(2)
|
To
record $171,277 decrease in derivative liability for the three months
ended March 31, 2009.
|
NOTE
5
-
ACQUISITION OF HUHHOT XINHENG BAIDE
BIOTECHNOLOGY CO., LTD. (“
XHBD”
)
On July
31, 2008, the Company acquired 51 percent of the outstanding capital interest of
Huhhot Xinheng Baide Biotechnology Co., Ltd. (“XHBD”). XHBD is
located in the city of Huhhot in Inner Mongolia of the PRC and is organized
under the laws of the PRC. XHBD manufactures and distributes bovine
serum products, which is used in research, the production of pharmaceuticals,
and production of veterinary medicines. The Company purchased
51 percent of the outstanding capital interest of XHBD in exchange for cash
of $881,058 (RMB 6,000,000). The acquisition has been accounted for
as a purchase in accordance with SFAS No. 141
Business
Combinations
. As such, the results of XHBD's operations have been
included in the consolidated financial statements since August 1, 2008. The
components of the purchase price and the allocation of the purchase price are as
follows:
Purchase
Price
|
|
|
|
Cash
consideration
|
|
$
|
881,058
|
|
|
|
|
|
|
Purchase
price allocation
|
|
|
|
|
Fair
value of tangible assets acquired, including cash of
$487,118
|
|
$
|
1,114,828
|
|
Goodwill
|
|
|
243,248
|
|
|
|
|
1,358,076
|
|
Historical
cost of 49% minority interest
|
|
|
(477,018
|
)
|
Net
purchase price
|
|
$
|
881,058
|
|
Allocation
of the purchase price may change based on final valuation
analysis. In preparing the valuation, the Company consulted with
independent valuation experts. Goodwill represents the excess of the
purchase price of XHBD over the fair value of the identifiable assets acquired
and liabilities assumed. The Company accounts for minority interest
using a historical basis.
The
following unaudited pro forma operating data shown below presents the results of
operations for the three months ended March 31 2008, as if the acquisition of
XHBD had occurred on the last day of the immediately preceding fiscal
period. Accordingly, transaction costs related to the acquisition are not
included in the loss from operations shown below. The pro forma results are not
necessarily indicative of the financial results that might have occurred had the
acquisition actually taken place on the respective dates, or of future results
of operations.
|
|
For the
three months
Ended
March 31,
|
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
Net
sales
|
|
$
|
47,633
|
|
Net
loss
|
|
$
|
(265,387
|
)
|
|
|
|
|
|
Net loss
per share-basic and diluted
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
Weighted
average shares outstanding-basic and diluted
|
|
|
34,357,676
|
|
In
addition, China Diamond, an entity controlled by Mr. Trevor Roy, a director of
the Company, purchased 14 percent of XHBD on April 30, 2008.
NOTE
6 - INVENTORIES
Inventories
consist of the following at:
|
|
March 31,
2009
|
|
|
December 31,
2008
|
|
|
|
(
unaudited)
|
|
|
|
|
Raw
materials
|
|
$
|
73,276
|
|
|
$
|
40,929
|
|
Finished
goods
|
|
|
417,098
|
|
|
|
450,418
|
|
|
|
|
|
|
|
|
|
|
Total
inventories
|
|
$
|
490,374
|
|
|
$
|
491,347
|
|
|
NOTE
7 - DERIVATIVE LIABILITY
|
In June
2008, the FASB finalized Emerging Issues Task Force (“EITF”) 07-05, “Determining
Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own
Stock.” Under EITF 07-05, instruments which do not have fixed settlement
provisions are deemed to be derivative instruments. The strike price
of options and warrants issued by the Company, and the conversion feature in the
Company’s preferred stock are denominated in US dollars, a currency other than
the Company’s functional currency, RMB. As a result, the options and
warrants and conversion feature are not considered indexed to the Company’s own
stock. In accordance with EITF 07-05, the fair value of certain of
the Company’s options and warrants, and the conversion feature of the Company’s
convertible preferred stock, have been re-characterized as derivative
liabilities effective January 1, 2009. SFAS 133, “Accounting for
Derivative Instruments and Hedging Activities,” requires that the fair value of
these liabilities be re-measured at the end of every reporting period with the
change in value reported in the statement of operations.
At
January 1, 2009, the Company had 2,297,000 options and 8,864,943 warrants
outstanding with a strike price denominated in US dollars, a currency other than
the Company’s functional currency, RMB. The Company determined that
2,177,000 of the options and 5,488,276 of the warrants were issued pursuant to
SFAS 123R and therefore were not subject to the liability accounting required by
EITF 07-5.
The
derivative liabilities were valued using the Black-Scholes-Merton valuation
technique with the following assumptions:
|
|
March
31,
2009
|
|
|
December
31,
2008
|
|
|
At
dates of issuance
in
2007 and 2008
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free
interest rate
|
|
|
1.67
|
%
|
|
|
1.55
|
%
|
|
2.%
to 3.4%
|
|
Expected
volatility
|
|
|
81.4
|
%
|
|
|
80.3
|
%
|
|
50%
to 56%
|
|
Expected
life (in years)
|
|
1
to 3 years
|
|
|
1
to 3 years
|
|
|
2
to 5 years
|
|
Expected
dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
and warrants
|
|
$
|
481,836
|
|
|
$
|
558,193
|
|
|
$
|
124,699
|
|
Embedded
conversion feature
|
|
|
636,256
|
|
|
|
731,176
|
|
|
|
1,293,320
|
|
|
|
$
|
1,118,092
|
|
|
$
|
1,289,369
|
|
|
$
|
1,418,019
|
|
The
risk-free interest rate is based
on the yield available on
U.S. Treasury securities. The Company estimates volatility based on
the historical volatility of its common stock. The expected life of
the options and warrants and embedded conversion feature are based on the
expiration date of the related options and warrants and convertible preferred
stock. The expected dividend yield was based on the fact that the
Company has not paid dividends to common shareholders in the past and does not
expect to pay dividends to common shareholders in the future.
EITF
07-05 was implemented in the first quarter of 2009 and is reported as a
cumulative change in accounting principles. The cumulative effect on
the accounting for the conversion feature of the notes and the warrants at
December 31, 2008 is as follows:
Derivative
Instrument:
|
|
Additional
Paid-in Capital
|
|
|
Retained
Earnings
|
|
|
Derivative
Liability
|
|
Options
and warrants
|
|
$
|
682,892
|
|
|
$
|
(124,699
|
)
|
|
$
|
558,193
|
|
Embedded
conversion feature
|
|
|
731,176
|
|
|
|
-
|
|
|
|
731,176
|
|
|
|
$
|
1,414,068
|
|
|
$
|
(124,699
|
)
|
|
$
|
1,289,369
|
|
The
warrants were originally recorded at their relative fair value as an increase in
additional paid-in capital. The change in the accumulated deficit
includes gains resulting from decreases in the fair value of the derivative
liabilities through December 31, 2008. The derivative liability
amounts reflect the fair value of each derivative instrument as of the January
1, 2009
,
date
of implementation.
On March
31, 2009, the Company measured the fair value of the warrants, options, and
conversion feature as of March 31, 2009 as $1,118,092 and recorded a gain in
change in the fair value of derivatives of $171,277. At March 31, 2008, no
derivative instruments were recorded.
NOTE 8
- SHAREHOLDER'S EQUITY
Preferred
Stock
On
December 31, 2006, the Company amended its certificate of incorporation to
provide for 5,000,000 shares of Series A preferred stock. Pursuant to the
Company's certificate of incorporation, its board of directors has the
authority, without further action by the stockholders, to issue up to 5,000,000
shares of undesignated preferred stock, par value $0.001 per share. The
Company's board will also have the authority, without the approval of the
stockholders, to fix the designations, powers, preferences, privileges and
relative, participating, optional or special rights and the qualifications,
limitations or restrictions of any preferred stock issued, including dividend
rights, conversion rights, voting rights, terms of redemption and liquidation
preferences, any or all of which may be greater than the rights of the common
stock. Preferred stock could thus be issued with terms that could delay or
prevent a change in control of our company or make removal of management more
difficult.
On
January 30, 2007, the Company entered into a Securities Purchase Agreement with
three individuals, whereby the Company agreed to sell 4,000,000 shares of Series
A Convertible Preferred Stock and warrants to purchase 3,000,000 shares of
common stock at $1.00 per share. On February 12, 2007, the preferred stock and
warrants were issued for $0.75 per unit, or $3,000,000 in
aggregate.
The
preferred stock earns dividends at 12% annually, in common shares of the Company
valued at $1.00 per share, payable semiannually in arrears. The preferred stock
dividend is cumulative and non-participating. During the three months
ended March 31, 2009 and 2008, the Company recorded $55,550 and $90,000 of
preferred stock dividends payable. The preferred stock has
liquidation preference of $0.75 per share and no voting rights. The preferred
shares contain standard anti-dilution protection.
At the
holder’s option, the preferred stock is convertible into the Company’s common
stock on a one-for-one basis anytime up to January 30, 2010 (three
years). At the Company’s option, the preferred stock is convertible
into the Company’s common stock (at the conversion price initially set at $0.75
per share) when the average closing price of the common stock for any 20
consecutive trading days is at least $2.00. On the third anniversary (January
30, 2010) of the closing, the Company shall have the right to convert all the
Preferred Stock then outstanding into shares of common
stock. The warrants are exercisable through January 20, 2010,
into 3,000,000 shares of the Company’s common stock for $1.00 per
share.
Common
Stock
In the
first quarter of 2009, the Company sold 12,800 shares of common stock to 123
investors at $1.375 per share for a total consideration of $17,600.
NOTE 9
- STOCK OPTION AND WARRANTS
At March
31, 2009, stock options outstanding were as follows:
|
|
Options
Granted
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2009
|
|
|
2,297,000
|
|
|
$
|
0.42
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
Withdrawn
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at March 31, 2009
|
|
|
2,297,000
|
|
|
$
|
0.42
|
|
The
following table summarizes information about stock options outstanding as of
March 31, 2009:
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
Range of Exercise
Prices
|
|
|
Number of
Shares
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Remaining Contractual
Life (in years)
|
|
|
Number of
Shares
|
|
|
Weighted Average
Exercise Price
|
|
$
|
0.001 to $0.55
|
|
|
|
2,297,000
|
|
|
$
|
0.42
|
|
|
|
6.33
|
|
|
|
2,297,000
|
|
|
$
|
0.42
|
|
|
|
|
|
|
2,297,000
|
|
|
|
|
|
|
|
|
|
|
|
2,297,000
|
|
|
|
|
|
Information
relating to stock options at March 31, 2009 summarized by exercise price is as
follows:
Outstanding
|
|
|
Exercisable
|
|
Exercise price per
Share
|
|
|
Number of
shares
|
|
|
Remaining
Life (years)
|
|
|
Exercise
price
|
|
|
Number of
Shares
|
|
|
Weighted
average
exercise price
|
|
$
|
0.001
|
|
|
|
400,000
|
|
|
|
6.58
|
|
|
$
|
0.001
|
|
|
|
400,000
|
|
|
$
|
0.0001
|
|
$
|
0.001
|
|
|
|
20,000
|
|
|
|
3.00
|
|
|
$
|
0.001
|
|
|
|
20,000
|
|
|
$
|
0.0001
|
|
$
|
0.5
|
|
|
|
1,277,000
|
|
|
|
6.50
|
|
|
$
|
0.50
|
|
|
|
1,277,000
|
|
|
$
|
0.50
|
|
$
|
0.55
|
|
|
|
600,000
|
|
|
|
6.50
|
|
|
$
|
0.55
|
|
|
|
600,000
|
|
|
$
|
0.55
|
|
$
|
0.001
to $0.55
|
|
|
|
2,297,000
|
|
|
|
6.33
|
|
|
$
|
0.42
|
|
|
|
2,297,000
|
|
|
$
|
0.42
|
|
At March
31, 2009, warrants outstanding were as follows:
|
|
Number of
Shares under
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
|
|
|
|
|
Warrants
outstanding at January 1, 2009
|
|
|
8,864,943
|
|
|
|
0.95
|
|
Warrants
granted
|
|
|
-
|
|
|
|
|
|
Warrants
expired
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
outstanding at March 31, 2009
|
|
|
8,864,943
|
|
|
$
|
0.95
|
|
The
following table summarizes information about warrants outstanding at March 31,
2009:
Warrants
Outstanding and Exercisable
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares Under Warrants
|
|
|
Exercise Price
|
|
Expiration
Date
|
|
Weighted
Average
Exercise Price
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
1.20
|
|
November
20, 2009
|
|
$
|
1.20
|
|
|
3,000,000
|
|
|
$
|
1.00
|
|
January
20, 2010
|
|
$
|
1.00
|
|
|
183,334
|
|
|
$
|
0.75
|
|
June
4, 2011
|
|
$
|
0.75
|
|
|
183,333
|
|
|
$
|
1.20
|
|
June
4, 2013
|
|
$
|
1.20
|
|
|
1,724,138
|
|
|
$
|
0.725
|
|
July
2, 2012
|
|
$
|
0.725
|
|
|
1,724,138
|
|
|
$
|
1.10
|
|
July
2, 2013
|
|
$
|
1.10
|
|
|
1,000,000
|
|
|
$
|
0.725
|
|
July
9, 2012
|
|
$
|
0.725
|
|
|
1,000,000
|
|
|
$
|
1.10
|
|
July
9, 2013
|
|
$
|
1.10
|
|
|
8,864,943
|
|
|
$
|
0.75-$1.20
|
|
|
|
$
|
0.95
|
|
The
aggregate intrinsic value of 2,297,000 options and 8,864,943 warrants
outstanding and exercisable as of March 31, 2009 was $528,310. The aggregate
intrinsic value for the options is calculated as the difference between the
price of the underlying awards and quoted price of the Company’s common shares
for the options that were in-the-money as of March 31, 2009. At March 31,
2009, all options shares and warrant shares were vested, and there is no
unamortized cost to be recognized in future periods.
NOTE 10
- COMMITMENTS AND CONTINGENCIES
Construction
in Progress
In May
2003, the Company acquired a land use right for approximately 28 acres of land
in the Tianzhu Export Processing Zone, Shunyi District, Beijing, China, which
the Company plans to develop into a laboratory and bio-manufacturing facility in
compliance with Good Manufacturing Practices, or GMP, regulations primarily for
clinical trials of our vaccine candidates. The general plans for development
include the construction of a laboratory facility (“Phase One”) and construction
of an administrative office building (“Phase Two”). At March 31, 2009, the Phase
One construction and internal clean room are awaiting the inspections and
approval from the government, which is expected to be finished by the second
quarter or early third quarter of 2009, and is recorded as construction in
progress. At March 31, 2009, $133,830 was due to the contractors of Phase One
for the completed construction and internal clean room decoration and this
obligation is recorded as due to contractors.
The
Company estimates the cost of laboratory equipment for Phase One to be fully
operational will be approximately $400,000. As of March 31, 2009, the Company
had signed agreements with several parties for the purchase of the laboratory
equipment. The Company estimates the purchase and installation of the laboratory
equipment will be completed by the second quarter or early third quarter of
2009. At March 31, 2009, Phase Two was still in the design stage. The Company
estimates the total project costs for Phase Two will be approximately
$1,200,000.
The
Company estimates that construction may begin on Phase Two in 2011 or later, but
currently has no plans for Phase Two construction.
Lease
Commitment
As of
March 31, 2009, we had future minimum lease payments of $19,858 and $19,004 due
in 2009 and 2010, respectively, related to the operating lease for our office in
Oak Brook, IL.
Royalty
and License Arrangements
Liang
Qiao, M.D., our co-founder and chief executive officer, is one of the two
co-inventors of our core technology that was assigned to Loyola University
Chicago in April 2001. Under an agreement with Loyola University Chicago, we
have obtained exclusive rights to this technology for use in its future products
within the United States, Japan and the People's Republic of China, including
mainland China, Hong Kong, Taiwan and Macau. The license continues perpetually
or for the maximum period of time permitted by law, unless terminated earlier
under the terms of the agreement. Pursuant to this agreement, Loyola receives a
royalty of 4% from the net profit for all uses of the licensed technology,
including uses under sublicenses. As of March 31, 2009, we had not generated any
revenues from the sale of any products under development, nor had we received
any revenues from sublicenses.
Potential
Joint Venture
We
entered into a non-binding memorandum of understanding with JR Scientific, Inc.,
a Woodland, California based manufacturer of classical and custom cell culture
medium and sera products ("JRS”) and Mr. Jan Baker, President and CEO of JRS on
April 15, 2008. Under the agreement, the Company will form a joint venture
together with JRS and several other investors in China to produce culture
medium, serum, and other biomaterial for sale in China and other
countries. The total investment for the joint venture is planned to
be around RMB 10 million (approximately $1,500,000). We expect to own at least
51% of the new joint venture. The joint venture is expected to be formed in the
second quarter of 2009. However, the agreement is non-binding and we are not
certain a joint venture will be formed
Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operation
Some of
the statements made by us in this Quarterly Report on Form 10-Q are
forward-looking in nature, including but not limited to, statements relating to
our future revenue and expenses, product development, future market acceptance,
levels of research and development, our management's plans and objectives for
our current and future operations, and other statements that are not historical
facts. Forward-looking statements include, but are not limited to, statements
that are not historical facts, and statements including forms of the words
"intend", "believe", "will", "may", "could", "expect", "anticipate", "plan",
"possible", and similar terms. Actual results could differ materially from the
results implied by the forward looking statements due to a variety of factors,
many of which are discussed throughout this Quarterly Report and in our SEC
filings. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. We undertake
no obligation to publicly release any revisions to these forward-looking
statements that may reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events, unless required by law. Factors
that could cause actual results to differ materially from those expressed in any
forward-looking statement made by us include, but are not limited
to:
·
|
our
ability to finance our activities and maintain our financial
liquidity;
|
·
|
our
ability to attract and retain qualified, knowledgeable
employees;
|
·
|
our
ability to complete product
development;
|
·
|
our
ability to obtain regulatory approvals to conduct clinical
trials;
|
·
|
our
ability to design and market new products
successfully;
|
·
|
our
failure to acquire new customers in the
future;
|
·
|
deterioration
of business and economic conditions in our
markets;
|
·
|
intensely
competitive industry conditions.
|
In this
document, the words "we," "our," "ours," and "us" refers to Bio-Bridge Science,
Inc. and our wholly owned subsidiaries, including Bio-Bridge Science (Beijing)
Co. Ltd., a Wholly-Foreign Owned Enterprise of the People's Republic of China
("Bio-Bridge (Beijing)") , Bio-Bridge Science Corporation, a Cayman Islands
corporation, Bio-Bridge Science Holding Co. Ltd, a Cayman Islands corporation,
Bio-Bridge Science(HK) CO. Ltd, a Hong Kong company, and Xinheng Baide
Biotechnology Co. Ltd., a Chinese company.
OVERVIEW
Bio-Bridge
Science, Inc. is a biotechnology company whose subsidiaries are focused on the
commercial development of HIV-PV Vaccine I, HPV vaccine, colon cancer vaccine,
mucosal adjuvant. Also, we sell bovine serum through our 51% owned subsidiary,
XHBD. The pre-clinical testing of HIV-PV Vaccine I on laboratory animals in
Beijing, China was completed in June 2006. After the lab equipment is installed
and we are able to produce vaccine candidate samples, we will apply to China's
State Food and Drug Administration for approval to conduct clinical trials of
HIV-PV Vaccine I. As of December 31, 2005, we had completed the construction of
the outside body of our laboratory and bio-manufacturing facility in Beijing,
China. The internal clean room installation project has been substantially
completed as of end of 2006. We expect to pass the local government inspection
and receive the necessary licenses in the second quarter of 2009, and by then
the laboratory facility will be in operations. We acquired a 51% equity interest
in Huhhot Xinheng Baide Biotechnology Co. Ltd. at the end of July in 2008. XHBD
produces and sells bovine serum, a major material used in the production of
vaccines. We expect XHBD will bring us increasing revenues in the
future.
Plan of
Operations
Vaccine
Development
Our
primary corporate focus is on the commercial development of our potential
vaccine products through our subsidiaries. Our capital requirements,
particularly as they relate to product research and development, have been and
will continue to be significant. Our future cash requirements and the adequacy
of available funds will depend on many factors, including the pace at which we
are able to obtain regulatory approvals of vaccine candidates, whether or not a
market develops for our products and, if a market develops, the pace at which it
develops, and the pace at which the technology involved in making our products
changes.
The
pre-clinical testing of HIV-PV Vaccine I on laboratory animals was completed in
Beijing Institute of Radiation Medicine, and the testing result was issued in
June 2006 and showed encouraging results. After the vaccine samples are produced
in our GMP facility, we will submit application for clinical trials with the
Chinese SFDA. The clinical trial for therapeutic vaccine is expected to last
three years. The clinical trial for preventive vaccine will last longer, most
likely five to seven years.
We also
plan to conduct the pre-clinical trials for colon cancer vaccine and HPV
vaccine. We estimate that we will complete the pre-clinical trial of colon
cancer vaccine by late 2009 and that of HPV vaccine by mid 2010. We expect to
enter clinical trials of colon cancer vaccine in the second half of 2010. As we
discussed previously, clinical trial for therapeutic vaccine is expected to last
three years. All the technology to make HIV vaccine and colon cancer vaccine is
based on the technology co-developed by our CEO, Dr. Liang Qiao. Because we use
the same technology to develop our potential vaccine products, we expect to use
the same GMP facility in Beijing, China, to produce the HIV vaccine and colon
cancer vaccine for pre-clinical and clinical trials.
To date
we have funded our operations from funds we raised in private offerings. In the
first quarter of 2009, the Company sold 12,800 shares of common stock to a
hundred twenty-three investors at $1.375 per share for a total consideration of
$17,600.
During
2008, we sold common stock and investment unit composed of common stock and
warrants to investors in several private placements in which we raised
$4,245,000 in total. During the next twelve months, we will need to raise
capital through an offering of our securities or from loans to continue research
and development of our various vaccine product candidates in China as well as
conducting the potential acquisition activities in China. We estimate that our
capital requirements for the next twelve months will be as follow:
o
approximately $1.0 million for preparatory work and Phase I clinical study of
HIV-PV Vaccine I;
o
approximately $1.0 million for working capital and general corporate needs;
and
o
approximately $0.7 million for pre-clinical trials on colon cancer vaccine and
HPV vaccine.
We expect
that the therapeutic vaccine can be brought to market in three years and the
preventive vaccine can be brought to market in five to seven years, if we are
successful in raising funds to complete development of the vaccines. As of March
31 of 2009, our cash and cash equivalents and trading securities position was
$1,715,957. Although we raised $ 4.245 million in 2008 in private placements, we
will still need to raise additional funds through the public or private sales of
our securities, loans, or a combination of the foregoing to meet
our planned operations. We cannot guarantee that financing will be
available to us, on acceptable terms or at all. We also may borrow from local
banks in China given that our land use right and laboratory facility could be
used as collateral for borrowing. If we fail to obtain other financing in
the next 12 months, either through an offering of our securities or by obtaining
additional loans, we may be unable to develop our planned projects as scheduled
and may be forced to scale back.
Distribution
of Xinhua surgical instruments
We signed
an exclusive agency agreement with Xinhua Surgical Instruments Co. Ltd. to
distribute its operational instruments in the United States at the end of 2005.
We are currently seeking collaboration with local distributors and developing
markets for Xinhua instruments. We built up a B2C website devoted to selling
Xinhua surgical instruments in 2008. Also, we initiated some marketing
campaigns, such as buying Google keywords. As a result of our efforts, our first
quarter surgical instrument sale posted a 713% increase compared with the same
period in 2008.
Acquisitions
of companies complementary to the Company
Another
major corporate focus is for the Company to acquire other profitable vaccine
companies or vaccine production related companies, such as those producing
materials for vaccine production, in China. Such an acquisition may help support
our development of our in-house vaccines candidates by providing us with
operating cash flows, lower cost for material used in our vaccine production,
skillful work force in vaccine production, and a distribution channel. We
believe these companies will be complementary to us and make us more
competitive.
On July
31, 2008, the Company completed the acquisition of Huhhot Xinheng Baide
Biotechnology Co. Ltd., (“XHBD”), in which the Company purchased 51% of the
outstanding capital interests of XHBD for RMB 6 million (approximately US$
881,000). XHBD was incorporated on May 17, 2006 under the laws
of the People’s Republic of China (“PRC”) as a limited company. XHBD is
located in the city of Huhhot in Inner Mongolia, China. The primary operations
of the Company are the manufacture and distribution of bovine serum products,
which is used in research, and production of vaccines. The
acquisition was accounted for as a purchase in accordance with Statement of
Financial Accounting Standards No. 141 “Business Combinations”. The assets
acquired and liabilities assumed were recorded at their fair values at the date
of acquisition. We completed the 51% acquisition of Xinheng Baide on July 31,
2008 and its operations are included in our consolidated financial statements
beginning August 1, 2008.
Potential
Joint Venture
We
entered into a non-binding memorandum of understanding with JR Scientific, Inc.,
a Woodland, California based manufacturer of classical and custom cell culture
medium and sera products ("JRS”) and Mr. Jan Baker, President and CEO of JRS on
April 15, 2008. Under the MOU, the Company will form a joint venture together
with JRS and several other investors in China. The joint venture is expected to
mainly produce culture medium, serum, and other biomaterial for sale in China
and other countries under the brand name of the joint venture. Cell culture
medium and serum are used in vaccine production as well as scientific research.
JRS and Mr. Baker as part of the MOU, agree to transfer technology and
“know-how” to the joint venture. The total investment for the joint venture is
planned to be around RMB 10 million (about US$ 1.47 million). We expect to own
at least 51% of the new joint venture. The joint venture is expected to be
formed in the second quarter of 2009. However, the agreement is non-binding and
we cannot assure you that a joint venture will be formed.
Results
of Operations
Three-month
period ended March 31, 2009 and March 31, 2008
During
the three-month period ended March 31, 2009, we had revenues of $264, 129. The
cost of revenue was $162, 529, which was 62% of the total revenue. On
July 31, 2008, the Company finished the acquisition of Huhhot Xinheng Baide
Biotechnology Co. Ltd., (“XHBD”).
During
the three-month period ended March 31, 2008, we had revenues of $2,285. The cost
of revenue was $891, which was 39% of the total revenue. The increase of the
revenue was mainly due to sales of bovine serum, which was $245,550. Also, the
sale of surgical instruments was increased to $18,579 during the three-month
period ended March 31, 2009.
The
decrease of the gross margin was due to the gross margin of bovine serum was
lower, which was 48% during the three-month period ended March 31, 2009,
compared with 64% for sale of surgical instruments.
For the
quarter ended March 31, 2009, research and development expenses were $32,812, as
compared to $36,533 for the quarter ended March 31, 2008. The decrease of $3,721
is due to the decrease of the pre-clinical trial development of our vaccine
candidates.
For the
quarter ended March 31, 2009, general and administrative expenses were $208,533
as compared to $206,561 for the quarter ended March 31, 2008. General and
administrative expenses for these two periods were almost the same.
For the
quarter ended March 31, 2009, selling and distribution expenses were $29,341 as
compared to $12,329 for the quarter ended March 31, 2008. The increase of
$17,012 is due primarily to increases in shipping and selling expense and
selling and distribution of XHBD.
For the
quarter ended March 31, 2009, interest expense was $274 as compared to interest
income of $26 for the quarter ended March 31, 2008. The decrease of $300 is due
primarily to a decrease in cash balance and borrowing cost.
However,
none of these revenues pertain to our core planned principal operations of
developing vaccine candidates. Therefore, we believe a separate analysis of
these revenues is not as helpful as an analysis of our liquidity and capital
resources.
Net loss
for the quarter ended March 31, 2009 was $18,102 as compared to $288,514 for the
quarter ended March 31, 2008. This decrease of $270,412 in net loss is
attributable primarily to the decrease of unrealized loss on trading
securities, the increase of sales
and change in fair value
of derivative liability.
Liquidity
and Capital Resources
Our
principal sources of liquidity are cash and cash equivalent balances, which were
$1,603,952 at March 31, 2009. Also, we had marketable securities valued at
$112,005 as of March 31, 2009. These marketable securities were classified
as trading securities.
Net cash
used in operating activities was $546,977 for the three months ended March 31,
2009 and $109,247 for the three months ended March 31, 2008. The increase was
due primarily to an increase in prepaid expenses and other assets and also an
increase in accounts receivable.
Net cash
provided by (used in) investing activities was ($ 187,567) for the three months
ended March 31, 2009 and $284,411for the three months ended March 31, 2008. This
change was due to the sale of our trading securities during the three months
ended March 31, 2008 and also the purchase of fixed assets for the three months
ended March 31, 2009.
Net cash
provided by financing activities was $852,493 for the three months ended March
31, 2009 compared to $28,494 for the three months ended March 31, 2008. This
increase was mainly due to proceeds from the issuance of commons stock during
the first quarter of 2009.
To date,
our operations have been funded through issuances of our common stock and
preferred stock whereby we raised an aggregate $8,383,488 from inception through
March 31, 2009.
In the
first quarter of 2009, the Company sold 12,800 shares of common stock to a
hundred twenty-three investors at $1.375 per share for a total consideration of
$17,600.
During
2008, the Company sold 5,841,609 shares of its common stock to seven individuals
for a total of $4,245,000. Four of these individuals, who purchased a
total of 5,488,276 shares of common stock for a total of $3,980,000, are members
of our Board of Directors. Some of the sales agreements also included
warrants to purchase common stock.
During
2007, the Company sold 4,000,000 shares of Series A Convertible Preferred Stock
and warrants to purchase 3,000,000 shares of common stock at $1.00 per share to
three individuals for a total of $3,000,000.
Based on
our current operating plan, we believe that we have sufficient cash and cash
equivalents to last approximately through June 2010. We will need to obtain
additional financing in addition to the funds already raised through the sale of
equity securities to fund our cash needs and continue our operations beyond
June 2010. Additional financing, whether through public or private equity or
debt financing, arrangements with stockholders or other sources to fund
operations, may not be available, or if available, may be on terms unacceptable
to us. Our ability to maintain sufficient liquidity is dependent on our ability
to raise additional capital. If we issue additional equity securities to raise
funds, the ownership percentage of our existing stockholders would be reduced.
New investors may demand rights, preferences or privileges senior to those of
existing holders of our common stock. Debt incurred by us would be senior to
equity in the ability of debt holders to make claims on our assets. The terms of
any debt issued could impose restrictions on our operations. If adequate funds
are not available to satisfy either medium or long-term capital requirements,
our operations and liquidity could be materially adversely affected and we could
be forced to cut back our operations.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations are
based on our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the U.S.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses for each period. The following represents a summary of our critical
accounting policies, defined as those policies that we believe are the most
important to the portrayal of our financial condition and results of operations
and that require management's most difficult, subjective or complex judgments,
often as a result of the need to make estimates about the effects of matters
that are inherently uncertain.
Revenue
recognition
The
Company recognizes revenue from the sales of products when persuasive evidence
of an order arrangement exists, delivery has occurred, the sales price is fixed
or determinable and collectibility is reasonably assured. Generally,
these criteria are met at the time the product is shipped to customers when
title and risk of loss have transferred.
Stock-Based
Compensation
The
Company periodically issues stock options and warrants to employees and
non-employees in capital raising transactions, for services and for financing
costs. The Company adopted SFAS No. 123R effective January 1, 2006, and is using
the modified prospective method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No. 123R
for all share-based payments granted after the effective date and (b) based on
the requirements of SFAS No. 123R for all awards granted to employees prior to
the effective date of SFAS No. 123R that remain unvested on the effective date.
The Company accounts for stock option and warrant grants issued and vesting to
non-employees in accordance with EITF No. 96-18: “Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” and EITF No. 00-18 “Accounting
Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees” whereas the value of the stock compensation is based upon
the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete.
Construction
in Progress
Construction
in progress represents direct costs of construction or acquisition and design
fees incurred. Capitalization of these costs ceases and the construction in
progress is transferred to plant and equipment when substantially all the
activities necessary to prepare the assets for their intended use are completed.
No depreciation is provided until it is completed and ready for intended
use.
Impairment
of Long-Lived Assets
We
account for long-lived assets in accordance with SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. We regularly
evaluate our long-lived assets for indicators of possible impairment whenever
events or changes in business circumstances indicate that the carrying amount of
the assets may not be fully recoverable. An impairment loss would be recognized
when estimated undiscounted future cash flows expected to result from the use of
an asset and its eventual disposition are less than its carrying
amount. Impairment, if any, is measured using discounted cash flows.
In the period ended March 31, 2009, we performed an evaluation of our long-lived
assets and concluded there was no impairment.
Financial
Assets and Liabilities Measured at Fair Value
Fair
Value Measurements are determined by the Company's adoption of Statement of
Financial Accounting Standards ("SFAS") No. 157, “Fair Value Measurements”
("SFAS 157") as of January 1, 2008, with the exception of the
application of the statement to non-recurring, non-financial assets and
liabilities as permitted. The adoption of SFAS 157 did not have a material
impact on the Company's fair value measurements. SFAS 157 defines fair
value as the price that would be received to sell an asset or paid to transfer a
liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants at the
measurement date. SFAS 157 establishes a fair value hierarchy, which
prioritizes the inputs used in measuring fair value into three broad levels as
follows:
Level 1—Quoted
prices in active markets for identical assets or liabilities.
Level 2—Inputs,
other than the quoted prices in active markets, are observable either directly
or indirectly.
Level 3—Unobservable
inputs based on the Company's assumptions.
SFAS 157
requires the use of observable market data if such data is available without
undue cost and effort
At March
31, 2009, the Company’s financial assets and liabilities that were measured at
fair value include its investment in trading securities which have a cost of
$259,270, a gross unrealized loss of $147,265 and a fair value of $112,005. The
Company estimates the fair value of its trading securities based on unadjusted
quoted prices in active markets of identical assets. In accordance with SFAS No.
157, this is a Level 1 valuation.
Accounting
for equity-linked financial instruments denominated in currency other than
functional currency
On
January 1, 2009, the Company adopted Emerging Issues Task Force Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity’s Own Stock” (EITF 07-5). As a result of adopting EITF 07-5,
certain options and warrants and the beneficial conversion feature of the
Company’s convertible preferred stock previously treated as equity are no longer
afforded equity treatment because the strike price of the warrants is
denominated in US dollars, a currency other than the Company’s functional
currency, the Chinese Renminbi. As a result, these instruments are
not considered indexed to the Company’s own stock, and as such, changes in the
fair value of these instruments will be recognized currently in earnings until
such time as the options, warrants, or beneficial conversion feature are
exercised or expire.
Accounting
for noncontrolling interest
Effective
January 1, 2009, the Company adopted SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements.” This statement amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,”
to establish accounting and reporting standards for a noncontrolling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement clarifies that a noncontrolling interest in a subsidiary is an
ownership in the consolidated entity that should be reported as equity in
the consolidated financial statements. The adoption of SFAS No. 160 did not
have any material impact on the Company’s financial condition and results of
operations. However, it did impact the presentation and disclosure of
noncontrolling (minority) interests in the Company’s condensed consolidated
financial statements. The presentation and disclosure requirements were
retrospectively applied to the condensed consolidated financial
statements. As such, all prior periods presented have been conformed
to current year’s presentation. The noncontrolling (minority)
interest relates to third party shareholders of XHBD, who own 49% of XHBD as of
March 31, 2009.
Recent
Accounting Pronouncements
In
December 2007, Financial Accounting Standards Board (FASB) Statement 141R,
“Business Combinations (revised 2007)” (SFAS 141R”) was issued. SFAS
141R replaces SFAS 141 “Business Combinations”. SFAS 141R requires
the acquirer of a business to recognize and measure the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree at fair value. SFAS 141R also requires transactions costs related to
the business combination to be expensed as incurred. SFAS 141R applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The effective date, as well as the adoption date
for the Company was January 1, 2009. Although SFAS 141R may impact
our reporting in future financial periods, we have determined that the standard
did not have any impact on our historical consolidated financial statements at
the time of adoption.
In April
2008 the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of
the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
142. This pronouncement requires enhanced disclosures concerning a
company’s treatment of costs incurred to renew or extend the term of a
recognized intangible asset. FST 142-3 is effective for financial statements
issued for fiscal years beginning after December 15, 2008. The
effective date, as well as the adoption date for the Company was January 1,
2009. Although FSP 142-3 may impact our reporting in future financial
periods, we have determined that the standard did not have any impact on our
historical consolidated financial statements at the time of
adoption.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not or are not believed by
management to have a material impact on the Company's present or future
consolidated financial statements.
Commitments
Construction
in Progress
In May
2003, the Company acquired a land use right for approximately 28 acres of land
in the Tianzhu Export Processing Zone, Shunyi District, Beijing, China, which
the Company plans to develop into a laboratory and bio-manufacturing facility in
compliance with Good Manufacturing Practices, or GMP, regulations primarily for
clinical trials of our vaccine candidates. The general plans for development
include the construction of a laboratory facility (“Phase One”) and construction
of an administrative office building (“Phase Two”). At March 31, 2009, the Phase
One construction and internal clean room are awaiting the inspections and
approval from the government, which is expected to be finished by the second
quarter or early third quarter of 2009, and is recorded as construction in
progress. At March 31, 2009, $133,830 was due to the contractors of Phase One
for the completed construction and internal clean room decoration and this
obligation is recorded as due to contractors.
The
Company estimates the cost of laboratory equipment for Phase One to be fully
operational will be approximately $400,000. As of March 31, 2009, the Company
had signed agreements with several parties for the purchase of the laboratory
equipment. The Company estimates the purchase and installation of the laboratory
equipment will be completed by the second quarter or early third quarter of
2009. At March 31, 2009, Phase Two was still in the design stage. The Company
estimates the total project costs for Phase Two will be approximately
$1,200,000.
The
Company estimates that construction may begin on Phase Two in 2011 or later, but
currently has no plans for Phase Two construction.
Lease
Commitment
As of
March 31, 2009, we had remaining outstanding commitments with respect to its
non-cancelable operating lease for our office in Oak Brook, IL, of which $19,858
and $19,004 is due in 2009 and 2010.
Royalty
and License Arrangements
Liang
Qiao, M.D., our co-founder and chief executive officer, is one of the two
co-inventors of our core technology that was assigned to Loyola University
Chicago in April 2001. Under an agreement with Loyola University Chicago, we
have obtained exclusive rights to this technology for use in its future products
within the United States, Japan and the People's Republic of China, including
mainland China, Hong Kong, Taiwan and Macau. The license continues perpetually
or for the maximum period of time permitted by law, unless terminated earlier
under the terms of the agreement. Pursuant to this agreement, Loyola receives a
royalty of 4% from the net profit for all uses of the licensed technology,
including uses under sublicenses. As of March 31, 2009, we had not generated any
revenues from the sale of any products under development, nor had we received
any revenues from sublicenses.
Potential
Joint Venture
We
entered into a non-binding memorandum of understanding with JR Scientific, Inc.,
a Woodland, California based manufacturer of classical and custom cell culture
medium and sera products ("JRS”) and Mr. Jan Baker, President and CEO of JRS on
April 15, 2008. Under the agreement, the Company will form a joint venture
together with JRS and several other investors in China to produce culture
medium, serum, and other biomaterial for sale in China and other
countries. The total investment for the joint venture is planned to
be around RMB 10 million (approximately $1,500,000). We expect to own at least
51% of the new joint venture. The joint venture is expected to be formed in the
second quarter of 2009. However, the agreement is non-binding and we are not
certain a joint venture will be formed
Contractual
Obligations
Payments
due under contractual obligations at March 31, 2009 mature as
follows:
|
|
Payments due by period ($ in thousands)
|
|
Contractual Obligations
|
|
Total
|
|
|
Less than
1 year
|
|
|
1 to 3
years
|
|
Lease obligation
|
|
$
|
39
|
|
|
$
|
20
|
|
|
$
|
19
|
|
Payable
to contractors
|
|
|
134
|
|
|
|
134
|
|
|
|
|
|
R&D
agreement obligation
|
|
|
5
|
|
|
|
5
|
|
|
|
—
|
|
Total
|
|
$
|
178
|
|
|
$
|
159
|
|
|
$
|
19
|
|
Item
3. Quantitative and Qualitative Disclosure about Market Risk
The
Company is a smaller reporting company and is not required to provide the
information required by this.
Item
4. Controls and Procedures
Evaluation of disclosure controls and procedures. As of the end
of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were not
effective as of the end of the applicable period at the reasonable assurance
level due to the material weaknesses described below.
Management
concluded that an accounting error had been made in the Company’s historical
March 31, 2009 consolidated financial statements in relation to the adoption of
provisions of EITF 07-5, "
Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock
”. As
a result, the Company’s consilidated financial statements for the quarter
ended March 31, 2009 were restated.
Management
evaluated the impact of this restatement on our assessment of our disclosure
controls and procedures and concluded that the control deficiency that resulted
in the incorrect recording of the adoption of provisions of EITF 07-5
represented a material weakness.
During
the second quarter of 2009, there has been an ongoing focus on the
remediation activities to address the material weaknesses in disclosure and
financial reporting controls. The remedial actions undertaken include more
hiring of capable accounting personnel and periodical review of our accounting
treatments in accordance with the US GAAP and related accounting pronouncements.
As a result of these efforts, the management concluded that the material
weakness has been eliminated.
The
Principal Executive Officer and the Principal Financial Officer anticipate that
the remedial actions and resulting improvement in controls will generally
strengthen our disclosure controls and procedures, as well as our internal
control over financial reporting (as defined in Rules 13a-15(c) and
15d-15(e) under the Exchange Act).
Changes in Internal Controls
o
ver Financial
Reporting
Other
than the remediation activities noted above, there were no changes to the
Company’s controls over financial reporting during the quarter ended
March 31, 2009 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal controls over financial
reporting.
PART
II - OTHER INFORMATION
Item 1.
Legal
Proceedings
Not
Applicable.
Item
1A. Risk Factors
There
have been no material changes in the risk factors previously disclosed in Form
10-K we filed with the SEC on March 31, 2009.
Item 2.
Unregistered Sales of Equity
Securities and Use of Proceeds
In the
first quarter of 2009, the Company sold 12,800 shares of common stock to a
hundred twenty-three investors at $1.375 per share for a total consideration of
$17,600.
Item 3.
Defaults Upon Senior
Securities
Not
applicable.
Item 4.
Submission of Matters to a Vote of
Security Holders
Not
applicable.
Item 5.
Other
Information
Not
applicable.
Item 6.
Exhibits
The
exhibits listed in the Exhibit Index are filed as part of this
report.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Bio-Bridge
Science, Inc.
|
|
|
|
|
|
|
|
/s/
Dr. Liang Qiao
|
|
|
Dated:
August 13, 2009
|
By:
Dr. Liang Qiao
|
|
|
|
Chief
Executive Officer
|
|
|
|
EXHIBIT
INDEX
3.1(i)*
|
|
Certificate
of incorporation of the registrant, as currently in
effect
|
|
|
|
3.1(ii)*
|
|
Bylaws
of the registrant, as currently in effect
|
|
|
|
3.1(iii)**
|
|
Certificate
of Designation of Series A Preferred Stock
|
|
|
|
4.1**
|
|
Form
of Common Stock Warrant Agreement dated January 2007
|
|
|
|
4.2**
|
|
Registration
Rights Agreement dated January 2007
|
|
|
|
10.1**
|
|
Securities
Purchase Agreement dated January 2007
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer
|
|
|
|
32.1
|
|
Section
1350 Certifications of Chief Executive Officer and Chief Financial
Officer
|
*
Previously filed with the Securities and Exchange Commission pursuant to
Registration Statement No. 333-121786.
**
Previously filed as an exhibit to the Registrant's Form 10-KSB for its year
ended December 31, 2006.