UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





(Mark
One)





x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





For the
quarterly period ended September
30, 2009




o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





For the
transition period from ____________ to ____________





Commission
File Number 000-51336





BEFUT INTERNATIONAL CO.,
LTD.


(Exact
name of small business issuer as specified in its charter)




Nevada
                  
                  20-2777600(State
      or other jurisdiction of
                  
                  (IRS
      Employerincorporation
      or organization)
                  
                  Identification
      No.)





No. 90-1 Hongji Street,
Xigang District Dalian City, Liaoning Province,


People’s Republic of
China         
                
116011


(Address
of principal executive offices) (Zip Code)





+86-411-83678755


(Issuer's
telephone number, including area code)





Indicate
by check mark whether the issuer (1) 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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o  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 filero
              Accelerated
      fileroNon-accelerated
      filero
                (Do
      not check if a smaller reporting company)
              Smaller
      reporting companyx





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o  No x





APPLICABLE
ONLY TO CORPORATE ISSUERS:





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 29,511,071 shares of Common
Stock, $.001 par value, were outstanding as of November 9,
2009.








TABLE OF
CONTENTS





PagePART I
                                              
                                              FINANCIAL INFORMATIONItem
      1.
                                              
                                              Financial
      Statements.
                                              3Consolidated
      Balance SheetsAs
      of September 30, 2009 (Unaudited) and June 30, 2009
                                              6Consolidated
      Statements of Operations and Comprehensive IncomeFor
      the Three Months Ended September 30, 2009 and 2008
    (Unaudited)
                                              7Consolidated
      Statements of Cash FlowsFor
      the Three Months Ended September 30, 2009 and 2008
    (Unaudited)
                                              8Notes
      to Consolidated Financial Statements
                                              9Item
      2.
                                              
                                              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                                              16Item
      4T.
                                              
                                              Controls
      and Procedures.
                                              26PART II
                                              
                                              OTHER INFORMATION
                                              26Item
      5.
                                              
                                              Other
      Information.
                                              26Item
      6.
                                              
                                              Exhibits.
                                              29Signatures
                                              30Exhibits/Certifications
                                              31


2





PART
I - FINANCIAL INFORMATION





Item
      1.
            Financial
      Statements





BEFUT
INTERNATIONAL CO., LTD.
 
 CONSOLIDATED
FINANCIAL STATEMENTS
 
 SEPTEMBER
30, 2009 AND 2008
 
 (UNAUDITED)
  3
  BEFUT
INTERNATIONAL CO., LTD.
 Consolidated
Financial Statements
 September
30, 2009 And 2008
 (Unaudited)
 
 Table
of Contents
 
 PageCONSOLIDATED
      FINANCIAL STATEMENTSReport
      of Independent Registered Public Accounting Firm
                    5Consolidated
      Balance Sheets
                    6Consolidated
      Statements of Operations and Other Comprehensive Income
                    7Consolidated
      Statements of Cash Flows
                    8Notes
      to Consolidated Financial Statements
                    9
  4
  Report
of Independent Registered Public Accounting Firm
 
 To the
Board of Directors and Stockholders
 BEFUT
International Co., Ltd.
 
 We have reviewed the accompanying
consolidated balance sheet of BEFUT International Co., Ltd. and subsidiaries
(collectively, the “Company”) as of September 30, 2009, and the related
consolidated statements of operations and comprehensive income, and cash flows
for the three months ended September 30, 2009 and 2008. These consolidated
financial statements are the responsibility of the Company's
management.
 
 We conducted our reviews in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
 
 Based on our review, we are not aware
of any material modifications that should be made to the accompanying financial
statements referred to above for them to be in conformity with accounting
principles generally accepted in the United States of America.
 
 We have previously audited, in
accordance with auditing standards of the Public Company Accounting Oversight
Board (United States), the balance sheet of BEFUT International Co., Ltd. and
Subsidiaries as of June 30, 2009, and the related consolidated statements of
operations and comprehensive income, stockholders’ equity, and cash flows for
the year then ended (not presented herein); and in our report dated September
24, 2009, we expressed an unqualified opinion on those financial statements. In
our opinion, the information set forth in the accompanying condensed balance
sheet as of June 30, 2009, is fairly stated, in all material respects, in
relation to the balance sheet from which it has been derived.
 
 /s/:Patrizio
& Zhao, LLC
 
 Parsippany,
New Jersey
 November
9, 2009
  5
  BEFUT
INTERNATIONAL CO., LTD.
 
 Consolidated
Balance Sheets
 
 September 30,
                            
                            
                            June 30,2009
                            
                            
                            2009(Unaudited)AssetsCurrent
      assets:Cash
      and cash equivalents
                            
                            $
                            178,075
                            
                            
                            $
                            210,301Restricted
      cash
                            
                            
                            -
                            
                            
                            
                            586,000Accounts
      receivable, net of allowance for doubtful accounts of
    $20,250and
      $20,222 at September 30, 2009 and June 30, 2009,
    respectively
                            
                            
                            8,496,994
                            
                            
                            
                            8,560,592Inventory
                            
                            
                            2,713,704
                            
                            
                            
                            1,353,532Loans
      to unrelated parties
                            
                            
                            6,405,659
                            
                            
                            
                            6,955,623Bank
      loan security deposits
                            
                            
                            148,122
                            
                            
                            
                            733,233Advance
      payments
                            
                            
                            729,729
                            
                            
                            
                            866,868Advance
      payments – R & D
                            
                            
                            2,960,406
                            
                            
                            
                            2,956,370Other
      current assets
                            
                            
                            240,573
                            
                            
                            
                            273,391Total
      current assets
                            
                            
                            21,873,262
                            
                            
                            
                            22,495,910Property
      and equipment, net
                            
                            
                            19,115,436
                            
                            
                            
                            18,646,274Other
      assets:Intangibles,
      net
                            
                            
                            11,090,452
                            
                            
                            
                            11,335,978Long-term
      investment
                            
                            
                            -
                            
                            
                            
                            2,930Total
      other assets
                            
                            
                            11,090,452
                            
                            
                            
                            11,338,908Total
      assets
                            
                            $
                            52,079,150
                            
                            
                            $
                            52,481,092LiabilitiesCurrent
      liabilities:Short-term
      bank loans
                            
                            $
                            7,335,000
                            
                            
                            $
                            8,057,500Convertible
      notes payable
                            
                            
                            500,000
                            
                            
                            
                            500,000Accounts
      payable and accrued expenses
                            
                            
                            903,716
                            
                            
                            
                            659,142Trade
      notes payable
                            
                            
                            -
                            
                            
                            
                            1,172,000Loans
      from unrelated party
                            
                            
                            -
                            
                            
                            
                            249,050Advances
      from customers
                            
                            
                            531,576
                            
                            
                            
                            372,417Income
      tax payable
                            
                            
                            1,027,616
                            
                            
                            
                            777,497Other
      taxes payable
                            
                            
                            -
                            
                            
                            
                            37,975Other
      current liabilities
                            
                            
                            977,285
                            
                            
                            
                            636,514Total
      current liabilities
                            
                            
                            11,275,193
                            
                            
                            
                            12,462,095Long-term
      bank loan
                            
                            
                            5,477,778
                            
                            
                            
                            5,470,310Total
      liabilities
                            
                            
                            16,752,971
                            
                            
                            
                            17,932,405EquityStockholders’
      equity:Preferred
      stock, $0.001 par value, 10,000,000 shares authorized,no
      shares issued or outstanding
                            
                            
                            -
                            
                            
                            
                            -Common
      stock, $0.001 par value, 200,000,000 shares authorized,29,510,971
      and 29,488,341 shares issued and outstanding at
                            
                            
                            29,511
                            
                            
                            
                            29,488September
      30, 2009 and June 30, 2009, respectivelyAdditional
      paid-in capital
                            
                            
                            21,708,252
                            
                            
                            
                            21,708,275Statutory
      reserve
                            
                            
                            729,135
                            
                            
                            
                            729,135Retained
      earnings
                            
                            
                            10,440,358
                            
                            
                            
                            9,750,035Accumulated
      other comprehensive income
                            
                            
                            2,004,431
                            
                            
                            
                            1,956,623Total
      stockholders’ equity
                            
                            
                            34,911,687
                            
                            
                            
                            34,173,556`Noncontrolling
      interest
                            
                            
                            414,492
                            
                            
                            
                            375,131Total
      equity
                            
                            
                            35,326,179
                            
                            
                            
                            34,548,687Total
      liabilities and equity
                            
                            $
                            52,079,150
                            
                            
                            $
                            52,481,092
  The accompanying notes are an
integral part of these consolidated financial
statements.
  6
  BEFUT
INTERNATIONAL CO., LTD.
 
 Consolidated
Statements of Operations and Other Comprehensive Income
 (Unaudited)
 
 For the Three Months EndedSeptember 30,2009
                  
                  
                  2008Sales
                  
                  $
                  5,483,659
                  
                  
                  $
                  5,286,220Cost
      of sales
                  
                  
                  3,862,774
                  
                  
                  
                  3,963,966Gross
      profit
                  
                  
                  1,620,885
                  
                  
                  
                  1,322,254Operating
      expenses:Selling
      expenses
                  
                  
                  21,873
                  
                  
                  
                  30,351General
      and administrative expenses
                  
                  
                  588,285
                  
                  
                  
                  204,087Total
      operating expenses
                  
                  
                  610,158
                  
                  
                  
                  234,438Income
      from operations
                  
                  
                  1,010,727
                  
                  
                  
                  1,087,816Other
      income (expenses):Government
      subsidy income
                  
                  
                  49,954
                  
                  
                  
                  59,070Interest
      expense, net
                  
                  
                  (132,309
                  )
                  
                  
                  (158,132
                  )Other
      expenses
                  
                  
                  5,697
                  
                  
                  
                  (21,421
                  )Total
      other income (expenses)
                  
                  
                  (76,658
                  )
                  
                  
                  (120,483
                  )Income
      before provision for income tax
                  
                  
                  934,069
                  
                  
                  
                  967,333Provision
      for income tax
                  
                  
                  248,904
                  
                  
                  
                  72,723Net
      income before noncontrolling interest
                  
                  
                  685,165
                  
                  
                  
                  894,610Noncontrolling
      interest
                  
                  
                  (5,158
                  )
                  
                  
                  (80
                  )Net
      income
                  
                  
                  690,323
                  
                  
                  
                  894,690Other
      comprehensive incomeForeign
      currency translation adjustment
                  
                  
                  47,807
                  
                  
                  
                  121,027Comprehensive
      income
                  
                  $
                  738,130
                  
                  
                  $
                  1,015,717Basic
      earnings per share
                  
                  $
                  0.02
                  
                  
                  $
                  0.03Diluted
      earnings per share
                  
                  $
                  0.02
                  
                  
                  $
                  0.03Weighted
      average number of common shares outstanding:Basic
                  
                  
                  29,510,971
                  
                  
                  
                  29,488,341Diluted
                  
                  
                  30,280,226
                  
                  
                  
                  29,488,341
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  7
  BEFUT
INTERNATIONAL CO., LTD.
  Consolidated
Statements of Cash Flows
 (Unaudited)
 
 For the Three Months EndedSeptember 30,2009
                    
                    
                    2008Cash
      flows from operating activities:Net
      Income
                    
                    $
                    690,323
                    
                    
                    $
                    894,690Adjustments
      to reconcile net income to net cashused
      in operating activities:Depreciation
      and amortization
                    
                    
                    352,054
                    
                    
                    
                    63,622Noncontrolling
      interest
                    
                    
                    (5,158
                    )
                    
                    
                    (80
                    )Changes
      in current assets and current liabilities:Accounts
      receivable
                    
                    
                    75,238
                    
                    
                    
                    (422,077
                    )Inventory
                    
                    
                    (1,357,491
                    )
                    
                    
                    (571,968
                    )Advance
      payments
                    
                    
                    138,122
                    
                    
                    
                    16,078Other
      current assets
                    
                    
                    45,108
                    
                    
                    
                    (2,941,106
                    )Accounts
      payable and accrued expenses
                    
                    
                    243,714
                    
                    
                    
                    (483,123
                    )Trade
      notes payable
                    
                    
                    (1,172,880
                    )
                    
                    
                    1,171,120Advances
      from customers
                    
                    
                    158,553
                    
                    
                    
                    -Income
      tax payable
                    
                    
                    248,904
                    
                    
                    
                    -Other
      taxes payable
                    
                    
                    (49,979
                    )
                    
                    
                    15,963Other
      current liabilities
                    
                    
                    339,267
                    
                    
                    
                    (140,227
                    )Total
      adjustments
                    
                    
                    (984,548
                    )
                    
                    
                    (3,291,798
                    )Net
      cash used in operating activities
                    
                    
                    (294,225
                    )
                    
                    
                    (2,397,108
                    )Cash
      flows from investing activities:Additions
      to property and equipment
                    
                    
                    (375,484
                    )
                    
                    
                    (29,135
                    )Additions
      to construction in progress
                    
                    
                    (159,391
                    )
                    
                    
                    (130,894
                    )Long-term
      investment
                    
                    
                    2,932
                    
                    
                    
                    -Loans
      to unrelated parties
                    
                    
                    559,117
                    
                    
                    
                    -Net
      cash provided by (used in) investing activities
                    
                    
                    27,174
                    
                    
                    
                    (160,029
                    )Cash
      flows from financing activities:Repayment
      of loans from unrelated party
                    
                    
                    (249,237
                    )
                    
                    
                    -Bank
      loan security deposits
                    
                    
                    585,752
                    
                    
                    
                    -Proceeds
      form minority shareholders
                    
                    
                    43,983
                    
                    
                    
                    -Proceeds
      (repayment) of short-term bank loans
                    
                    
                    (733,050
                    )
                    
                    
                    3,220,580Net
      cash provided by (used in) financing activities
                    
                    
                    (352,552
                    )
                    
                    
                    3,220,580Effect
      of foreign currency translation on cash
                    
                    
                    1,377
                    
                    
                    
                    80,510Net
      increase (decrease) in cash and cash equivalents and restricted
      cash
                    
                    
                    (618,226
                    )
                    
                    
                    743,953Cash
      and cash equivalents  and restricted cash –
      beginning
                    
                    
                    796,301
                    
                    
                    
                    353,049Cash
      and cash equivalents and restricted cash – ending
                    
                    $
                    178,075
                    
                    
                    $
                    1,097,002
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  8
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
1 – Organization and Nature of Business
 
 BEFUT International Co.,
Ltd., formerly Frezer, Inc. (“Frezer”), a former public shell company asdefined in Rule 12b-2 of the SecuritiesExchange
Actof 1934,
was established under the laws of Nevada on May 2, 2005.The
accompanying consolidated financial statements include the financial statements
of BEFUT
International Co., Ltd. and its subsidiaries(collectively,
the “Company”).The Company’s primary business
is to design and
manufacture industrial wires and cables.
 
 On March 13, 2009, Frezer
entered into and consummated a series of transactions whereby(a) Frezeracquired
100% of the outstandingshares of
common stock of Befut Corporation which
was incorporated in the State of Nevada on January 14, 2009 (“Befut
Nevada”),
constituting all of the capital stock of Befut Nevada, from Befut International
Co. Limited, a British Virgin Islandscompany
(“Befut BVI”) in exchange for the issuance to Befut BVI of a net number of
117,768,300 sharesof Frezer’s common
stock and the cancellationof an
aggregate of 2,176,170 shares of the Frezer’s common
stock and (b) Frezer raised
$500,000 in gross proceeds from the sale to four investors ofconvertible
promissory notes of Frezer in the
principal amount of $500,000 and warrants to purchase an aggregate of 720,076
shares of Frezer’scommon
stock.The
acquisition was accounted for as a reverse acquisition under the purchase method
for business combinations. On June 18, 2009, the Company effectuated a name
change from its original name “Frezer, Inc.” to “BEFUT International Co.,
Ltd.”.
 
 Hong Kong
BEFUT Co., Ltd. (“Befut Hong Kong”)was incorporated on
September 10, 2008 under the laws of Hong Kong. It is 100% owned by Befut
Nevada.On February 13, 2009, Befut Hong Kong invested 100% in Befut
Electric (Dalian) Co., Ltd. (“WFOE”) in the city of
Dalian, the People’s Republic of
China (the “PRC”).
 
 On
February 16, 2009, WFOE entered into a series of agreements, the purpose of
which was to restructure Dalian BefutWire & Cable
Manufacturing Co., Ltd. (“Dalian Befut”) in accordance with PRC law such
that itcould seek
capital and grow its business (the “Restructuring”). Dalian Befutwas
incorporated on June 13, 2002 under the laws of the PRC. The Restructuring includes
the following arrangements:First, WFOE entered into an Original
Manufacturer Agreement (the “OEM Agreement”) withDalian Befut
with the following material provisions: (i) Dalian Befut may not manufacture
products for any person or entity other than WFOE without itswritten
consent; (ii) WFOE is to provide all raw materials and advance related costs to
Dalian Befut, as well as provide design requirements for products to bemanufactured;
(iii) WFOE is responsible for marketing and distributing the products
manufactured by Dalian Befut and it keeps all related profits andrevenues; and
(iv) WFOE has an exclusive right to purchase whole or part of the assets and/or
equity of Dalian Befut to the extent permitted by the PRC law atthe sole
discretion of WFOE and at the mutually agreed price.In addition,
on February 16, 2009, WFOE entered into two ancillary agreements with Dalian
Befut: (i) Intellectual Property Rights License Agreement, pursuantto which WFOE
shall be permitted to use the intellectual property rights such as trademarks,
patents and know-how for the marketing and sale of the productsmanufactured
by Dalian Befut; and (ii) Non-competition Agreement, pursuant to which Dalian
Befut shall not compete against WFOE.
 
 On April
14, 2006, Dalian Marine Cable Co., Ltd. (“Dalian Marine Co.”) was incorporated
by Dalian Befut. Its current shareholders are Dalian Befut (having 86.6% of the
equity interest) and three individual shareholders. The three
individuals are also shareholders of Dalian Befut. Dalian Marine Co.is intended to
conduct marketing and production of marine cablesfor Dalian
Befut.
 
 On July
1, 2009, Dalian Befut formed a joint venture Befut Zhong Xing Switch Co., Ltd.
with a third party individual. Dalian Befut owns 70% of the equity interest in
Befut Zhong Xing Switch Co., Ltd.
  9
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
2 – Summary of Significant Accounting Policies
 
 Basis
Of Presentation
 
 The Company’s consolidated financial
statements include the accounts of its direct wholly-owned subsidiaries and of
its indirect proportionate share ofsubsidiariesowned by the wholly-owned
subsidiaries. All intercompany balances and transactions are eliminated in
consolidation.The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles (“GAAP”) applicable to
interim financial information and the requirements of Form 10-Q and Rule 10-01
of Regulation S-X of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. Interim results are not necessarily indicative of results
for a full year. In the opinion of management, all adjustments considered
necessary for a fair presentation of the financial position and the results of
operations and cash flows for the interim periods have been
included.
 
 Interim
Financial Statements
 
 These
interim financial statements should be read in conjunction with the audited
financial statements for the years ended June 30, 2009 and 2008, as not all
disclosures required by generally accepted accounting principles for annual
financial statements are presented. The interim financial statements follow the
same accounting policies and methods of computations as the audited financial
statements for the years ended June 30, 2009 and 2008.
 
 Recent
Accounting Pronouncements
 
 On July
1, 2009, the Financial Accounting Standards Board (“FASB”) officially launched
the FASB Accounting Standards Codification (“ASC”), which has
become the single official source of authoritative nongovernmental U.S. GAAP, in
addition to guidance issued by the Securities and Exchange Commission. The ASC is designed to
simplify U.S. GAAP into a single, topically ordered structure. All guidance
contained in the ASC carries an
equal level of authority. The ASC is effective
for all interim and annual periods ending after September 15, 2009.The Company’s
implementation of this guidance effective July 1, 2009 did not have a material
effect on the Company’s condensed consolidated financial
statements.
 
 Note
3– Inventory
 
 Inventory
at September 30, 2009 and June 30, 2009 consists of the following:
  September 30,
              
              
              June 30,2009
              
              
              2009Raw
      materials
              
              $
              1,694,225
              
              
              $
              400,343Work
      in process
              
              
              222,654
              
              
              
              60,703Finished
      goods
              
              
              796,825
              
              
              
              892,486Total
              
              $
              2,713,704
              
              
              $
              1,353,532
 
 Note
4– Loans to Unrelated Parties
 
 As ofSeptember 30,
2009 and June 30, 2009, the Company had
outstandingloans to unrelated partiesof $6,405,659 and
$6,955,623,
respectively. These
loans representadvancestounrelated
partiesat an annual
interest rate of50% above the
applicable bank interest rate. Interest payments are
made semi-annually with no principal paymentsrequireduntil on or before
the due date, as per the terms of the loan agreement.
  10
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
5– Advance Payments
 
 As a
common practice in Chinese business environment, the Company is often required
to make advances to certain vendors for inventory, equipment, and construction
in progress. The balances outstanding for advances on purchase of inventory
amounted to $285,839 and $224,196 as of September 30, 2009 and June 30, 2009,
respectively. Additionally, the Company made advances on equipment purchases
amounting to $443,890 and $642,672 as of September 30, 2009 and June 30, 2008,
respectively.
 
 Note
6– Property and Equipment
 `
 Property
and equipment at September 30, 2009 and June 30, 2009 consists of the
following:
 
 September 30,
                    
                    
                    June 30,2009
                    
                    
                    2009Buildings
                    
                    $
                    1,025,047
                    
                    
                    $
                    1,019,457Machinery
      and equipment
                    
                    
                    1,871,440
                    
                    
                    
                    1,663,732Office
      equipment and furniture
                    
                    
                    115,073
                    
                    
                    
                    57,770Vehicles
                    
                    
                    381,324
                    
                    
                    
                    272,327Subtotal
                    
                    
                    3,392,884
                    
                    
                    
                    3,013,286Less:
      Accumulated depreciation
                    
                    
                    1,175,016
                    
                    
                    
                    1,082,2712,217,868
                    
                    
                    
                    1,931,015Add:
      Construction in progress
                    
                    
                    16,897,568
                    
                    
                    
                    16,715,259Total
                    
                    $
                    19,115,436
                    
                    
                    $
                    18,646,274
 
 Depreciation
expense for the three months ended September 30, 2009 and 2008 was $91,212 and
$62,857, respectively.
 
 Note
7 – Intangible Assets
 
 Intangible
assets at September 30, 2009 and June 30, 2009 consist of the
following:
 
 September 30,
                    
                    
                    June 30,2009
                    
                    
                    2009Software
                    
                    $
                    16,071
                    
                    
                    $
                    16,049Well-known
      trademark
                    
                    
                    83,619
                    
                    
                    
                    83,505High-tech
      patent
                    
                    
                    11,554,158
                    
                    
                    
                    11,538,406Subtotal
                    
                    
                    11,653,848
                    
                    
                    
                    11,637,960Less:
      accumulated amortization
                    
                    
                    563,396
                    
                    
                    
                    301,982Total
                    
                    $
                    11,090,452
                    
                    
                    $
                    11,335,978
 
 Amortization
expense for the three months ended September 30, 2009 and 2008 was $260,842 and
$765, respectively.
  11
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
8 – Accounts Payable and Accrued Expenses
 
 Accounts
payable and accrued expenses at September 30, 2009 and June 30, 2009 consist of
the following:
 
 September 30,
                    
                    
                    June 30,2009
                    
                    
                    2009Accounts
      payable
                    
                    $
                    876,550
                    
                    
                    $
                    527,142Accrued
      expenses
                    
                    
                    27,166
                    
                    
                    
                    132,000Total
                    
                    $
                    903,716
                    
                    
                    $
                    659,142
 
 The
carrying value of accounts payable and accrued expenses approximates fair value
due to the short-term nature of these obligations.
 
 Note
9 – Short-Term Bank Loans
 
 Short-term
bank loans consist of the following:
  September 30,
                      
                      
                      June 30,2009
                      
                      
                      2009On
      July 31, 2008, the Company obtained a loan from GuangdongDevelopment
      Bank, of which the principal and interest were paid in full by July 30,
      2009.The
      interest was calculated using an annual fixed interest rate of
      9.98%and
      paid monthly. The loan was guaranteed by a third
      party. The guaranty was released upon the full repayment of the
      loan.
                      
                      $
                      -
                      
                      
                      $
                      586,000On
      August 27, 2008, the Company obtained a loan from Bank of
      Dalian,of
      which the principal and interest were paid in full by August 27, 2009. The
      interest  was calculated using an annual fixed interest rate of
      10.458% and paidmonthly.
      The loan was secured by a lien on the Company’s property and equipment,
      inventory and guaranteed by a third party. Upon the repayment in full of
      the loan, such lien and guaranty were released.
                      
                      $
                      -
                      
                      
                      $
                      2,856,750On
      November 21, 2008, the Company obtained a loan from Agricultural
      Bankof
      China, of which the principal was paid in full by August 20, 2009. The
      interestwas
      calculated using an annual fixed interest rate of 10.0485% and
      paidmonthly.
      The loan was secured by a lien on the Company’s property and equipment and
      guaranteed by a third party. Upon the repayment in full of the loan, such
      lien and guaranty were released.
                      
                      $
                      -
                      
                      
                      $
                      219,750On
      December 24, 2008, the Company obtained a loan from Shanghai
      PudongDevelopment
      Bank, of which the principal is to be paid in full by December
      24,2009.
      The  interest is calculated using an annual fixed interest rate
      of6.138%
      and paid quarterly. The loan is guaranteed by a third
    party.
                      
                      $
                      1,467,000
                      
                      
                      $
                      1,465,000On
      May 6, 2009, the Company obtained a loan from China Merchants
      Bank,of
      which the principal is to be paid in full by May 5, 2010. The
      interestis
      calculated using an annual fixed interest rate of 5.841% and
      paidmonthly.
      The loan is secured by a lien on the Company’s property and
      equipment.
                      
                      $
                      2,934,000
                      
                      
                      $
                      2,930,000On
      September 16, 2009, the Company obtained a loan from Harbin
      Bank,of
      which the principal is to be paid in full by September  15,
      2010. The interestis
      calculated using an annual fixed interest rate of 6.372% and
      paidmonthly.
      The loan is secured by a lien on the Company’s property and
      equipment.
                      
                      $
                      2,934,000
                      
                      
                      $
                      -Total
                      
                      $
                      7,335,000
                      
                      
                      $
                      8,057,500
  12
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
10 – Long-Term Bank Loan
 
 In
November 2006, the Company obtained a loan from Construction Bank of China for
the purchase of property. As per the terms of the loan agreement, the loan will
mature in November 2011. The interest rate is to be adjusted every twelve
months. As ofSeptember 30, 2009 and June 30, 2009, theoutstanding
loanbalance
was$5,477,778 and $5,470,310,
respectively. The annual interest ratefor the first and the second yearwasfixed at
8.6879% and 7.50312%, respectively.
The current interest rate is 6.947%.
 
 Note
11 –Earnings Per Share
 
 The
Company presents earnings per share on a basic and diluted basis. Basic earnings
per share are computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding. Diluted earnings per
share are computed by dividing income available to common shareholders by the
weighted average number of shares outstanding plus the dilutive effect of
potential securities. All shares and per share data have been adjusted
retroactively to reflect the recapitalization of
the Company pursuant to the Securities Exchange Agreement withBefut
Nevada.On
June 18, 2009, the Company effectuated a 1 for 4.07 reverse stock split of the
Company’s common stock, and previously reported shares and earnings per share
amounts have been recalculated accordingly.
 
 For the Three MonthsEndedSeptember30,2009
                                  
                                  
                                  2008Net
      income
                                  
                                  $
                                  690,323
                                  
                                  
                                  $
                                  894,690Weighted
      average common shares
                                  
                                  
                                  29,510,971
                                  
                                  
                                  
                                  29,488,341(denominator
      for basic earnings per share)Effect
      of dilutive securities:Convertible
      notes
                                  
                                  
                                  769,255
                                  
                                  
                                  
                                  -Weighted
      average common shares
                                  
                                  
                                  30,280,226
                                  
                                  
                                  
                                  29,488,341(denominator
      for diluted earnings per share)Basic
      earnings per share
                                  
                                  $
                                  0.02
                                  
                                  
                                  $
                                  0.03Diluted
      earnings per share
                                  
                                  $
                                  0.02
                                  
                                  
                                  $
                                  0.03
 
 Note
12– Stockholders’ Equity And Related Financing Agreements
 
 On March
13, 2009, as part of the reverse merger transaction, Frezer acquired, from Befut
BVI, 100% of the outstanding shares of common stock of Befut Nevada. In
exchange, Befut BVI was issued 117,768,300 shares of Frezer’s Common Stock,
under a Share Exchange Agreement (“SEA”) pursuant to a claim of exemption under
Section 4(2) of the Securities Act of 1933, as amended, for issuances not
involving a public offering. As a result of the transaction, Befut Nevada became
a wholly-owned subsidiary of Frezer.
 
 On March
13, 2009, the Company completed a private financing totaling $500,000, for which
convertible promissory notes were issued, with four accredited investors (the
“March 2009 Financing”). Consummation of the financing was a condition to the
completion of the share exchange transaction with Befut BVI and the Befut BVI
Stockholders under the Share Exchange Agreement. The securities offered in the
financing were sold pursuant to a Securities Purchase Agreement (the “Purchase
Agreement”) by and among Frezer and the investors named in the Purchase
Agreement (collectively, the “Investors”).
  13
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
12– Stockholders’ Equity And Related Financing Agreements
(continued)
 
 In
accordance with the Purchase Agreement, the Company issued a total securities
consisting of: (i) 3,130,869 shares of Frezer’s common stock $0.001 par value
per share in connection with the private financing; (ii) Five (5) year warrants
to purchase 720,076 shares of Frezer common stock at an initial exercise price
of $0.1916 per share.
 
 On June
18, 2009, the Company effectuated a 1 for 4.07 reverse stock split of its
outstanding common stock (the “Reverse Split”).  The Reverse Split did
not alter the number of shares of the common stock the Company is authorized to
issue, but rather simply reduced the number of shares of its common stock issued
and outstanding. Any fractional shares issued as a result of the Reserve Split
were rounded up. In addition, any shareholder owning at least 100 shares but
less than 407 shares of the Company’s common stock on June 17,2009,
would own at least 100 shares after giving effect to the Reverse
Split.
 
 Note
13– Income Taxes
 
 The
Company is a Nevada corporation and conducts all of its business through its
Chinese subsidiary and its affiliated Chinese operating companies. All business
is conducted in PRC. As the U.S. holding company has not recorded any income for
the three months ended September 30, 2009 and 2008, there was no provision or
benefit for U.S. income tax purpose.
 
 The
Company’s Chinese subsidiary and affiliated operating companies based in China
are governed by the Income Tax Law of the PRC concerning the private-run
enterprises, which are generally subject to tax at a new statutory rate of 25%
and were, until January 2008, subject to tax at a statutory rate of 33% (30%
state income tax plus 3% local income tax) on income reported in the statutory
statements after appropriate tax adjustments.
 
 On March
16, 2007, the National People’s Congress of China approved the Corporate Income
Tax Law of the PRC (the New CIT Law), which is effective from January 1, 2008.
Under the new law, the corporate income tax rate applicable to all Companies,
both domestic and foreign-invested companies, is 25%, replacing the previous
applicable tax rate of 33%. For the three months ended September 30, 2009, the
income tax provision by the Company was $248,904.
 
 Note
14 – Employee
Welfare Plan
 
 The
Company has established an employee welfare plan in accordance with Chinese laws
and regulations. Full-time employees of the Company in the PRC
participate in a government-mandated multi-employer defined contribution plan
pursuant to which certain pension benefits, medical care, unemployment
insuranceand other
welfare benefits are provided to employees. PRC labor regulations require the
Company to accrue for these benefits based on a certain percentage of the
employees’ salaries.
 
 Note
15 – Risk Factors
 
 For the
three months ended September 30, 2009 and 2008, two vendors accounted for
approximately 63% and 51% of the Company’s raw materials, respectively.
Purchases from these vendors were $3,057,510 and $2,759,862 for the three months
ended September 30, 2009 and 2008, respectively.
 
 For the
three months ended September 30, 2009, five customers accounted for
approximately 68% of the Company’s total sales. Sales to these customers
amounted to $3,715,811. For the three months ended September 30, 2008, five
customers accounted for approximately 61% of the Company’s total sales. Sales to
these customers amounted to $3,251,357.
 
 The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC as well as by the general
state of the PRC’s economy. The Company's business may also be influenced by
changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates
and methods of taxation, among other things.
  14
  BEFUT
INTERNATIONAL CO., LTD.
 
 Notes
to Consolidated Financial Statements
 September
30, 2009 and 2008
 (Unaudited)
 
 Note
16 - Concentrations of Credit Risk
 
 Financial
instruments which potentially subject the Company to credit risk consist
principally of cash on deposit with financial institutions. Management believes
that the financial institutions that hold the Company’s cash and cash
equivalents are financially sound and minimal credit risk exists with respect to
these investments.
 
 Note
17 – Supplemental Cash Flow Disclosures
 
 The
following is supplemental information relating to the consolidated statements of
cash flows:
 
 Three MonthsEnded September 30,2009
                    
                    
                    2008Cash
      paid for interest
                    
                    $
                    113,143
                    
                    
                    $
                    158,132Cash
      paid for income taxes
                    
                    $
                    -
                    
                    
                    $
                    72,723
 
 Note
18 - Subsequent Events
 
 On
November 2, 2009, Dalian Befut entered into a Loan Agreement (the “Loan
Agreement”) with the PRC National Development Bank Joint Equity Corporation
(“NDB”) pursuant to which Dalian Befut borrowed RMB100,000,000 (approximately
$14,640,000) from NDB (the “Loan”). Dalian Befut received the first tranche of
the proceeds from the Loan at the amount of RMB70,000,000 (approximately
$10,248,000) on November 9, 2009. The term of the Loan is seven years, maturing
on November 1, 2016. The interest rate will be a variable rate equal to 5% per
annum above the floating base interest for loans of the same term promulgated by
the PRC’s central bank, China People’s Bank. The Loan was designated to finance
the construction of Dalian Befut’s planned specialty cable production lines with
a production capacity of 15,000 tons. The Loan was secured by, among other
liens, a first priority lien on the Dalian Befut’s land use right and its
building property ownership and guaranteed by, among other guarantees, Mr. Cao,
and Mr. Li, Dalian Befut’s two major shareholders.
 
 15





Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations


The
following discussion of our financial condition and results of operations should
be read in conjunction with our consolidated financial statements and the notes
to those financial statements appearing elsewhere in this report.
 
 Certain
statements in this report constitute "forward-looking statements". Such
forward-looking statements include statements, which involve risks and
uncertainties, regarding, among other things, (a) our projected sales,
profitability, and cash flows, (b) our growth strategies, (c) anticipated trends
in our industries, (d) our future financing plans, and (e) our anticipated needs
for, and use of, working capital. They are generally identifiable by use of
the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,”
“potential,” “project,” “continuing,” “ongoing,” “expects,” “management
believes,” “we believe,” “we intend,” or the negative of these words or other
variations on these words or comparable terminology. Actual events or
results may differ materially from those discussed in forward-looking statements
as a result of various factors, including, without limitation, the risks and
matters described in this report generally. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this filing will in fact occur. You should not place undue reliance
on these forward-looking statements.
 
 The
forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events.
 
 Unless
the context indicates otherwise, as used in the following discussion, the words
"Company”, "we,” "us,” and "our,” each refer to (i) Befut International Co.,
Ltd. (f/k/a Frezer, Inc.) (the “Public Company”), a corporation incorporated in
the State of Nevada; (ii) BEFUT Corporation, a corporation incorporated in the
State of Nevada (“Befut Nevada”); (ii) Hongkong BEFUT Co., Ltd. (“Befut
Hongkong”), a wholly-owned subsidiary of Befut Nevada incorporated under the
laws of Hong Kong; (iii) Befut Electric (Dalian) Co., Ltd. (“WFOE”), a
corporation organized under the laws of the People’s Republic of China (the
“PRC”), a wholly-owned subsidiary of Befut Hongkong; (vi) Dalian Befut Wire and
Cable Manufacturing Co., Ltd. (“Dalian Befut”), a corporation incorporated under
the laws of the PRC, which is controlled by Dalian Befut through a series of
agreements; (vii) Dalian Marine Cable Co., Ltd., a corporation that is 86.6%
owned by Dalian Befut. (“Befut Marine”) and (viii) Befut Zhong Xing Switch Co.,
Ltd., a corporation that is 70% owned by Dalian Befut (“Befut Zhong
Xing”).
 
 Unless
the context otherwise requires, all references to (i)  “PRC” and
“China” are to the People’s Republic of China or mainland China; (ii) “U.S.
dollar,” “$” and “US$” are to United States dollars; and (iii) “RMB”, “Yuan” and
Renminbi are to the currency of PRC or China.
  16
 
 Overview
 
 We are
one of the largest developers, manufacturers and distributors of cable and wire
in northeastern China, headquartered in the city of Dalian. We are engaged in
the production of traditional cables, including metallurgy, electric power
system cables, and specialty cables, including marine cable, mine specialty
cable, nuclear cable, and petrochemical cable. We also have the technical
capability for the production of large-scale marine cable, a segment with
significantly higher profit margins. During the past decade, Dalian has become a
center for ship manufacturing plant construction.  Northeastern China
is a fast growing area with well-developed mining and oil industries due to its
rich resources of various mines and oil and gas. Most of our existing customers
are large scale companies with specialty cable needs in these industries.
Therefore, we are re-positioning our company from being a traditional cable
manufacturer to a specialty cable supplier.
 
 We sell
our products through a network of twenty-four salespeople based in Dalian and
sales branches in nine cities, such as Beijing, Shenyang, Tianjin, Jilin, Harbin
and Benxi, to facilitate the sales in those cities. These branches are staffed
with a total of twelve salespeople. In addition, we have contractual
arrangements with three distributors for the sale of our products. Normally, the
contracts with distributors are valid for one year. In fiscal year 2009, most of
our sales were generated by our full-time salespeople.
 
 Mining
and telecommunication construction in China have been progressing well. As such,
demand for the related specialty cables has increased, especially demand for
mining specialty cable which has a historical gross profit margin ranging from
35% to 45%.
 
 Recent
Developments
 
 As we
reported under Item 5 of Part II of this report, we received a bank loan of
approximately $14.64 million from the PRC National Development Bank Joint Equity
Corporation. We plan to use the net proceeds to purchase production lines, to
pay construction costs relating to our Changxing Island facility and for working
capital purposes associated with such construction and production
lines.
 
 In 2006,
we commenced the construction of a manufacturing plant in the industrial zone on
Changxing Island, which is 120 kilometers away from Dalian, for the main purpose
of specialty cable production. As of the date of this report, we have completed
the first phase of the construction, which includes 45,000 square meters of
construction space on a parcel of land of 65,000 square meters. The construction
includes production facility of 24,964 square meters, warehouse of 5,326 square
meters, office building of 8,264 square meters, and other supporting facilities
of 6,923 square meters (“Changxing Island Phase I Construction”). We have
obtained land use rights to land of 85,000 square meters of property for the
second phase of construction (“Changxing Island Phase II
Construction”).  We plan to commence our Changxing Island Project
Phase II Construction when our Changxing Island Project Phase I Construction
reaches full capacity in approximately three years or when we identify an
appropriate strategic partner, whichever comes earlier. The main purpose of
Changxing Island Phase II Construction is to expand our production capacity for
specialty cable by introducing strategic alliances, integrating technology and
industrial resources so as to make Dalian Befut the most competitive specialty
cable producer in China and at the same time strive to enter the international
cable market. After the completion of both phases, this project is anticipated
to occupy a total of 150,000 square meters, with building construction of 87,000
square meters. We expect Changxing Island Phase I Construction to be operational
by the end of 2009.
  17
 
 On July
1, 2009, Dalian Befut formed a new company under the laws of the PRC, Befut
Zhong Xing, by investing approximately $100,000 (RMB700,000) for a 70% equity
interest in the new entity. The remaining 30% equity interest is held by an
individual. By setting up Befut Zhong Xing, we aim to enter into the switch
appliance market as a number of our cable customers have demonstrated certain
demand for switch products.
 
 Organizational
History
 
 As we
reported in our Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 19, 2009, we entered into and consummated a series
of transactions on March 13, 2009, whereby (a) we acquired 100% of the
outstanding shares of common stock of Befut Nevada, from Befut International Co.
Limited, a British Virgin Islands company (“Befut BVI”) in exchange for the
issuance to Befut BVI of 117,768,300 shares of our common stock and the
cancellation of 2,176,170 shares of our common stock (the “Reverse Merger”) and
(b) we raised $500,000 in gross proceeds from the sale to four investors of
convertible promissory notes in the principal amount of $500,000 and warrants to
purchase an aggregate of 720,076 shares of our common stock (the “Private
Placement”). Befut BVI owns all the shares of Befut Hongkong and Befut Hongkong
is the sole shareholder of WFOE, which controls Dalian Befut through a series of
agreements. Dalian Befut owns 86.6% of the outstanding equity of Befut Marine.
In addition, Dalian Befut owns 70% of the outstanding equity of Befut Zhong Xing
since July 1, 2009.
 
 As a
result of the Reverse Merger, we, through WFOE, Dalian Befut and Befut Marine,
are engaged in the production of traditional cables, including metallurgy,
electric power system cables and specialty cables, including marine cable, mine
specialty cable, nuclear cable, and petrochemical cable.
 
 Effective
June 18, 2009, we changed our corporate name from “Frezer, Inc.” to “BEFUT
International Co., Ltd.” We also effectuated a 1-for-4.07 reverse stock split of
our outstanding common stock. As a result of the corporate name change and the
reverse stock split, our ticker symbol was changed to BFTI.OB.
 
 Results
of Operations
 
 Three
months ended September 30, 2009 compared to the three months ended September 30,
2008.
 
 For the Three
      Months EndedSeptember 30,
                          2009
                        
                        
                        September 30,
                          2008Sales
                        
                        $
                        5,483,659
                        
                        
                        $
                        5,286,220Cost
      of sales
                        
                        $
                        3,862,774
                        
                        
                        $
                        3,963,966Total
      operating expenses
                        
                        $
                        610,158
                        
                        
                        $
                        234,438Other
      income/(expense)
                        
                        $
                        (76,658
                        )
                        
                        $
                        (120,483
                        )Income
      taxes
                        
                        $
                        248,904
                        
                        
                        $
                        72,723Net
      income
                        
                        $
                        690,323
                        
                        
                        $
                        894,690Foreign
      currency translation adjustment
                        
                        $
                        47,807
                        
                        
                        $
                        121,027Comprehensive
      income
                        
                        $
                        738,130
                        
                        
                        $
                        1,015,717
  18
 
 Sales
 
 Our sales
for the three months ended September 30, 2009 were $5,483,659, an increase
of $197,439, or 3.7%, as compared to the three months ended September 30, 2008.
The increase was primarily due to stronger costumer demand as the global
economic environment, is recovering.
 
 For the
three months ended September 30, 2009, our sales of specialty cable as
percentage of total sales increased significantly to 61%, from 46% in the
three months ended September 30, 2008. We continue to maintain our strategy to
manufacture more high margin specialty cables than traditional
cables.
 
 In the
first half of the fiscal year ended June 30, 2009, as a direct impact of the
global financial crisis, orders from ship manufacturers and steel refining
companies decreased dramatically. In the second half of the fiscal year, we
adjusted our marketing strategy to temporarily refocus on traditional coal cable
until the economic environment in China recovers. Beginning in June 2009 and
during the three months ended September 30, 2009, demand for our specialty
cables, such as marine cable, increased dramatically which led to higher sales
of specialty cables.  As a result, for the three months ended
September 30, 2009, sales for specialty cables approximately represented a
greater percentage of our total sales than in the three months ended
September 30, 2008 and for the fiscal year ended June 30, 2009. Sales of our
marine cable products for the three months ended September 30, 2009
significantly increased and reached 27.6% of total sales as compared to 5.58% of
total sales for the three months ended September 30, 2008.  We plan to
continue to devote more resources toward developing, marketing and selling high
margin specialty cables as part our long-term business strategy.
 
 Cost of
Sales
 
 Cost of
sales is primarily comprised of the cost of raw materials used in the production
of our cable products, direct labor and manufacturing overhead expenses. Our
cost of sales for the three months ended September 30, 2009 was $3,862,774, a
decrease of $101,192, or 2.6%, as compared to the three months ended September
30, 2008. This was primarily due to higher specialty cable products sales during
the three months ended September 30, 2009 as compared to its corresponding
period. Specialty cable products have relatively lower cost than traditional
cable products.
 
 Gross
Profit
 
 Our gross
profit is the difference between sales and cost of sales. Our gross profit for
the three months ended September 30, 2009 was $1,620,885, an increase of
$298,631, or 22.6%, as compared to the three months ended September 30, 2008.
Gross profit as a percentage of sales was 29.6% for the three months ended
September 30, 2009, as compared to 25.0% for the three months ended September
30, 2008. This was due to the shift in our product mix toward higher sales of
specialty cable products, which have gross profit margins ranging from 35% to
45%. The gross margin of marine cable for the three months ended September
30 was 36.9%, compared to 30.1% for the three months ended September 30,
2008.
  19
 
 Selling,
General and Administrative Expenses
 
 Our
selling, general and administrative expenses consist primarily of salaries and
bonus of sales personnel, advertising and promotion expenses, freight charges,
related compensation and professional fees. Selling expenses were $21,875 in the
three months ended September 30, 2009 as compared to $30,351 in the three months
ended September 30, 2008, a decrease of $8,478. General and administrative
expenses were $588,285 for the three months ended September 30, 2009, an
increase of $384,198, or 188.3%, as compared to the three months ended
September 30, 2008. Such increase was primarily due to the amortization expense
related to intangible assets we acquired in the third and fourth quarters of
fiscal 2009.
  Income from
Operations
 
 Our
operating income was $1,010,727 for the three months ended September 30,
2009, a decrease of $77,089, or 7.0% as compared to the three months ended
September 30, 2008, primarily a result of the significant increase in
general and administrative expense related to the amortization of the intangible
assets acquired in the third and fourth quarters of fiscal 2009, partially
offset by increase in gross profit of our main business.
 
 Government
Subsidy
 
 For the
past two years we received a subsidy from the Chinese local government due to
our employment of disabled workers. In the three months ended September 30, 2009
we received a subsidy in the amount of $49,954 as compared to a subsidy of
$59,070 in the three months ended September 30, 2008.
 
 This
subsidy is determined by the local government on a yearly basis and no
assurances can be given that we will continue to receive the
subsidy.
 
 Income
Taxes
 
 Our
business operations were solely conducted by our subsidiaries incorporated in
the PRC and we were governed by the PRC Enterprise Income Tax Laws. China
enterprise income tax is calculated based on taxable income determined under
Chinese GAAP. In accordance with the PRC Income Tax Laws, a Chinese domestic
company is subject to the following taxes, including but not limited to: (i)
enterprise income tax rate of 25% effective from January 1, 2008; and (ii) value
added tax at the rate of 17% for most of the goods sold.
  20
 
 Provision
for income taxes was $248,904 for the three months ended September 30,
2009, an increase of $176,181, or 242%, compared to the three months ended
September 30, 2008. Such increase was primarily due to the fact that Dalian
Befut was subject a full 25% income tax rate in the three months ended September
30, 2009 while it paid income tax at a lesser ratio in the corresponding period
ended September 30, 2008.
 
 Net
Income
 
 Net
income for the three months ended September 30, 2009 was $690,323, a decrease of
$204,367, or 22.8%, compared to net income of $894,690 for the three
months ended September 30, 2008. The decrease was mainly attributable to an
increase in general and administrative expenses of $384,198 and an increase in
provision for income taxes of $176,181, which was partially offset by a $298,631
increase in gross profit.
 
 Liquidity
and Capital Resources
 
 Selected
Measures of Liquidity and Capital Resources
 
 The
following table sets forth certain relevant measures regarding our liquidity and
capital resources:
 
 (dollars, except ratios and per common share data)
                    
                    September 30,
                      2009
                    
                    
                    June 30,
                      2009Cash
      and cash equivalents and restricted cash
                    
                    $
                    178,075
                    
                    
                    $
                    796,301Working
      capital
                    
                    $
                    10,598,069
                    
                    
                    $
                    10,033,815Ratio
      of current assets to current liabilities
                    
                    1.9:1
                    
                    
                    1.8:1
 
 The small
increase in working capital as of September 30, 2009 as compared to June 30,
2009 was primarily due to the increase in inventory and the decrease in
short-term bank loans, trade notes payable, and loans from unrelated party,
partially offset by a decrease in restricted cash and increases in accounts
payable, accrued expenses, income tax payable and other current liabilities. In
the three months ended September 30, 2009, we increased inventory, mainly raw
materials, to meet anticipated higher customer demand in future
quarters.
 
 Cash
Flows
 
 We had a
net decrease in cash, cash equivalents and restricted cash from $796,301 in
June 30, 2009 to $178,075 in September 30, 2009 as compared to a net increase
from $353,049 in June 30, 2008 to $1,097,002 in September 30, 2009,
respectively.  The following table summarizes such
changes:
  21
 
 For the Three Months EndedSeptember 30,
                    
                    
                    September 30,2009
                    
                    
                    2008Net
      cash used in operating activities
                    
                    
                    (294,225
                    )
                    
                    
                    (2,397,108
                    )Net
      cash provided by (used in) investing activities
                    
                    
                    27,174
                    
                    
                    
                    (160,029
                    )Net
      cash provided by/(used in) financing activities
                    
                    
                    (352,552
                    )
                    
                    
                    3,220,580Effect
      of exchange rate change on cash
                    
                    
                    1,377
                    
                    
                    
                    80,510Net
      increase (decrease) in cash and cash equivalents and restricted
      cash
                    
                    
                    (618,226
                    )
                    
                    
                    743,950
 
 The net
decrease in cash this quarter was primarily due to pay back of a bank loan of
approximately $733,000 and purchase more raw materials for possibly producing
more products. We have historically financed our operations and capital
expenditures principally through cash provided by operations and bank loans. Our
management believes that we have sufficient cash, along with projected cash to
be generated from operations to support our current operations for the next
twelve months. In November 2009, we obtained a bank loan of approximately
$14.7 million from National Development Bank Joint Equity Corporation. We plan
to use the net proceeds of the loan to purchase new production lines and pay the
remaining balance of our Changxing Island Phase I Construction costs of
(approximately of $1.5 million). The remaining proceeds will be used for
working capital associated with the new production lines.
 
 Operating
Activities
 
 During
the three months ended September 30, 2009, we used net cash in operating
activities of $294,225, as compared to $2,397,108 in the three months ended
September 30, 2008. This decrease was primarily due to a $2,986,214 decline in
cash used in other current assets and a $497,315 decline in cash used in
accounts receivable, which was partially offset by increased cash used in
inventory and trade notes payable.
 
 Investing
Activities
 
 During
the three-months ended September 30, 2009, we generated net cash in
investing activities of $27,174, which represented an increase of $187,205 as
compared to cash of $160,029 used in investing activities in the three
months ended September 30, 2008. This increase was principally due to an
increase in loans to unrelated parties of $559,117, which was partially
offset by increased cash used for property and equipment of
$346,349.
 
 Financing
Activities
 
 During
the three months ended September 30, 2009, we used net cash in financing
activities of $352,552, which represented a decrease of $3,573,132 as compared
to net cash of $3,220,580 provided by financing activities in the three months
ended September 30, 2008. This decrease principally reflects that we repaid a
bank loan $733,050 in the three months ended September 30, 2009, as compared to
additional borrowings of $3,220,580 in the three months ended September 30,
2008.
  22
 
 Financial
Obligation
 
 As of
September 30, 2009, our outstanding loans were as follows:
 
 Creditors
                              
                              Loan
                                Amount
                              
                              
                              Interest Rate
                              
                              Term
                              
                              Maturity DateHarbin
      Bank
                              
                              
                              2,934,000
                              
                              
                              
                              6.372
                              %
                              1
      year
                              
                              09/15/10Shanghai
      Pudong Development Bank
                              
                              
                              1,467,000
                              
                              
                              
                              6.138
                              %
                              1
      year
                              
                              12/24/09China
      Merchants Bank
                              
                              
                              2,934,000
                              
                              
                              
                              5.841
                              %
                              1
      year
                              
                              05/05/10Construction
      Bank of China
                              
                              
                              5,477,778
                              
                              
                              To be adjusted
                                every 12 months
                              
                              5
      year
                              
                              
                              11/2011Total
                              
                              $
                              12,812,778
  Accounts
Receivable
 
 We had
$8,496,994 in accounts receivable, net of allowance for doubtful accounts of
$20,250 as of September 30, 2009, compared to $8,560,592, net of allowance for
doubtful account of $20,222 as of June 30, 2009.
 
 Inventories
 
 Inventories
consisted of the following as of September 30, 2009 and June 30, 2009,
respectively:
 
 (dollars)
                          
                          September 30,
                            2009
                          
                          
                          June
      30,
                            2009(dollars)CategoryRaw
      materials
                          
                          $
                          1,694,225
                          
                          
                          $
                          400,343Work-in-process
                          
                          
                          222,654
                          
                          
                          
                          60,703Finished
      goods
                          
                          
                          796,825
                          
                          
                          
                          892,486Total
      inventories
                          
                          $
                          2,713,704
                          
                          
                          $
                          1,353,532
 
 We had
total inventory of $2,713,704 as of September 30, 2009, an increase of
$1,360,172,  or 100.4%, compared to $1,353,532 as of June 30, 2009.
The increase, was primarily due to the increases in raw material and
work-in-process, to meet anticipated higher customer demand.
 
 Intangible
Assets
 
 There was
no significant change in intangible assets during the three months ended
September 30, 2009 as compared to the year ended June 30, 2009.
  23
 
 Loan to
Third Parties
 
 We had a
net decrease of $549,964 in loans to unrelated parties as of September 30, 2009
compared as June 30, 2009. Between 2009 and 2008, we entered into four separate
loan agreements with our important business alliances, which permitted them to
borrow principal up to RMB51 million (approximately $7.5 million) at an annual
interest rate 50% more than the latest primary loan rate of banks in China.
These loans are secured by a lien on each borrower’s accounts receivables and
fixed assets and the loans have terms ranging from one to four
years.
  Off-Balance
Sheet Arrangements
 
 At
September 30, 2009, we did not have any off-balance sheet
arrangements.
 
 Critical
Accounting Policies
 
 Revenue
Recognition
 
 Sales
revenue, is recognized at the date of shipment to customers, at which time title
passes to customer provided that there are no uncertainties regarding customer
acceptance, persuasive evidence of formal arrangement exists, the sales price is
fixed and determinable, the delivery is completed, no other significant
obligations of the Company exist and collectability is deemed probable. Payments
received before all of the relevant criteria for revenue recognition are
satisfied are recorded as unearned revenue.
 
 Use of
Estimates and Assumption
 
 In
presenting our financial statements in conformity with generally accepted
accounting principles, we are required to make estimates and assumptions that
affect the amounts reported therein. Several of the estimates and assumptions we
are required to make relate to matters that are inherently uncertain as they
pertain to future events.  However, events that are outside of our
control cannot be predicted and, as such, they cannot be contemplated in
evaluating such estimates and assumptions.  If there is a significant
unfavorable change to current conditions, it could result in a material adverse
impact to our consolidated results of operations, financial position and
liquidity.  We believe that the estimates and assumptions we used when
preparing our financial statements were the most appropriate at that time. See
Note 2 to our consolidated financial statements, “Basis of Presentation and
Summary of Significant Accounting Policies.” While there have been no material
changes to our critical accounting policies as to the methodologies or
assumptions we apply under them, we continue to monitor such methodologies and
assumptions.
 
 Cash and
Cash Equivalents
 
 For
statement of cash flows purposes, we consider all cash on hand and in banks,
certificates of deposit and other highly-liquid investments with maturities of
three months or less, when purchased, to be cash and cash
equivalents.
  24
 
 Accounts
Receivable
  Accounts
receivable are stated at the amount management expects to collect from balances
outstanding at the end of period. Periodically management assesses customer
credit history and relationships as well as performs accounts receivable aging
analysis. Based on the results, management determines whether certain balances
are deemed uncollectible at the end of period. Using its past collection
experience, the Company establishes allowance for doubtful accounts using the
following formula: 0.3% of accounts receivable balances outstanding at the end
of period.
  25




Item
      4T.
            Controls
      and Procedures




(a)            Evaluation of disclosure controls
and procedures. At the conclusion of the period ended September 30, 2009
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 such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that as of the end of the period covered by this report, our
disclosure controls and procedures were effective and adequately designed to
ensure that the information required to be disclosed by us in the reports we
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the applicable rules and forms and that
such information was accumulated and communicated to our Chief Executive Officer
and Chief Financial Officer, in a manner that allowed for timely decisions
regarding required disclosure.





(b)  Changes in internal controls.
During the period covered by this report, there was no change in our internal
control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that has materially affected, or is reasonably
likely to materially affect our internal control over financial
reporting.





PART
II       OTHER INFORMATION





Item
      5.
            Other
      Information





$14.64
million  Loan Facility:





On
November 2, 2009, Dalian Befut (the “Borrower”) entered into a Loan Agreement
(the “Loan Agreement”) and other loan documentation with the PRC National
Development Bank Joint Equity Corporation (“NDB”, or the “Lender”) pursuant to
which Dalian Befut borrowed RMB 100,000,000 (approximately $14,640,000) (the
“Loan”) from NDB to finance the construction of its planned specialty cable
production lines with a production capacity of 15,000 tons (the
“Project”).


26





The term
of the Loan is seven years, maturing on November 1, 2016.





The
outstanding principal balance bears interest from the date of the Loan Agreement
until the Loan is fully repaid.  The interest rate will be a variable
rate equal to 5% per annum above the floating base interest for loans of the
same term promulgated by the PRC’s central bank, China People’s Bank (the
“Interest”). Any principal balance under the Loan that is not paid when due will
be subject to a default rate of 130% of the Interest.  If the proceeds
of the Loan are used for any purpose other than financing the Project, the
interest shall be increased to 150% of the Interest.





Interest
on the Loan is payable on a quarterly basis, in the months of March, June,
September and December.





The
proceeds of the Loan are being funded to the Borrower in two tranches:
RMB70,000,000 (approximately $10,248,000) were funded on November 9, 2009 and
RMB30,000,000 (approximately $4,392,000) will be funded on January 4,
2010.





The
following is the repayment schedule of the principal amount of the
Loan:





Repayment Date
                        
                        Repayment Principal AmountRMB (The Official
                          Currency in the PRC)
                        
                        
                        USD Equivalence (approximate
                          number using the exchange rate
      RMB1=$0.1464on November 2, 2009, only forreference purpose)10/30/2010
                        
                        
                        2,000,000
                        
                        
                        
                        292,80004/30/2011
                        
                        
                        2,000,000
                        
                        
                        
                        292,80010/30/2011
                        
                        
                        3,000,000
                        
                        
                        
                        439,20004/30/2012
                        
                        
                        4,000,000
                        
                        
                        
                        586,60010/30/2012
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00004/30/2013
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00010/30/2013
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00004/30/2014
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00010/30/2014
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00004/30/2015
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00010/30/2015
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00004/30/2016
                        
                        
                        10,000,000
                        
                        
                        
                        1,464,00010/30/2016
      (maturity date)
                        
                        
                        9,000,000
                        
                        
                        
                        1,317,600





The Loan
Agreement permits the Borrower to prepay the outstanding principal amount and
all accrued but unpaid interest and fees. Prepayments must be made in a minimum
installments of RMB10,000,000 (approximately $1,464,000). In addition, the
Lender is entitled to receive a prepayment fee equal an amount determined as
follows:


27





Prepayment
Fee = Prepayment Amount×the number of days earlier than the scheduled due date
pursuant to the Loan Agreement×the Interest/360×20%.





Under the
Loan Agreement, the Borrower is subject to specified covenants, including the
obligations to deliver to the Lender the annual status report of the
construction of the Project, audited financial statements of the Borrower, and
certain other events.





The Loan
is secured by the following:





(i). A
first priority lien on the Borrower’s land use right for a 151,243-square-meter
parcel of land and Dalian Befut’s ownership on its buildings of 43,144.61 square
meters;





(ii). A
first priority lien of deposit accounts holding of RMB8,000,000 (approximately
$1,171,200) of the Borrower at the Lender;





(iii). A
pledge of 100% of the shares of Dalian Befut by Mr. Hongbo Cao, our CEO and Mr.
Tingmin Li, Dalian Befut’s main shareholder;





(iv). A
first priority lien on facilities at the value of RMB45,725,600 (approximately
$6,694,228) Dalian Befut is to purchase for the Project by using part of the
Loan.





In
addition, the following parties provided guaranties of the Loan on Borrower’s
behalf:





(i).
Dalian Baocheng Credit Unit provided its guarantee for RMB 50,000,000
(approximately $7,320,000);





(ii).
Dalian Dingli Credit Unit provided its guarantee for RMB 5,000,000
(approximately $732,000);





(iii).
Mr. Tingmin Li and Mr. Hongbo Cao each provided personal unlimited liability
guarantees.





The Loan
Agreement contains the following events of defaults: (1) failing to use the fund
for the set purpose; (2) failing to pay any of the principals and/or interests
when due under the Loan Agreement; (3) failing to comply with its covenant in
disclosing its financial statements to the Lender on regular basis; (4) failing
to inform the Lender of its major corporate restructuring activities such as
mergers and acquisitions, investing into other companies and equity transfers;
(5) failing to make up the value of the pledged properties when such property’s
value decreased to the extent that threatens the safety of the Loan; (6)
breaching other loan agreements; (7) failure to keep the progress of the Project
the same pace as the use of the Loan. If the Borrower defaults, the Lender has
the right, to take actions, including (i) suspending the release of subsequent
funds and accelerating the amounts outstanding under the Loan Agreement among
other remedies.


The Loan
Agreement contains customary representations, warranties, covenants, and
agreements.


28





We intend
to file a copy of the Loan Agreement and other loan documents as exhibits to our
next Quarterly Report on Form 10-Q.





Item
      6.
            Exhibits





The
exhibits required by this item are set forth in the Exhibit Index attached
hereto.


29


SIGNATURES





Pursuant
to the requirements of the Securities Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.





BEFUT
      INTERNATIONAL CO., LTD.Date:
      November 16, 2009
              By:
              /s/Hongbo CaoName:
      Hongbo CaoTitle:
      President and Chief Executive Officer(principal
      executive officer)Date:
      November 16, 2009
              By:
              /s/ Mei YuName:
      Mei YuTitle:
      Chief Financial Officer(principal
      financial officer and principal accounting
  officer)


30


EXHIBIT
INDEX





No.
                
                Description31.1
                –
                Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2
                –
                Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
                –
                Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.32.2
                –
                Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.




31