**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington, D.C.
      20549**


**Form 10-K**


**(Mark
      One)**


**x**  **ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


**For
      the fiscal year ended December 31, 2007**


**OR**


** ̈**  **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: 000-31539**





**Bodisen
      Biotech, Inc.**


**(Exact
      name of registrant as specified in its charter)**


**Delaware**
            **98-0381367****(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            **(I.R.S.
                Employer**
              **Identification
                No.)**




**Room
      2001, FanMei Building**


**No.
      1 Naguan Zhengjie**


**Xi’an,
      Shaanxi 710068**


**People’s
      Republic of China**


**(Address
      of principal executive offices, including ZIP Code)**




**+86.29.87895373**


**(Registrant’s
      telephone number, including area code)**


**Securities
      registered pursuant to Section 12(b) of the Act: None**




**Securities
      registered pursuant to Section 12(g) of the Act: Common
      Stock**





Indicate
      by check if the registrant is a well-known seasoned issuer, as defined in Rule
      405 of the Act:    Yes  ̈ No x




Indicate
      by check if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the
      Act:    Yes  ̈ No x




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past
      90 days:    Yes x No  ̈




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the
      best of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any
      amendment to this Form 10-K.  ̈




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. (Check one):


Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated
                filer ̈
              (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  ̈ No x




As
      of
      June 29, 2007, the aggregate market value of the registrant’s common stock
      held by non-affiliates was $43,941,352 based on the closing price ($2.60) for
      the registrant’s common stock, on such date.




As
      of
      April 14, 2008, the registrant had 18,310,520 shares of common stock
      outstanding.




**DOCUMENTS
      INCORPORATED BY REFERENCE**




None





**TABLE
      OF CONTENTS**




**Page****PART I**Item
                1.
            BUSINESS
            1Item 1A.
            RISK
                FACTORS
            10Item 1B.
            UNRESOLVED
                STAFF COMMENTS
            17Item
                2.
            PROPERTIES
            17Item
                3.
            LEGAL
                PROCEEDINGS
            17Item
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            18**PART
                II**Item
                5.
            MARKET
                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY SECURITIES
            19Item
                6.
            SELECTED
                FINANCIAL DATA
            20Item
                7.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            21Item
                7A.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            25Item
                8.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA
            26Item
                9.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            27Item
                9A(T).
            CONTROLS
                AND PROCEDURES
            27Item
                9B.
            OTHER
                INFORMATION
            28**PART
                III**Item
                10.
            DIRECTORS,
                EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            29Item
                11.
            EXECUTIVE
                COMPENSATION
            31Item
                12.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            33Item
                13.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
                INDEPENDENCE
            34Item
                14.
            PRINCIPAL
                ACCOUNTING FEES AND SERVICES
            34**PART
                IV**Item
                15.
            EXHIBITS,
                FINANCIAL STATEMENT SCHEDULES
            37SIGNATURES
            38EXHIBIT
                INDEX
            39




ii




As
      used
      in this annual report, the terms “we,” “us,” “our,” the “Company” and “Bodisen”
mean Bodisen Biotech, Inc., a Delaware corporation, and its subsidiaries (unless
      the context indicates a different meaning). Bodisen is a trademark of Bodisen
      Biotech, Inc. All other company names and trademarks included in this annual
      report are trademarks, registered trademarks or trade names of their respective
      owners.





**NOTE
      REGARDING FORWARD-LOOKING STATEMENTS**





This
      annual report contains “forward-looking statements” - that is, statements
      related to future, not past, events. In this context, forward-looking statements
      often address our expected future business and financial performance, and often
      contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,”
“seek,” or “will.” Forward-looking statements by their nature address matters
      that are, to different degrees, uncertain. For us, particular uncertainties
      that
      could adversely or positively affect our future results include: our business
      strategy; expectations of market and customer response; liquidity and capital
      expenditures; future sources of revenues; expansion of our proposed product
      line; government policies in the People’s Republic of China; trends in industry
      activity generally and litigation concerning the matters surrounding our
      delisting from the American Stock Exchange, or Amex, as well as litigation
      concerning our ownership of shares in China Natural Gas. These uncertainties
      may
      cause our actual future results to be materially different than those expressed
      in our forward-looking statements. Any “forward-looking statements” contained in
      this report are only predictions and involve known and unknown risks,
      uncertainties and other factors, including, but not limited to, the risks
      outlined under “Risk Factors,” that may cause our or our industry’s actual
      results, levels of activity, performance or achievements to be materially
      different from any future results, levels of activity, performance or
      achievements expressed or implied by such forward-looking statements. Although
      we believe that the expectations reflected in the forward looking statements
      are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements. We undertake no obligation to update or revise any
      forward-looking statements other than as required by applicable law or
      regulations.


iii




**PART
      I**




**ITEM
      1.**  **BUSINESS**





**Overview
      of Business**





We
      are
      engaged in developing, manufacturing and selling organic fertilizers, liquid
      fertilizers, pesticides and insecticides in the People’s Republic of China, and
      have developed a product line of over 60 items. We manufacture our proprietary
      product lines, which are then marketed and sold to distributors, which
      distributors in turn sell our products to farmers. In addition to our
      manufacturing and sales and marketing efforts, we conduct research and
      development to further improve existing products and to develop new formulae
      and
      products.





Bodisen
      Biotech, Inc. was incorporated on January 14, 2000, and our current structure
      is
      the result of a series of mergers and other combinations, including a reverse
      triangular merger with our predecessor, Stratabid.com, Inc. As a result of
      these
      transactions, Bodisen Biotech, Inc. owns 100% of Bodisen Agricultural Technology
      Co., Ltd., or “Bodisen Agricultural,” which in turn owns 100% of Yang Ling
      Bodisen Biology Science and Technology Development Company Limited, or “Yang
      Ling.” Yang Ling, which is our sole operating subsidiary, is located in the
      People’s Republic of China. Further details regarding these transactions are
      provided below in the summary of our history.





Our
      over
      60 products cover three categories: organic compound fertilizers, liquid
      fertilizers, and pesticides and insecticides. Organic compound fertilizer
      products are our leading product category, accounting for approximately 48.6%
      of
      our revenue in 2007. Liquid fertilizers accounted for approximately 34.9% of
      our
      revenue in 2007. Pesticides and insecticides accounted for approximately 16.5%
      of our revenue in 2007.





We
      currently distribute our products solely in the People’s Republic of China, and
      our products are currently sold within a group of approximately 20 Chinese
      agricultural provinces and government-controlled cities. Approximately 80%
      of
      our sales are attributable to the local Shaanxi province, 8% of sales are
      attributable to Henan province, and 5% of sales are attributable to Shanxi
      province. We also sell a smaller percentage of our products to additional
      provinces and government-controlled cities, including Ningxia province,
      Guangdong province and Heilongjian province.





**History
      and Company Structure**





Bodisen
      Biotech, Inc. was incorporated on January 14, 2000 in Delaware, and our
      principal place of business is based in the People’s Republic of China. Our
      principal executive offices are located at: Room 2001, FanMei Building, No.
      1
      Naguan Zhengjie, Xi’an, Shaanxi, China, 7100068. Our telephone number is
      +86.29. 87895373. Our
      current structure is the result of a series of mergers and other combinations,
      including a reverse triangular merger with our predecessor, Stratabid.com,
      Inc.
      A summary of these transactions is provided below.





Prior
      to
      March 1, 2004, we were called Stratabid.com, Inc., which was a startup stage
      Internet-based commercial mortgage origination business. We operated primarily
      through our wholly-owned subsidiary, Stratabid.com Online (B.C.) Ltd., or
“Stratabid.com Online,” which provided services in Canada.





Our
      sole
      operating subsidiary, Yang Ling, was founded in the People’s Republic of China
      on August 31, 2001. Yang Ling, which is located in the Yang Ling Agricultural
      High-Tech Industries Demonstration Zone, was primarily engaged in developing,
      manufacturing and selling pesticides and compound organic fertilizers in the
      People’s Republic of China. On November 19, 2003, Yang Ling incorporated Bodisen
      International, Inc., or “Bodisen International,” a Delaware corporation, as a
      non-operative holding company.





On
      December 15, 2003, Bodisen International entered in to an agreement with all
      of
      the stockholders of Yang Ling to exchange all of the outstanding stock of
      Bodisen International for all of the issued and outstanding stock of Yang Ling.
      After the consummation of the transaction, the former stockholders of Yang
      Ling
      owned 1,500 shares of common stock of Bodisen International, which represented
      100% of Bodisen International’s issued and outstanding shares, and Bodisen
      International owned 100% of Yang Ling. For U.S. federal income tax purpose,
      the
      transaction was intended to be qualified as a tax-free transaction under section
      351 of the Internal Revenue Code of 1986, as amended.





1








We
      accounted for the exchange of shares with Yang Ling as a reverse acquisition
      under the purchase method of accounting because the stockholders of Yang Ling
      obtained control of the consolidated entity. Accordingly, the merger of the
      two
      companies was recorded as a recapitalization of Yang Ling, with Yang Ling being
      treated as the continuing entity.





On
      January 14, 2004, we created a wholly-owned subsidiary corporation currently
      known as Bodisen Holdings, Inc., a Delaware corporation, or “Bodisen Holdings”
(formerly Bodisen Acquisition Corp.), to pursue a merger with Bodisen
      International, the parent of Yang Ling. On February 11, 2004, we and Bodisen
      Holdings entered into an Agreement and Plan of Merger with Bodisen International
      and the shareholders of Bodisen International, providing for the merger of
      Bodisen International into Bodisen Holdings, with Bodisen Holdings being the
      surviving entity in the merger. The transactions provided for in the Agreement
      and Plan of Merger closed on February 24, 2004.











In
      the
      merger, we acquired 100% of Bodisen International’s outstanding stock in
      exchange for the issuance of 3,000,000 shares of our common stock to the holders
      of Bodisen International shares. The common stock issued in the merger
      constituted approximately 66% of our outstanding shares after the
      merger.





The
      exchange of shares with Stratabid was accounted for as a reverse acquisition
      under the purchase method of accounting because the stockholders of Bodisen
      International obtained control of Stratabid. Accordingly, the merger of the
      two
      companies was recorded as a recapitalization of the Company, with the Company
      being treated as the continuing entity.





On
      February 25, 2004, we sold Stratabid.com Online to Derek Wasson, our former
      CEO.
      In consideration of the sale, Mr. Wasson returned 750,000 (pre-dividend) shares
      of our common stock to us for cancellation and forgave all of our indebtedness
      to him. Other than indebtedness of Bodisen International, we had no indebtedness
      or other liability of any kind or nature after the sale of the business to
      Mr.
      Wasson, save and except for liabilities incurred in connection with the
      merger.











2




After
      the
      merger, we paid a three for one stock dividend and then, by prior agreement,
      cancelled the shares that were previously returned by our former CEO. After
      these transactions, the shareholders of Bodisen International held approximately
      79% of our outstanding common stock. On March 1, 2004, we changed our name
      to
      Bodisen Biotech, Inc.





In
      March
      2005, we formed a new wholly-owned subsidiary by the name of Yang Ling Bodisen
      Agricultural Technology Co., Ltd., or “Bodisen Agricultural.” In June 2005,
      Bodisen Agricultural completed a transaction with Yang Ling, our operating
      subsidiary in the People’s Republic of China, which resulted in Bodisen
      Agricultural owning 100% of Yang Ling.










As
      a
      result of the foregoing, we now own 100% of Bodisen Agricultural, which in
      turn
      owns 100% of Yang Ling. Bodisen Holdings and Bodisen Agriculture Material Co.
      Ltd. are also our subsidiaries.




In
      June
      2006, we created another wholly owned subsidiary in Xinjiang, China by the
      name
      of Bodisen Agriculture Material Co. Ltd., which had no operations during the
      years ended December 31, 2006 or 2007.





**Industry
      Background and Markets**





The
      People’s Republic of China is the exclusive market for our organic compound
      fertilizers, liquid fertilizers, pesticides and insecticides. We sell our
      products within
      a
      group of 20 Chinese agricultural provinces and government-controlled cities.
      Approximately 80% of our sales are attributable to the local Shaanxi province,
      8% of sales are attributable to Henan province, and 5% of sales are attributable
      to the neighboring Shanxi province. We also sell a smaller percentage of our
      products to additional provinces and government controlled cities, including
      Ningxia province, Guangdong province and Heilongjian province.





Although
      the People’s Republic of China has the world’s largest population of over 1.3
      billion people, its arable land on a per capita basis is only 0.09 hectares
      (Source: 2006 China Statistical Yearbook), or less than one-sixth of that
      present in the United States (Source: U.S. State Department, www.america.gov ).
      This
      combination of limited arable land and a large and growing population has
      created a significant need to increase the amount of crops per hectare in the
      People’s Republic of China.





**Our
      Business and Products**





As
      noted
      above in the “Business Overview” section of this report, we manufacture over 60
      products, which can be broken down into the following categories:




·
            Organic
                compound fertilizers;


·
            Liquid
                fertilizers; and


·
            Pesticides
                and insecticides.




*Organic
      Compound Fertilizers*





Organic
      compound fertilizers are our leading products, accounting for approximately
      48.6% of our revenue in 2007.





3




Organic
      fertilizers are composed of natural nutritional elements that not only improve
      the quality and yield of the crops but also improve the soil quality; this
      in
      turn improves the yield. Organic compound fertilizer accelerates reproduction
      of
      soil microbes to improve soil quality through the decomposition of organic
      material and the improvement of the soil’s retention of nitrogen. Moreover, this
      application can activate dormant soil by increasing soil nitrates and moisture
      content that otherwise is not enhanced by traditional chemical fertilizers.
      This
      process controls the release of nutritional elements that enhances the quality,
      quantity and health of crops. Although organic compound fertilizers typically
      are more expensive than chemical fertilizers, we believe that the extra cost
      is
      justified by the increase of yield and quality and, consequently, the increased
      margin attained at the market.





Plants
      tend to easily absorb organic fertilizer without many of the side effects found
      in chemical fertilizer products, and this organic process strengthens
      photosynthesis, which improves the overall health of a plant in resisting
      drought and disease.




Organic
      fertilizers also improve the cation exchange capacity, or “CEC,” of soil, which
      refers to the soil’s ability to hold positively charged ions (cations), making
      them available for uptake by the plant roots. This not only allows for improved
      uptake of nutrients by the plant but can also reduce leaching, which is of
      particular concern in sandy soil. Leaching moves nutrients away from the plant
      roots and into the subsurface water. Additional functions of organic compound
      fertilizer include:





·
            preserving
                nitrogen and improving soil
                fertility;


·
            allowing
                phosphorus and potash fertilizer to gradually
                dissolve;


·
            promoting
                disease resistance; and


·
            activating
                and maintaining
                soil moisture content.





Our
      organic fertilizer line includes compound organic fertilizers containing organic
      matter content levels of 20%, 25%, 35% and 45%. Each of these organic compound
      fertilizers can then be further narrowed into one of the following product
      types: wide field, fruit, vegetable, melon or pepper. We also produce various
      “Bulk Blend” or “BB” organic fertilizers, which contain organic matter content
      levels of 35%, 40% and 54%. In addition, we produce various solid organic
      fertilizers.





Our
      process for manufacturing organic compound fertilizer products has received
      ISO
      9001: 2000 certification. ISO 9000 has become an international reference for
      quality management requirements in business-to-business dealings, and the ISO
      9000 family is primarily concerned with quality management.





*Liquid
      Fertilizers*





Liquid
      fertilizer products accounted for approximately 34.9% of our revenue in 2007.





The
      early
      application of liquid fertilizers aids absorption of the key elements and
      nutrients of the fertilizer, which may increase the rate of photosynthesis
      and
      improve the health of the plant, making it more resistant to disease, drought
      and cold weather. Liquid fertilizer increases the plant’s yield and shortens the
      time to harvest while heightening the color and luster of fruit and vegetables.
      These products may also prolong growing periods, guarantee sufficient nutrition
      during different crop stages and improve pest resistance in certain fruits
      and
      vegetables and other crops. Liquid fertilizer is sold to farmers in a
      concentrated form and needs to be mixed with water before it is sprayed onto
      plants.




Our
      liquid fertilizer line includes the following products: “New Guo Li Dan (500G
      and 250G),” “New Shi Kang Lu (500G),” New Jia An Gai,” “An Fu Lv Ye Wang,” “Tian
      Feng,” and “Feng Chan Su (20KG).”





*Pesticides
      and Insecticides*





Our
      pesticides and insecticides account for approximately 16.5% of our revenues
      in
      2007.





4




Our
      pesticide products can be applied to all fruit trees and vegetable crops, and
      are used to kill various insects and pests that reduce crop yield. Our
      insecticide products are applied to various fruit trees, vegetables and other
      crops to kill bacteria and to prevent the reproduction of harmful insects and
      pests.





Our
      pesticides and insecticides include the following products: “Wei Te Li Oil,” “A
      Wei Chai Oil,” “Lun Mei Su,” “Li Jun Sha,” “Jin Li Sheng,” and “Lun Mei
      Qing.”





**Methods
      of Distribution**





We
      currently sell each of the products identified above through a network of over
      150 regional distributors in the People’s Republic of China. These distributors
      in turn sell the products to the end-users (typically farmers). Typically,
      we
      enter into non-exclusive, short-term written distribution agreements with our
      distributors. Upon signing a distribution agreement, the distributor will
      indicate its intent to purchase specified products, and we agree to provide
      those products upon the distributor’s request. We generally make sales to
      distributors on a rolling basis. This means that there is a lag between when
      we
      deliver our products to our distributors (and recognize revenues for those
      shipments) and when we receive payment for those products. Typically, accounts
      are settled anywhere from one to two months and up to seven months after
      delivery of our products, often in connection with an order for additional
      product, although we may extend other payment terms to our distributors
      depending on their ability to pay. We also make advances to suppliers for the
      purchase of their materials. The products are then sold to farmers and other
      end-users by the distributor.





Each
      year
      we participate in the Yang Ling region’s annual agricultural trade fair and
      exhibition. Many of our distributors attend this trade fair, and the event
      accounts for the vast majority of our sales contracts. Sales are then made
      pursuant to these contracts throughout the year.





We
      expect
      to distribute products that are manufactured in our new Xinjiang
      facility through similar arrangements with distributors; however, we have not
      yet established relationships with distributors. The construction of our
      Xinjiang facility is underway and we expect to begin initial production at
      the
      new facility during 2008.





**Raw
      Materials**





Production
      of organic fertilizer products, pesticides and insecticides requires a variety
      of raw materials, and Shaanxi Province provides numerous suppliers of such
      materials. We currently maintain short-term (typically one-year) supply
      contracts with 11 material suppliers, 7 of whom are considered “key” suppliers.
      This is a decrease from 19 relationships we maintained in the past. We have
      terminated some of our prior relationships based on problems with the quality
      of
      materials and supplier inability to satisfy contract requirements. During 2007,
      we did not experience any significant delays in receiving raw materials from
      our
      suppliers, while in 2006 we had some minor issues related to road construction
      in front of one of our facilities.





The
      specific raw materials and suppliers used for each of our product lines are
      described below.





*Organic
      Compound Fertilizer Raw Materials and Suppliers*





To
      manufacture organic compound fertilizer, we use carbamide, monoammonium
      phosphate, ammonium acid carbonate, humic acid, oil shale, zeolite powder,
      phosphorus, coarse whiting, potassium, iron oxide red and potassium chloride.
      We
      obtain these raw materials for organic compound fertilizers from many different
      suppliers in the People’s Republic of China.





*Liquid
      Fertilizer Raw Materials and Suppliers*





The
      raw
      materials we use to manufacture our liquid fertilizer are carbamide, potassium
      chloride, ammonium bicarbonate, borax, ferrous sulphate, bluestone, zinc
      sulphate, manganese sulfate, citric acid, chlorocholine chloride, dodecane,
      peregal, ethene, calcium chloride, monoammonium phosphate, bitter salt, amino
      acid, sodium humate, polyacrylimide, humic acid and carbon white. There are
      several suppliers from whom we obtain these raw materials.





5




*Pesticide
      and Insecticide Raw Materials and Suppliers*





The
      raw
      materials used to manufacture pesticides and insecticides include
      jiajiliujunlung, thiram, muzhisuhuansuanna, active floridin, vaseline,
      meiduowei, phoxin, qingwujuzhi, emulsifying agent, dimethylbenzene, aweijunsu,
      #0 diesel oil, damanling, sulfur powder, carbendazim, mancozeb, dodecane,
      hexamethylenamine, french chalk, malathion, shellfish powder, xiuqingjuzhi,
      together with additional raw materials that constitute part of our proprietary
      formulae.





We
      obtain
      these raw materials for pesticides and insecticides from Shaanxi Tianshun
      Chemical Industry Co., Ltd. We also have access to additional suppliers for
      each
      of the necessary raw materials in the event that our primary supplier is unable
      to satisfy our manufacturing needs.





**Intellectual
      property**





We
      rely
      on trade secret protection for our proprietary technology and formulae. We
      currently do not own any patents and have not applied for any patents on our
      proprietary technology and formulae. A patent application requires a detailed
      description of our technology and formulae, which would then be made available
      to the general public. We believe that a patent application and disclosure
      would
      be detrimental to our business, as it would reveal features unique to our
      products. Most of our intellectual property was developed in-house or with
      various universities and research laboratories (which may not be owned by our
      company). For information regarding the potential consequences of our
      intellectual property strategy, please see the paragraph of Item 1A, “Risk
      Factors,” titled “ *We
      may not be able to adequately protect and maintain our intellectual
      property.* ”





We
      hold
      certain government approved intellectual property rights in our trade secrets
      and proprietary information. Certain intellectual property rights in the
      People’s Republic of China are decided by the government registry, and we have
      registered our formulae and proprietary information with the Chinese government.
      We hold certificates for these rights, which must be registered on an annual
      basis.





We
      also
      own trademarks in the “Bodisen” name, which is used on all products.





**Seasonality
      and Volatility**





The
      fertilizer and pesticide businesses are highly seasonal, based upon the
      planting, growing and harvesting cycles. The seasonality of these industries
      has
      its primary effect on the sales volume of our product. Typically, we experience
      a higher sales volume in the second and third quarters, with a lower volume
      in
      the first and fourth quarters.





Our
      sales
      volume can be volatile as a result of a number of factors,
      including:





·
            Weather
                patterns and field conditions (particularly during periods of high
                fertilizer consumption);


·
            Quantities
                of fertilizers imported to primary markets;


·
            Current
                and projected grain inventories and prices, which are heavily influenced
                by U.S. exports, worldwide grain markers, and domestic demands (food,
                feed, biofuel);


·
            Government
                regulation, intervention and unexpected changes in government policies;
                and


·
            The
                reputation of our products and company in the marketplace.





In
      addition to the effect on sales volume, certain factors may have an effect
      on
      the prices of our organic fertilizer, pesticide and insecticide products. These
      factors include raw material and other product related costs, as well as
      expenses related to our workforce and employees.





**Inventory
      and Working Capital**





For
      each
      of our products, we maintain an inventory system to meet customer demands.
      Typically, we produce our products upon receipt of customer orders. We do,
      however, hold excess inventory to ensure an adequate supply of products. We
      maintain a larger inventory for “in-season” products, while our inventory for
      out of season products is less.





6




In
      order
      to ensure a continuous allotment of goods and raw materials, we operate on
      an
      advanced payment system with our suppliers. We pay our suppliers based on our
      projected needs for raw materials and other supplies, which allows us to
      maintain a stock of such materials and supplies sufficient to sustain continued
      production.





We
      do not
      have policies related to warranties or the return of merchandise. We do,
      however, provide our customers with extended payment terms and payment options.





Although
      each company in the fertilizer, pesticide and insecticide industry adopts its
      own practices based on its employees, equipment, materials and other resources,
      we believe that our operations are generally consistent with those of other
      companies in the industry. We are continuing in our efforts to ensure that
      we
      exceed industry expectations for product quality, development and overall
      performance.





**Sales
      and Marketing**





We
      market
      and promote the Bodisen brand through trade fairs, conventions and the print
      media, and through television and radio advertising in the People’s Republic of
      China. As noted previously, a significant portion of our sales are generated
      directly or indirectly via the annual trade fair and agricultural exhibition
      in
      Yang Ling. Because the end-users of our products are local farmers, we also
      conduct educational seminars to promote products and organic fertilizers
      directly to farmers. In addition, we send our promotional team to the
      countryside and other agricultural areas to advance product recognition through
      field tests. To capture additional markets, we distribute free samples of our
      products to new areas, allowing for a product trial period. The results of
      these
      trials are then made known to surrounding areas. The cost of such efforts is not
      material and is typically offset by new sales in those test zones.





Our
      primary tasks with respect to sales goals are to strengthen our home market
      in
      the Shaanxi province and to expand the market outside the Shaanxi province
      into
      new districts where our products are not well established.





It
      is our
      intention to increase marketing in regions where our products are not well
      known. We anticipate that once we commence operations in our new facility in
      Xinjiang, we will begin efforts to promote and market our products within that
      region. In addition, we expect to engage in general promotion of our products
      through national newspapers in the People’s Republic of China, where we plan to
      explain the advantages of the high-tech nature of our environmentally friendly
      product lines. Although we considered selling exclusive franchise opportunities
      to new wholesale agents, we have since decided against proceeding with any
      such
      projects.





**Customers**





We
      sell
      our products directly to over 150 regional distributors in the People’s Republic
      of China through written sales contracts. Typically, these non-exclusive
      distribution contracts have a one-year term and, upon signing the contract,
      the
      distributor will indicate its intent to purchase a certain quantity of our
      products. Distributors who fail to place orders for the quantities estimated
      under these contracts are generally not held responsible for failing to place
      orders reflecting the estimated quantity.





All
      of
      our sales currently are directed to our distributors, and we do not make any
      sales directly to farmers or other end users of our products.





One
      customer accounted for 11.2% of our revenues as of December 31, 2007. We do
      not
      believe that our business would be materially harmed by the loss of this
      customer or any of our other current customers.





In
      November 2006 we entered into contracts providing for approximately $43.8
      million worth of sales for 2007. As of December 31, 2007, we had received
      approximately $12.1 million in net revenues in connection with these and other
      sales contracts.





Following
      the November 2007 agricultural trade fair and exhibition in Yang Ling, we have
      received approximately $9.4 million in commitments for 2008.





7




**Competition**





The
      organic fertilizer industry in the People’s Republic of China is largely
      fragmented with most competitors operating small regional factories, serving
      local requirements. Most companies in this industry do not widely promote their
      products. We have not yet identified any competitors in the Shaanxi province
      that operate in all of our product lines (organic compound fertilizer, liquid
      fertilizer and pesticide and insecticides). We believe that we occupy nearly
      10%
      of the Shaanxi fertilizer market, and that no fertilizer company possesses
      a
      larger market share in Shaanxi. This conclusion is based on our knowledge of
      the
      Shaanxi Province’s land and area and its fertilizer needs. Our competitive
      position in the fertilizer industry is strengthened by our emphasis on the
      use
      of “environmentally friendly” fertilizer products.





We
      believe that our only international competitor is DuPont.





**Research
      and Development**





In
      2007,
      we budgeted to spend approximately $650,000 for research and development and
      in
      2007, we focused our research and development efforts on our liquid fertilizer
      product line. In 2006, we budgeted to spend $130,000 on research and
      development, the majority of which was to be dedicated to existing research
      programs. Our actual research and development costs amounted to approximately
      $3,700, largely because two of our planned research and development projects
      for
      2006 were stopped before their completion.





In
      2008,
      we have budgeted approximately $710,000 for research and development, which
      we
      also plan to use to our liquid fertilizer product line.





**Government
      and Environmental Regulation**





Our
      products and services are subject to regulation by governmental agencies in
      the
      People’s Republic of China and Shaanxi Province. Business and company
      registrations, along with the products, are certified on a regular basis and
      must be in compliance with the laws and regulations of the People’s Republic of
      China and provincial and local governments and industry agencies, which are
      controlled and monitored through the issuance of licenses. We believe that
      we
      have complied with all registrations and requirements for the issuance and
      maintenance of the licenses required of us by the governing bodies. As of the
      date of this annual report, all of our license fees and filings are current.
      Our
      licenses include:





*National
      Certificate for Production of Industrial Products*





The
      National Certificate for Production of Industrial Products for compounded
      fertilizers was issued by the National Industrial Products Production License
      Office on February 27, 2004. This certificate will be valid until February
      26,
      2009.





*Certificate
      for Pesticide Registration*





Pesticide
      registration is required for the production of liquid fertilizer and issued
      by
      the Ministry of Agriculture of the People’s Republic of China. This registration
      also applies to our production of insecticides.





*Production
      standard*





We
      are
      registered with Bureau of Quality Controls and Technology, Shaanxi Provincial
      Government, Xi’an.





The
      cost
      of obtaining and maintaining these licenses is not prohibitive and it is illegal
      to do business without these licenses. If we were to lose any of these licenses,
      we would only have a limited time to reapply for such licenses and would face
      possible regulatory fines.





8




While
      we
      are subject to relevant environmental laws and regulations that require outlay
      of capital and the obtaining of relevant permits, we do not anticipate any
      extraordinary capital expenditures in 2008 for such purposes. We did not make
      any extraordinary capital expenditures in 2007 related to compliance with
      environmental laws and regulations, including expenditures necessary to obtain
      relevant permits.





Our
      new
      Mancozeb product is awaiting government approval. Prior to the launch of our
      Mancozeb product, the Chinese government pesticide office instituted a review
      of
      all pesticide production companies. As a result, we suspended the installation
      of our Mancozeb facility pending completion of this government review. Although
      we continue to work with the government and local authorities to advance the
      approval process, we have not yet received such approval and do not know when
      such approval will be received, if at all. Once the government has completed
      its
      review and subject to receipt of approval, we expect to continue the
      installation and launch of the Mancozeb facility.





Except
      for approvals that have already been obtained, our anticipated new facility
      in Xinjiang
      will not require any additional permits or authorizations.





**Employees**





As
      of
      December 31, 2007, we had a total of 283 employees. Of these employees,
      approximately 23 were executive and senior managers, 80 were business and
      accounting staff, 14 were warehouse and purchasing staff, and 20 were drivers
      or
      secretaries. The balance consists of production workers. We have not experienced
      any work stoppages and we consider relations with our employees to be good.
      We
      are not a party to any collective bargaining agreements.




**Executive
      Officers of the Registrant**




Certain
      information regarding our current executive officers is provided below:




**Name**
            
            **Age**
            
            **Position**Bo
                Chen
            
            50
            
            President,
                Chief Executive Officer and Chairman of the BoardChunsheng
                Wang
            
            44
            
            Chief
                Operating OfficerJunyan
                Tong
            
            36
            
            Chief
                Financial Officer





**Available
      Information**





We
      file
      electronically with the Securities and Exchange Commission, or the “SEC,” our
      annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports
      on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
      of
      1934. The public may read and copy any materials we file with the SEC at the
      SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The
      public may obtain information on the operation of the Public Reference Room
      by
      calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
      contains reports, proxy and information statements, and other information
      regarding issuers that file electronically with the SEC. The address of that
      site is http://www.sec.gov.





Our
      website is located at http://www.bodisen.com. We currently do not make our
      annual reports on Form 10-K, quarterly reports on Form 10-Q or current reports
      on Form 8-K or amendments thereto available on our website because the
      information is available via the SEC website. You may, however, obtain a free
      copy of such reports and amendments to those reports filed or furnished pursuant
      to Section 13(a) or 15(d) of the Securities Exchange Act, as amended (15 U.S.C.
      78m(a) or 78o(d)) on the day of filing with the SEC by contacting the Investor
      Relations Department at our corporate offices by calling +86-29-87882072 or
      by
      sending an e-mail message to info@bodisen.com .




9





**ITEM
      1A.**  **RISK
      FACTORS**





**Risks
      Related To Our Business**





*Legal
      actions could result in financial losses or harm to our business.*





We
      are,
      and in the future may be, subject to legal actions in the ordinary course of
      our
      operations, both domestically and internationally. In
      late
      2006, various shareholders of our company filed eight purported class actions
      in
      the U.S. District Court for the Southern District of New York against our
      company and certain of our officers and directors (among others), asserting
      claims under the federal securities laws. In addition, we are currently in
      litigation regarding our ownership of shares of China Natural Gas, which was
      our
      single largest asset based on market value of such shares at December 31, 2007.
      For more information relating to these matters, s ee
      Item 3
“Legal Proceedings.” Substantial legal liability in these or future legal or
      regulatory actions could have a material financial effect or cause significant
      reputational harm, which in turn could seriously harm our business prospects
      and
      our ability to continue as a going concern.





*We
      may be exposed to potential risks relating to our internal control over
      financial reporting and our ability to have those controls attested to by our
      independent auditors.*





We
      are
      (and were required last year) to include a report of management on our internal
      control over financial reporting in our annual reports on Form 10-K. Although
      beginning this year, because we are now a smaller reporting issuer, our
      independent registered public accounting firm is not required to attest to
      and
      report on management’s assessment of the effectiveness of our internal control
      over financial reporting as well as the operating effectiveness of such internal
      controls for this year, such attestation of our independent registered public
      accounting firm was required in our annual report for the year ended December
      2006, when we were considered to be an accelerated filer. For the reasons
      described under Item 9A in this annual report, we have not yet completed our
      evaluation of our internal control over financial reporting and can provide
      no
      assurance that we will receive a positive attestation from our independent
      auditors on such evaluation when completed. While we have no reason to believe
      that our reported financial results and other information included in this
      annual report are inaccurate or incomplete in any material respect, we may
      nevertheless identify significant deficiencies or material weaknesses in our
      internal control over financial reporting in connection with the completion
      of
      our report. In the event we identify significant deficiencies or material
      weaknesses in our internal controls that we cannot remediate in a timely manner
      or we are unable to receive a positive attestation from our independent auditors
      with respect to our internal controls, it could have a material adverse effect
      on our business, financial condition and results of operations.





*We
      may require additional financing in the future and a failure to obtain such
      required financing could inhibit our ability to grow.*





As
      of
      December 31, 2007, we had $617,406 of cash and cash equivalents. Although we
      expect that our cash and cash flow from operations will be sufficient to meet
      our anticipated needs for the next twelve months, if we decide to expand our
      business more broadly than currently estimated, or if our business grows more
      rapidly than we expect, we may need to raise additional financing in the future.
      Our ability to obtain additional funding would be subject to a number of
      factors, including market conditions, operational performance and investor
      sentiment. These factors may make the timing, amount, terms and conditions
      of
      additional funding unattractive, or unavailable, to us. If we are not able
      to
      obtain additional financing in the future, we will not be able to grow our
      business, which could have a material adverse effect on our financial condition,
      results of operations and liquidity.





*The
      terms of any future financing may adversely affect your interest as stockholders
      and could restrict the operation of our business.*





If
      we
      require additional financing, we may be required to incur indebtedness or issue
      equity securities, the terms of which may adversely affect your interests in
      our
      company. For example, any future indebtedness may be senior in right of payment
      to your shares upon liquidation. In addition, the terms of any future
      indebtedness may limit the operation of our business by imposing restrictions
      on
      our ability to grant security interests in our assets or make distributions,
      require us to comply with certain financial covenants or obtain consent before
      undertaking certain actions. Similarly, the terms of any equity securities
      we
      issue may be senior in right of payment of dividends to our common stock and
      may
      contain superior rights and other rights as compared to our common stock.
      Further, any such issuance of equity securities may dilute your interest in
      our
      company.





10




*We
      may not be able to adequately protect and maintain our intellectual property.*





Our
      success will depend on our ability to continue to develop and market fertilizer
      and pesticide/insecticide products. We protect our proprietary technology and
      formulae by keeping such technology or formulae confidential. If such technology
      or formulae are disclosed to a third party that is not under an obligation
      to
      keep the technology confidential, we may not be able to protect our technology
      or formulae against being exploited by third parties. We currently have not
      applied for patents for our technology products or formulae as we believe an
      application for such patents would result in public disclosure of our
      proprietary technology and formulae with no guarantee that we would have
      enforceable rights in our intellectual property. Public knowledge of our
      proprietary technology and formulae without enforceable intellectual property
      rights could have a material adverse effect on our business, financial condition
      and results of operations.





*Our
      success depends on our management team and other key personnel, the loss of
      any
      of whom could disrupt our business operations.*





Our
      future success will depend in substantial part on the continued service of
      our
      senior management. The loss of the services of one or more of our key personnel
      could impede implementation of our business plan and result in reduced
      profitability. We do not carry key person life or other insurance in respect
      of
      any of our officers or employees (other than Directors’ & Officers’ (or
      D&O) insurance). Our future success will also depend on the continued
      ability to attract, retain and motivate highly qualified technical sales and
      marketing customer support. Because of the rapid growth of the economy in the
      People’s Republic of China, competition for qualified personnel is intense. We
      cannot guarantee that we will be able to retain our key personnel or that we
      will be able to attract, assimilate or retain qualified personnel in the future.
      If we are unsuccessful in our efforts in this regard, it could have an adverse
      effect on our business, financial condition and results of
      operations.





*We
      do
      not have supplier contracts with all of our trade vendors.*





As
      is
      typical in the agricultural industry in the People’s Republic of China, we do
      not have supplier contracts with all of our trade vendors. Where we do not
      have
      contracts in place, we conduct business on an order-by-order basis. Because
      we
      do not have supply contracts in place, we have no guarantee that we will be
      able
      to continue to receive adequate supplies for the production of our products
      or
      that our suppliers will not continually raise their prices. Despite not having
      supplier contracts in place in every case, we believe that we have very good
      relations with the agricultural vendor community. Nonetheless, because we
      conduct business in this fashion, it exposes us to some risk in the production
      of our products, which could have an adverse effect on our business, financial
      condition and results of operations.





*We
      currently rely on a small number of suppliers for raw materials used to produce
      our products* .





For
      the
      year ended December 31, 2007, three vendors provided 46.7%, 15.2% and 13.8%
      of
      our raw materials (compared to three vendors providing 47.5%, 17.7% and 12.5%
      of
      our raw materials in 2006). Although we have written agreements with these
      suppliers, we cannot guarantee that they will comply with the terms of our
      agreements, or that they will be able to deliver sufficient quantities of these
      raw materials in order for us to meet the increasing demand for our products.
      If
      we are not able to manufacture our products because of issues in the supply
      of
      necessary raw materials, it could have a material adverse effect on our
      business, financial condition and results of operations.





*Disruptions
      to our chain of production could have a material adverse effect on our
      business.*





If
      there
      is disruption in our chain of production - from receipt of raw materials, to
      stoppages at our facilities, to delivery of our products - for whatever reason,
      it could have a material adverse effect on our business. The manufacture of
      our
      products relies on the delivery of raw materials to our facilities, the absence
      of work stoppages or other problems at our manufacturing facilities, as well
      as
      the ability to ship our products in a timely fashion. Although disruptions
      are
      infrequent, they can have an effect on our operations. For example, in mid-2006,
      road construction began in front of one of our manufacturing facilities, which
      affected our ability to receive supplies and ship products and consequently
      had
      a negative effect on our business. Similar road improvement projects over which
      we have no control could occur in the future. If we are unable to manufacture
      and deliver our products in a timely fashion, we could suffer harm to our
      reputation and our revenues and operating expenses could be negatively
      affected.





11




*We
      may be unable to pass along raw materials price increases to our customers,
      which could negatively affect our results of operations* .





The
      raw
      materials that we use in the manufacture of our products are subject to
      fluctuation due to market prices. Although we were able to use the proceeds
      from
      the issue of a short-term debenture in December 2005 to lock-in raw materials
      prices for 2006, and we prepaid for raw materials to secure pricing in the
      first
      half of 2007, we were not able to lock-in raw materials prices for the second
      half of 2007, nor may we be able to do so in the future. If raw materials prices
      significantly increase and we are unable to pass along these costs to our
      customers, our operating expenses will increase and our results of operations
      could be negatively affected.





*We
      sell many of our products on credit, which exposes us to risk of payment
      defaults. We also make interest-free and unsecured advances to suppliers for
      the
      purchase of materials, which exposes us to risk of default* .





As
      is
      typical in the People’s Republic of China, we generally sell our products to
      distributors on a rolling basis. This means that there is a lag between when
      we
      deliver our products to our distributors (and recognize revenues for those
      shipments) and when we receive payment for those products. Typically, accounts
      are settled anywhere from one to two months and up to seven months after
      delivery of our products, although we may extend other payment terms to our
      distributors depending on their ability to pay. Often times, if a customer
      does
      not order additional products for delivery, we do not have significant leverage
      to ensure prompt payment of outstanding accounts. In addition to accounts
      receivables from customers, we also make advances to suppliers for the purchase
      of their materials. These activities expose us to risk of default. A farmer’s
      inability to sell his agricultural goods, or grow crops due to inclement
      weather, could hinder his ability to timely pay his credit obligations to our
      distributors, which affects their ability to make payment to us. Notably, in
      2007, many of our customers did not make payments to our company for products
      delivered and we no longer believe that we will be able to collect such
      payments. Further, we have no guarantee that our suppliers will meet their
      delivery obligations to our company in order for us to produce our goods in
      a
      timely fashion. As of December 31, 2007, we had accounts receivable, net of
      allowance for doubtful accounts, of $618,052 compared to $18,875,368 in 2006,
      advances to suppliers of $9,741,090 compared to $12,552,139 in 2006, and we
      had
      allowances for doubtful accounts of $23,777,908 compared to $659,653 in 2006.
      If
      an unexpected number of our suppliers and creditors continue to default in
      their
      obligations to us, it could have a material adverse effect on our liquidity.





*Adverse
      weather conditions could reduce demand for our products, which could have a
      negative effect on our revenues.*





Demand
      for our products fluctuates significantly with weather conditions, which may
      delay the use of our products on crops or render them unnecessary at all. In
      addition, demand for our products is also affected by natural disasters such
      as
      floods, drought, hail, tornadoes and earthquakes. If demand for our products
      declines, this would have a negative effect on our revenues. In addition, in
      the
      event that crop yields are reduced for any reason, including natural disasters,
      farmers may default on their payments to our distributors, who, in turn, could
      default on their payments to our company. Further,
      we have no guarantee that our suppliers will meet their delivery obligations
      to
      our company in order for us to produce our goods in a timely fashion.
      I n
      2007,
      for example, there was unseasonably cold Spring weather in Shaanxi, which was
      followed by a flood and drought in the third quarter of 2007. These events
      affected crop plantings and the use of fertilizers, which had a material adverse
      effect on our 2007 revenues. Further, many
      of
      our customers did not make payments to our company in 2007 for products
      delivered and we had allowances for doubtful accounts of $23,777,908 at December
      31, 2007 compared to $659,653 in 2006. Continued
      defaults could have a negative effect on our cash flows and results of
      operations.





*Our
      success depends upon the development of the People’s Republic of China’s
      agricultural industry.*





The
      People’s Republic of China is currently the world’s most populous country and
      one of the largest producers and consumers of agricultural products. Over 40%
      of
      the People’s Republic of China’s labor force is engaged in agriculture, even
      though only about 14% of the land is suitable for cultivation. (Source: CIA
      Factbook) Although the People’s Republic of China hopes to further increase
      agricultural production, incomes for Chinese farmers are stagnating. Despite
      the
      Chinese government’s continued emphasis on agricultural self-sufficiency,
      inadequate port facilities and a lack of warehousing and cold storage facilities
      impedes the domestic agricultural trade. If the Chinese agricultural market
      does
      not develop, or develops slower than we expect, it could have an adverse effect
      on our business, financial condition and results of operations.




12




*Our
      operating subsidiary may be restricted from making distributions to our
      company.*





We
      are a
      legal entity separate and distinct from Yang Ling, which is our indirect
      wholly-owned operating subsidiary. Aside from our financing activities, the
      receipt of dividends from Yang Ling is currently our only other source of cash
      to pay shareholder dividends and to meet our other obligations. Yang Ling is
      subject to Chi nese
      regulations that currently permit the payment of dividends only out of
      accumulated profits as determined in accordance with Chinese accounting
      standards and regulations. These accounting standards and regulations also
      require Yang Ling to set aside a portion of its after tax profits to fund
      certain reserve funds. See Note 15 to our consolidated financial statements
      included in this annual report for more information about these regulations.
      Although it has been able to do so, to date Yang Ling has not paid us any
      dividends. In the future, if Yang Ling does not accumulate sufficient profits
      under Chinese accounting standards and regulations after funding the required
      reserves, it will not be able to pay us any dividends, and consequently, we
      may
      be unable to pay any dividends to our stockholders.





*We
      do
      not anticipate paying dividends on our common stock.*





We
      have
      never paid dividends on our common stock and do not anticipate paying dividends
      in the foreseeable future. Our Board of Directors currently intends to follow
      a
      policy of retaining all of our earnings, if any, to finance the development
      and
      expansion of our business.





*Our
      corporate structure may subject you to two levels of taxation on the payment
      of
      dividends or upon a disposition of our operating subsidiary, thereby
      substantially reducing the return on your investment.*





If
      Yang
      Ling, our wholly-owned indirect subsidiary, pays a dividend to us, its parent
      company, for distribution to our stockholders as a dividend, or if Yang Ling
      (rather than us, its parent company) is ultimately sold, the dividend or the
      proceeds of that transaction would be subject to two levels of tax: one at
      the
      parent corporate level and one at the parent stockholder level. Because we
      conduct our operations through Yang Ling, any dividends we pay must come from
      Yang Ling. Additionally, if a sale were to occur, it would most likely be Yang
      Ling that would be sold, rather than our company. Because of applicable tax
      laws, if Yang Ling pays a dividend to us in the future or if Yang Ling is sold
      in the future, those proceeds may be subject to two levels of taxation: (i)
      we
      will pay tax on the dividend or sale proceeds received from Yang Ling, and
      (ii)
      our stockholders will pay tax on the distribution of the dividend or the
      proceeds of the sale. These two levels of taxation will effectively reduce
      the
      financial return on your investment in our company.





*The
      industry in which we do business is highly competitive and we face competition
      from numerous fertilizer manufacturers in China and elsewhere.*





We
      compete with numerous local Chinese fertilizer manufacturers. Although we may
      have greater resources than many of our competitors, most of which are small
      local fertilizer companies, it is possible that these competitors have better
      access in certain local markets to customers and prospects, an enhanced ability
      to customize products to a particular region or locality and established local
      distribution channels within a small region. Furthermore, we may face
      competition from international producers and traders who import products into
      China that generally are of higher quality than those produced in the local
      Chinese market. Although we believe that we have many competitive strengths
      that
      differentiate our products and the Bodisen brand, we nevertheless must compete
      aggressively to maintain and grow our market share. If we are not successful
      in
      our marketing and advertising efforts to increase awareness of our brands,
      our
      revenues could decline and it could have a material adverse effect on our
      business, financial condition and results of operations.





13




*The
      admission of the People’s Republic of China into the World Trade Organization
      could lead to increased foreign competition for us.*





As
      a
      result of the People’s Republic of China becoming a member of the World Trade
      Organization (“WTO”), import restrictions on agricultural products are expected
      to be reduced. With the lowering of import restrictions and the WTO’s
      requirement for a reduction of import tariffs as condition of membership, such
      reduced import restrictions and tariffs for us may result in an increase of
      foreign products and could in turn lead to increased competition in the domestic
      agricultural market. Increase competition from foreign products could lead
      to
      downward pricing pressure, which could have a negative effect on our gross
      profit margins and adversely affect our business, financial condition and
      results of operations .





*We
      may not be able to obtain regulatory or governmental approvals for our
      products.*





The
      manufacture and sale of our agricultural products in the People’s Republic of
      China is regulated by the People’s Republic of China and the Shaanxi Provincial
      Government. The legal and regulatory regime governing our industry is evolving,
      and we may become subject to different, including more stringent, requirements
      than those currently applicable to our company. Because we must obtain permits
      and other regulatory approvals for the manufacture of our products. we may
      be
      vulnerable to local and national government agencies or other parties who wish
      to renegotiate the terms and conditions of, or terminate their agreements or
      other understandings with us, or implement new or more stringent requirements,
      which may require us to suspend or delay production of our products. For
      example, we are still delaying the launch of our Mancozeb product line because
      the Chinese government pesticide office instituted a review of all pesticide
      production companies. Although our licenses and regulatory filings are current,
      we have had to suspend the installation of our Mancozeb facility pending the
      completion of the government review. If we are unable to manufacture and
      distribute our products, even temporarily, it could have a material adverse
      effect on our business, financial condition and results of
      operations.





**Risks
      Related to the People’s Republic of China**





*The
      People’s Republic of China’s Economic Policies could affect our Business.*





Virtually
      all of our assets are located, and virtually all of our revenues are derived
      from our operations, in the People’s Republic of China. Accordingly, our
      business, financial condition and results of operations are subject, to a
      significant extent, to the economic, political and legal developments in the
      People’s Republic of China.





While
      the
      People’s Republic of China’s economy has experienced significant growth in the
      past twenty years, such growth has been uneven, both geographically and among
      various sectors of the economy. The Chinese government has implemented various
      measures to encourage economic growth and guide the allocation of resources.
      Some of these measures benefit the overall economy of the People’s Republic of
      China, but they may also have a negative effect on us. For example, operating
      results and financial condition may be adversely affected by the government
      control over capital investments or changes in tax regulations.





Over
      the
      past 20 years, the Chinese economy has experienced periods of rapid expansion
      and fluctuating rates of inflation. These factors have led to the adoption
      by
      the Chinese government, from time to time, of various corrective measures
      designed to restrict the availability of credit or regulate growth and contain
      inflation. High inflation may in the future cause the Chinese government to
      impose controls on credit and/or prices, or to take other action that could
      inhibit economic activity in China, and thereby harm the market for our
      products, which could have a negative effect on our business, financial
      condition and results of operations.





The
      economy of the People’s Republic of China has been changing from a planned
      economy to a more market-oriented economy. In recent years the Chinese
      government has implemented measures emphasizing the utilization of market forces
      for economic reform and the reduction of state ownership of productive assets,
      and the establishment of corporate governance in business enterprises; however,
      a substantial portion of productive assets in the People’s Republic of China are
      still owned by the Chinese government. In addition, the Chinese government
      continues to play a significant role in regulating industry development by
      imposing industrial policies. It also exercises significant control over the
      People’s Republic of China’s economic growth through the allocation of
      resources, the control of payment of foreign currency- denominated obligations,
      the setting of monetary policy and the provision of preferential treatment
      to
      particular industries or companies.





14


*Capital
      outflow policies in the People’s Republic of China may hamper our ability to
      remit income to the United States.*





The
      People’s Republic of China has adopted currency and capital transfer
      regulations. These regulations may require us to comply with complex regulations
      for the movement of capital. Although we believe that we are currently in
      compliance with these regulations, should these regulations or the
      interpretation of them by courts or regulatory agencies change; we may not
      be
      able to remit all income earned and proceeds received in connection with its
      operations or from the sale of its operating subsidiary to our stockholders.





*Fluctuation
      of the Renminbi may indirectly affect our financial condition by affecting
      the
      volume of cross- border money flow.*





Because
      we report our financial statements in U.S. dollars but generate virtually all
      of
      our revenues and expenses in Renminbi, we are exposed to translation risk
      resulting from fluctuations between the value of the U.S. dollar and the value
      of the Renminbi. The value of the Renminbi fluctuates and is subject to changes
      in the People’s Republic of China’s political and economic conditions. Since
      1994, the conversion of Renminbi into foreign currencies, including U.S.
      dollars, has been based on rates set by the People’s Bank of China, which are
      set based upon the interbank foreign exchange market rates and current exchange
      rates of a basket of currencies on the world financial markets. As of December
      31, 2007, the exchange rate between the Renminbi and the U.S. dollar was 7.17
      Renminbi to every one U.S. dollar.





*We
      may have difficulty establishing adequate management, legal and financial
      controls in the People’s Republic of China.*





The
      People’s Republic of China historically has not adopted a Western style of
      management and financial reporting concepts and practices, modern banking,
      computer or other control systems. We may have difficulty in hiring and
      retaining a sufficient number of qualified employees to work in the People’s
      Republic of China. As a result of these factors, we may experience difficulty
      in
      establishing management, legal and financial controls, collecting financial
      data
      and preparing financial statements, books of account and corporate records
      and
      instituting business practices that meet Western standards.





*Because
      most of our directors and all of our officers reside outside of the United
      States and virtually all of our assets are located in the People’s Republic of
      China, you may have difficulty enforcing certain rights.*





Any
      parties who file litigation against our officers and directors may have
      difficulty serving their lawsuit and acquiring personal jurisdiction because
      all
      of our executive officers and most of our directors reside in the People’s
      Republic of China. For the same reason, it may be difficult for parties who
      file
      litigation against those of our officers and directors who reside in the
      People’s Republic of China to enforce judgments that a jurisdiction other than
      the People’s Republic of China enters against them. In addition, because
      virtually all of our assets are located in the People’s Republic of China, it
      may be difficult to access those assets to satisfy any monetary judgment that
      a
      jurisdiction other than the People’s Republic of China enters against
      us.





**Risks
      Related to Our Common Stock**




*Our
      common stock is no longer listed on the American Stock Exchange, or Amex, and
      is
      currently quoted only on the Pink Sheets in the United States, which may have
      an
      unfavorable impact on our stock price and liquidity.*




On
      November 6, 2006, we received notice of deficiency from the Amex that we were
      not in compliance with certain continued listing standards and on March 22,
      2007, we received notice from Amex of its intent to delist our shares of common
      stock. We decided not to appeal Amex’s decision and our common stock is
      currently quoted in the United States on the Pink Sheets under the symbol
“BBCZ.” See Item 5 of this annual report for more information regarding the
      market for shares of our common stock. The Pink Sheets are a significantly
      more
      limited market than the Amex and the quotation of our shares on the Pink Sheets
      may result in a less liquid market available for existing and potential
      stockholders to trade shares of our common stock in the United States. This
      could depress the trading price of our common stock and could have a long-term
      adverse impact on our ability to raise capital in the future.




15




*The
      market price for our common stock may be volatile, which could result in a
      complete loss of your investment.*




Our
      common stock is not widely traded or traded in great volume. This was the case
      even prior to delisting from Amex. Because of the limited trading market and
      volume, the market price for our common stock is likely to be highly volatile
      and subject to wide fluctuations in response to factors including the following:




·
            actual
                or anticipated fluctuations in our operating results;




·
            changes
                in financial estimates by securities analysts;




·
            market
                conditions, including new product announcements by us or our competitors,
                changes in the economic performance or market valuations of competitor
                companies, as well as acquisition announcements;




·
            additions
                or departures of key personnel; and




·
            legal
                and regulatory developments.




Volatility
      in our common stock price may make the value of an investment in our shares
      more
      speculative.




*We
      could become subject to penny stock regulations and restrictions, which could
      make it difficult for our stockholders to sell their shares of stock in our
      company.*




SEC
      regulations generally define “penny stocks” as equity securities that have a
      market price of less than $5.00 per share or an exercise price of less than
      $5.00 per share, subject to certain exemptions. As of April 14, 2008, the
      closing bid price for our common stock was $0.79 per share. Although we
      currently meet the net worth exemption from the “penny stock” definition, no
      assurance can be given that such exemption will be maintained. If we lose the
      exemption, our common stock may become subject to Rule 15g-9 under the Exchange
      Act, which regulations are commonly referred to as the “Penny Stock Rules.” The
      Penny Stock Rules impose additional sales practice requirements on
      broker-dealers prior to selling penny stocks, which may make it burdensome
      to
      conduct transactions in our shares. If our shares become subject to the Penny
      Stock Rules, it may be difficult to sell shares of our stock, and because it
      may
      be difficult to find quotations for shares of our stock, it may be impossible
      to
      accurately price an investment in our shares. There can be no assurance that
      our
      common stock will continue to qualify for an exemption from the Penny Stock
      Rules. In any event, even if our common stock continues to remain exempt from
      the Penny Stock Rules, we remain subject to Section 15(b)(6)
      of the Exchange Act, which gives the SEC the authority to restrict any person
      from participating in a distribution of a penny stock if the SEC determines
      that
      such a restriction would be in the public interest.




16




**ITEM
      1B.**  **UNRESOLVED
      STAFF COMMENTS**




Not
      applicable.





**ITEM
      2.**  **PROPERTIES**





Our
      principal executive offices are located in leased office space located at Room
      2001, FanMei Building No. 1 Naguan Zhengjie, Xian, Shaanxi province, People’s
      Republic of China, 710068, and
      the
      telephone number is +86.29. 87895373 .
      The
      office space is approximately 328 square meters in area.





We
      also
      maintain two separate factories in Yang Ling, China, situated at differing
      locations within the Yang Ling Agriculture High-Tech Industries Demonstration
      Zone. These two factories occupy an aggregate of approximately 56,745 square
      meters of land and contain our production lines, as well as office buildings,
      warehouses and two research laboratories. We also use a leased warehouse, which
      occupies 300 square meters of land in close proximity to both of our Yang Ling
      factories.





In
      connection with an agreement with the city government of A La Er, China (which
      is located in the Uygur autonomous region of Xinjiang, China), we agreed to
      invest in the construction of a manufacturing facility that will be able to
      produce up to 200,000 metric tons of fertilizer and pesticide products. This
      facility will be located in Xinjiang, China and is projected to be approximately
      120 acres (80,000 square meters). We believe that, with the
      strong government support that we are receiving and the regional market demand
      for fertilizer and pesticide products, Xinjiang represents a significant
      long-term growth opportunity for Bodisen. We began
      construction of the facility in April 2006 and originally believed construction
      would be completed in November 2006. However, there have been a series
      of
      delays, including delays caused by local weather conditions (an early winter,
      late spring and frequent sandstorms). Although we now expect
      to
      begin initial production at the new facility during 2008, we cannot however,
      guarantee that production at this facility will begin in 2008. To
      date,
      we have spent approximately $11.8 million on this facility and expect that
      completion could cost another approximately $3.0 million. Although we believe
      we
      will have sufficient funds to complete the facility, in the event we do not
      have
      sufficient funds, we will be required to obtain them from additional sources
      and
      there is no guarantee that we will succeed in doing so.





Following
      the 2006 admission of our shares to trading on the AIM market of the London
      Stock Exchange plc, we indicated that we intended to use certain proceeds from
      that offering to construct an additional facility in Northeast China. We have
      since decided not to pursue this project at this time.





As
      discussed in Note 7 to our consolidated financial statements, we have entered
      into land-lease arrangements for our properties. We do not own any land because,
      under the People’s Republic of China’s governmental regulations, the government
      owns all land.





We
      believe that our owned and leased properties, along with the properties being
      developed in our current facility expansion plans, will be sufficient for our
      current and immediately foreseeable operating needs.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings that
      arise in the ordinary course of business. Litigation is, however, subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. Other than the matters
      described below, we are currently not aware of any such legal proceedings or
      claims that we believe would or could have, individually or in the aggregate,
      a
      material adverse affect on our business, financial condition, results of
      operations or liquidity.





In
      late
      2006, various shareholders of the Company filed eight purported class actions
      in
      the U.S. District Court for the Southern District of New York against the
      Company and certain of its officers and directors (among others), asserting
      claims under the federal securities laws. The complaints contain allegations
      about the Company’s prior financial disclosures and its internal controls and a
      prior, now-terminated relationship with a financial advisor. The complaints
      do
      not specify an amount of damages that plaintiffs seek.





17


The
      eight
      actions are Stephanie Tabor vs. Bodisen, Inc., et al., Case No. 06-13220 (filed
      November 2006), Fraser Laschinger vs. Bodisen, Inc., et al., Case No. 06-13254
      (filed November 2006), Anthony DeSantis vs. Bodisen, Inc., et. al., Case No.
      06-13454 (filed November 2006), Yuchen Zhou vs. Bodisen, Inc., et. al., Case
      No.
      06-13567 (filed November 2006), William E. Cowley vs. Bodisen, Inc., et. al.,
      Case No. 06-13739 (filed December 2006), Ronald Stubblefield vs. Bodisen, Inc.,
      et. al., Case No. 06-14449 (filed December 2006), Adam Cohen vs. Bodisen, Inc.,
      et. al., Case No. 06-15179 (filed December 2006) and Lawrence M. Cohen vs.
      Bodisen, Inc., et. al., Case No. 06-15399 (filed December 2006).





The
      court
      has consolidated each of the actions into a single proceeding. All the
      defendants, including the Company, have filed motions to dismiss the actions.
      The parties are currently in the process of briefing the dismissal issues.
      No
      hearing is set on these motions.





Because
      these consolidated matters are in early stages, we cannot comment on whether
      an
      adverse outcome is probable or otherwise. While we believe the Company has
      meritorious defenses to each of these actions and intends to defend them
      vigorously, an adverse outcome in the consolidated actions could have a material
      adverse effect on its business, financial condition, results of operations
      or
      liquidity.




*ex
      parte* order
      from the Utah court, without providing us an opportunity to be heard,
      temporarily preventing us from selling the China Natural Gas shares. A further
      hearing is scheduled in April to review this order. We intend to vigorously
      and
      thoroughly defend the Company against this claim. While we believe we will
      prevail in these litigation matters and establish our right of ownership to
      the
      China Natural Gas shares, an adverse outcome could have a material adverse
      effect on our business, financial condition, results of operations or
      liquidity.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS.**





Not
      applicable.





18


**PART
      II**





**ITEM
      5.**  **MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
      OF EQUITY SECURITIES**





**Market
      Information**





Since
      April 2, 2007, our common stock has been traded on the Pink Sheets under the
      symbol “BBCZ.” Prior to April 2, 2007, our common stock was traded on the
      American Stock Exchange under the symbol “BBC.” Prior to August 29, 2005, our
      common stock traded on the Over-the-Counter Bulletin Board under the symbol
      “BBOI.” In addition, since February 6, 2006, our common stock has been traded on
      AIM, a market operated by the London Stock Exchange plc, under the symbol
“BODI.”





The
      following table sets forth the high and low bid prices of our common stock
      for
      the periods indicated. The quotations set forth below reflect inter-dealer
      prices, without retail mark-up, markdown or commission and may not represent
      actual transactions.





**2007****High**
            
            **Low**1stQuarter
            $
            5.40
            
            $
            3.312ndQuarter
            
            3.43
            
            
            1.753rdQuarter
            
            2.75
            
            
            0.874thQuarter
            
            2.92
            
            
            0.64





**2006****High**
            
            **Low**1stQuarter
            $
            21.97
            
            $
            13.142ndQuarter
            
            18.05
            
            
            8.113rdQuarter
            
            14.65
            
            
            8.594thQuarter
            
            10.84
            
            
            3.93




As
      of
      April 14, 2008, there were approximately 519 holders of record of our common
      stock.





Of
      the
      approximately 519 holders of record, 28 holders of record currently hold shares
      of our common stock on behalf of additional persons residing in the People’s
      Republic of China. Some or all of the 19 stockholders of Bodisen International
      (which, prior to the “reverse merger,” was the parent of Yang Ling, our
      principal operating subsidiary) who received stock in the “reverse merger” held
      at least a portion of such shares on behalf of additional persons residing
      in
      the People’s Republic of China. Prior
      to
      the reverse merger that resulted in our current corporate structure, various
      individuals provided investment capital to Yang Ling .
      After
      the reverse merger, we issued share certificates for our common stock to reflect
      the value of the earlier investments. Pursuant to an arrangement with the
      initial investors, we issued share certificates to certain individuals other
      than the initial investors (including Qiong Wang, a Director, and Bo Chen,
      our
      Chairman, CEO and President), who held title to those shares as nominee for
      the
      benefit of those investors. Following our reverse merger and our payment of
      a
      three for one stock dividend, Ms. Wang held legal title to a total of 3,748,780
      shares, of which she held 3,028,780 as nominee for the benefit of the initial
      investors and 720,000 for her own benefit, and Mr. Chen held legal title to
      3,584,096 shares, of which he held 2,894,096 as nominee for the benefit of
      the
      initial investors and 690,000 for his own benefit. Thus, Ms. Wang and Mr. Chen
      held 5,922,876 shares beneficially for others, apart from the shares they held
      for themselves.




19


In
      late
      2005, some of the initial investors began to request that the beneficially-held
      shares be transferred to them so that they could hold the shares in their own
      names. In response, Ms. Wang and Mr. Chen transferred shares they held
      beneficially for the initial investors to their children, who in turn
      effectuated the transfer of such shares to the initial investors. Over time,
      this process continued so that eventually, Ms. Wang and Mr. Chen transferred
      indirectly through their children all of the 5,922,876 beneficially-held shares
      to the initial investors, with the exception of approximately 738,000 shares.
      We
      hold the originals of 28 stock certificates representing these approximate
      738,000 shares in our offices in Xi’an, China.




The
      record holders of the 28 share certificates are nominees only and hold the
      shares for the benefit of initial investors or their assigns. The nominees
      have
      not asserted any interest in or made any claim to these shares. We have
      confirmed that the share certificates are genuine and that the records of our
      transfer agent are consistent with the information that appears on the
      certificates.




**Dividends**





We
      have
      never declared or paid any cash dividends on our common stock. We currently
      intend to retain future earnings, if any, to finance the expansion of our
      business. As a result, we do not anticipate paying any cash dividends in the
      foreseeable future.





In
      addition, as stipulated by the Company Law of the People’s Republic of China,
      net income after taxation can only be distributed as dividends after
      appropriation has been made for the following:





·
            making
                up cumulative prior years’ losses, if any;·
            allocations
                to the “statutory surplus reserve” of at least 10% of income after tax, as
                determined under the People’s Republic of China’s accounting rules and
                regulations, until the fund amounts to 50% of a company’s registered
                capital;·
            allocations
                of 5-10% of income after tax, as determined under the People’s Republic of
                China’s accounting rules and regulations, to a company’s “statutory common
                welfare fund,” which is established for the purpose of providing employee
                facilities and other collective benefits to a company’s employees;
                and·
            allocations
                to the discretionary surplus reserve, if approved in the stockholders’
                general meeting.





Accordingly,
      we established a reserve for the annual contribution of 10% of net income to
      the
      welfare fund, and the amount included in the statutory reserve for the years
      ended December 31, 2007 and 2006 amounted to $0 and $1,947,557, respectively.





**Recent
      Issuances of Unregistered Securities**





None.





**Issuer
      Repurchases of Equity Securities**





None.





**ITEM
      6.**  **SELECTED
      FINANCIAL DATA**





Intentionally
      Omitted.





20


**ITEM
      7.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





The
      following information should be read in conjunction with our selected
      consolidated financial and operating data and the accompanying consolidated
      financial statements and related notes thereto included elsewhere in this annual
      report. The following discussion may contain forward-looking statements that
      reflect our plans, estimates and beliefs. Our actual results could differ
      materially from those discussed in these forward-looking statements. Factors
      that could cause or contribute to these differences include, but are not limited
      to, those discussed below and elsewhere in this annual report, particularly
      in
“Risk Factors” and “Note Regarding Forward Looking Statements.”





Virtually
      all of our revenues and expenses are denominated in Renminbi ("RMB"), the
      currency of the People's Republic of China. Because we report our financial
      statements in U.S. dollars, we are exposed to translation risk resulting from
      fluctuations of exchange rates between the RMB and the U.S. dollar. There is
      no
      assurance that exchange rates between the RMB and the U.S. dollar will remain
      stable. A devaluation of the RMB relative to the U.S. dollar could adversely
      affect our business, financial condition and results of operations. See “Risk
      Factors.” We do not engage in currency hedging and to date, inflation has not
      had a material impact on our business.





Unless
      otherwise specified, references to Notes to our consolidated financial
      statements are to the Notes to our audited consolidated financial statements
      as
      of December 31, 2007 and 2006 and for the two-year period ended December 31,
      2007.





**Overview**





We
      are
      incorporated under the laws of the state of Delaware and our operating
      subsidiary, Yang Ling, is headquartered in Shaanxi Province, the People’s
      Republic of China. We are engaged in developing, manufacturing and selling
      organic fertilizers, liquid fertilizers, pesticides and insecticides in the
      People’s Republic of China and produce numerous proprietary product lines, from
      pesticides to crop-specific fertilizers. We market and sell our products to
      distributors throughout the People's Republic of China, and these distributors,
      in turn, sell our products to farmers. We also conduct research and development
      to further improve existing products and develop new formulas and
      products.





**Critical
      Accounting Policies**





The
      accounting and reporting policies that we use affect our consolidated financial
      statements. Certain of our accounting and reporting policies are critical to
      an
      understanding of our results of operations and financial condition, and in
      some
      cases, the application of these policies can be significantly affected by the
      estimates, judgments and assumptions made by management during the preparation
      of our consolidated financial statements. These accounting and reporting
      policies are described below. See Note 2 to our consolidated financial statement
      for further discussion of our accounting policies.





*Accounts
      receivable*





We
      maintain reserves for potential credit losses on accounts receivable and record
      them primarily on a specific identification basis. In order to establish
      reserves, we review the composition of accounts receivable and analyze
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves. This analysis and evaluation requires the use of
      judgments and estimates. Because of the nature of the evaluation, certain of
      the
      judgments and estimates are subject to change, which may require adjustments
      in
      future periods.





*Inventories*





We
      value
      inventories at the lower of cost (determined on a weighted average basis) or
      market. When evaluating our inventory, we compare the cost with the market
      value
      and make allowance to write them down to market value, if lower. The
      determination of market value requires the use of estimates and judgment by
      our
      management.





21


*Intangible
      assets*





Since
      July 1, 2002, we have evaluated potential goodwill impairment in accordance
      with
      SFAS No. 142, which applied to our financial statements beginning July 1, 2002.
      We evaluate intangible assets for impairment, at least on an annual basis and
      whenever events or changes in circumstances indicate that the carrying value
      may
      not be recoverable from its estimated future cash flows. This evaluation
      requires the use of judgments and estimates, in particular with respect to
      recoverability. Recoverability of intangible assets, other long-lived assets
      and, goodwill is measured by comparing their net book value to the related
      projected undiscounted cash flows from these assets, considering a number of
      factors including past operating results, budgets, economic projections, market
      trends and product development cycles. If the net book value of the asset
      exceeds the related undiscounted cash flows, the asset is considered impaired,
      and a second test is performed to measure the amount of impairment
      loss.





**Recent
      Accounting Pronouncements**





In
      December 2007, the Financial Accounting Standards Board, or FASB, issued
      Statement of Financial Accounting Standard, or SFAS, No. 141 (Revised
      2007), “Business Combinations.” SFAS No. 141 (Revised 2007) changes how a
      reporting enterprise accounts for the acquisition of a business. SFAS
      No. 141 (Revised 2007) requires an acquiring entity to recognize all the
      assets acquired and liabilities assumed in a transaction at the acquisition-date
      fair value, with limited exceptions, and applies to a wider range of
      transactions or events. SFAS No. 141 (Revised 2007) is effective for fiscal
      years beginning on or after December 15, 2008 and early adoption and
      retrospective application is prohibited. We do not expect the adoption of SFAS
      141 to have a significant impact on our results of operations or financial
      position.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements,” which is an amendment of Accounting Research
      Bulletin, or ARB, No. 51.  SFAS No. 160 clarifies that a noncontrolling
      interest in a subsidiary is an ownership interest in the consolidated entity
      that should be reported as equity in the consolidated financial statements
      and
      changes the way the consolidated income statement is presented, thus requiring
      consolidated net income to be reported at amounts that include the amounts
      attributable to both parent and the noncontrolling interest.  SFAS No.
      160 is effective for the fiscal years, and interim periods within those fiscal
      years, beginning on or after December 15, 2008.  Based on current
      conditions, we do not expect the adoption of SFAS 160 to have a significant
      impact on our results of operations or financial position.





For
      information regarding these and other recent accounting pronouncements and
      their
      expected impact on our future financial condition or results of operations,
      see
      Note 2 to our consolidated financial statements.





**Results
      of Operations**





*Year
      ended December 31, 2007 compared to year ended* December
      31, 2006





Revenue.
      We generated revenues of $12,108,579 for the year ended December 31, 2007,
      a
      decrease of $31,518,405 or 72.2%, compared to $43,626,984 for the year ended
      December 31, 2006. The significant decrease in revenue was due to the continued
      decline in our customer base, which decreased following our delisting from
      the
      Amex and, to a lesser extent, the abnormally cold Spring time weather of Shaanxi
      province as well as a storm and drought in the third quarter of 2007, all of
      which affected crop plantings and decreased the use of fertilizer.





Gross
      Profit. We achieved a gross profit of $5,346,209 for the year ended December
      31,
      2007, a decrease of $11,737,612 or 68.7%, compared to $17,083,821 for the year
      ended December 31, 2006. The significant decrease in gross profit was due to
      the
      significant decrease in revenue as result of decreased sales, and, to a lesser
      extent, increased commodities prices, which increased our costs of revenues.
      Gross margin (gross profit as a percentage of revenues), increased, from 39.2%
      for the year ended December 31, 2006, to 44.2% for the year ended December
      31,
      2007 primarily due to changes in overall product mix comprising
      sales.





Operating
      expenses. We incurred operating expenses of $29,137,160 for the year ended
      December 31, 2007, an increase of $27,384,254 or 776.8% compared to $3,525,450
      for the year ended December 31, 2006. The significant increase in our operating
      expenses is primarily related to an increase in our allowance for doubtful
      accounts of approximately $23,800,000, and to a lesser extent, legal fees
      associated with litigation and other matters in connection with the Amex
      delisting and a loss of approximately $1,700,000 due to storm damage in
      August 2007.





22


Aggregated
      selling expenses accounted for $1,772,554 of our operating expenses for the
      year
      ended December 31, 2007, a decrease of $199,532 or 10.1% compared to $1,972,076
      for the year ended December 31, 2006. The decrease in our aggregated selling
      expenses is primarily due the reduction in transportation costs, which costs
      primarily decreased due to our lower sales volume although they continued to
      be
      negatively affected by the continued increases in petroleum prices. The
      reduction in our transportation costs was partially offset by increased labor
      costs. General and administrative expenses accounted for the remainder of our
      operating expenses of $29,137,160 for the year ended December 31, 2007, which
      increased $27,583,786 or 1,775.7% compared to $1,553,374 for the year ended
      December 31, 2006. The significant increase in our general and administrative
      expenses is primarily related to an increase in our allowance for doubtful
      accounts of approximately $23,800,000, legal fees associated with litigation
      and
      other matters in connection with the Amex delisting and a loss of
      approximately $1,700,000 due to storm damage in August 2007.





Non
      Operating Income and Expenses. We had total non-operating income of $274,276
      for
      the year ended December 31, 2007 compared to total non-operating income of
      $172,456 for the year ended December 31, 2006. We had other expense of $69,519
      for the year ended December 31, 2007 compared to other income of $612,584 for
      the year ended December 31, 2006. In 2006, other income was due to the effects
      of a foreign currency transaction gain, which we did not have in 2007. Total
      non-operating income includes interest income of $348,113 for the year ended
      December 31, 2007 compared to only $240,527 of interest income for the year
      ended December 31, 2006. The increase in interest income for the year ended
      December 31, 2007 is due to the full year effects of the increased cash balance
      that resulted from our sale of stock in the first quarter of 2006. Total
      non-operating income for the year ended December 31, 2007 also includes interest
      expense of only $4,318 compared to $680,655 for the year ended December 31,
      2006. The majority of the interest expense for the year ended December 31,
      2006
      relates to the $5 million note issued December 8, 2005, which was repaid during
      March 2006.





Net
      Income (Loss). For the foregoing reasons, we had a net loss of $25,327,392
      for
      the year ended December 31, 2007, a decrease of $39,058,219 or 284.5% compared
      to net income of $13,730,827 for the year ended December 31, 2006. We had
      earnings (loss) per share of $(1.38) for the year ended December 31, 2007
      compared to earnings per share of $0.76 for the year ended December 31,
      2006.





**Liquidity
      and Capital Resources**





We
      are
      primarily a parent holding company for the operations carried out by our
      indirect operating subsidiary, Yang Ling, which carries out its activities
      in
      the People’s Republic of China. Because of our holding company structure, our
      ability to meet our cash requirements apart from our financing activities,
      including payment of dividends on our common stock, if any, substantially
      depends upon the receipt of dividends from our subsidiaries, particularly Yang
      Ling.





As
      of
      December 31, 2007, we had $617,406 of cash and cash equivalents compared to
      $11,824,327 as of December 31, 2006. The significant decrease in cash is due
      to
      a significant decrease in cash provided by our operating activities as a result
      of an increase cash used to finance our working capital needs and the decrease
      in our net income.





Based
      on
      past performance and current expectations, we believe our cash and cash
      equivalents and cash generated from operations will satisfy our current working
      capital needs, capital expenditures and other liquidity requirements associated
      with our operations. However, to the extent our allowance for bad debts in
      insufficient to cover our actual bad debt experience, our liquidity would be
      negatively impacted.





*Cash
      Flows*





We
      used
      $7,932,725 of cash in our operating activities for the year ended December
      31,
      2007 compared to $5,920,097 in 2006. This significant increase in the use of
      cash to finance our operating activities is principally due to the significant
      decrease in net income from operations, which was only partially offset by
      our
      decreased working capital needs.




23


We
      used
      $3,743,357 of cash for investing activities for the year ended December 31,
      2007, compared to $5,629,351 in 2006. We used cash of $3,648,750 in connection
      with additions to construction in process for the year ended December 31, 2007
      compared to $1,696,321 in 2006. In 2006 our other investing activities consisted
      primarily of our land-lease arrangement as well as the investment in two local
      Chinese companies.





We
      had no
      cash provided by financing activities for the year ended December 31, 2007.
      We
      generated $16,769,964 of cash from our financing activities for the year ended
      December 31, 2006 due to the capital raised from the sale of our common stock
      in
      the first quarter of 2006.





*Financing
      Activities*





On
      February 3, 2006, we entered into an agreement to sell 1,643,836 shares of
      our
      common stock at 730 pence per share (approximately $12.99 per share). These
      shares currently trade on the AIM Market of the London Stock Exchange plc.
      We
      received approximately £12,000,000 (approximately $21,360,000) of gross
      proceeds, which were intended for construction of two factories (one in the
      Northwest and one in the Northeast of the People’s Republic of China), as well
      as the purchase of raw materials and for general corporate purposes. We have
      since decided not to pursue construction of the factory in the
      Northeast.





On
      March
      15, 2006, we raised $5,322,506 from the issuance of 380,179 restricted shares
      of
      common stock at $14.00 per share to institutional investors in a private
      placement. We used the proceeds of this financing to repay the $5,000,000
      short-term note issued in December 2005.





For
      additional information relating to our financing activities, see Notes 9 and
      10
      and to our annual consolidated financial statements included in this Form
      10-K.




*Loan
      Receivables*




In
      August
      2006, we made an unsecured loan of $1,306,745 to one of our suppliers.
      Because we will receive interest payments (at a rate of 13% per annum) on this
      amount from the supplier, we account for this as a loan rather than an advance
      to a supplier. This loan is to be repaid by August 2008. In November 2006,
      we made an unsecured $814,096 advance payment to a company for the
      installation of a facility to house a new compound fertilizer production
      line in a new building.  The installation of that facility occurred in
      November 2007. We accounted for this as a loan under applicable accounting
      rules
      because the advance payment bears interest at rate of 13% per annum and is
      to be
      repaid by November 2008. For more information relating to these loan
      receivables, see Note 2 to our annual consolidated financial statements included
      in this Form 10-K.





*Contractual
      Commitments*





In
      August
      2006, we entered into a 30-year land-lease arrangement with the government
      of
      the People’s Republic of China, under which we pre-paid $2,529,818 upon
      execution of the contract of lease expense for the next 15 years. We agreed
      to
      make a prepayment for the next eight years in November 2021, and will make
      a
      final pre-payment in November 2029 for the remaining seven years. The annual
      lease expense amounts to approximately $169,580. For further information
      regarding this arrangement, see Note 7 to our annual consolidated financial
      statements included in this Form 10-K. Our land-lease arrangement is currently
      our only material on- and off-balance sheet expected or contractually committed
      future obligation.





*Off-Balance
      Sheet Arrangements*





We
      currently do not have any material off-balance sheet arrangements except for
      the
      remaining pre-payments under the land-lease arrangement described above and
      in
      Note 7 to our annual consolidated financial statements included this Form
      10-K.





24


**ITEM
      7A.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





Intentionally
      Omitted




25





**ITEM
      8.**  **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**


**Bodisen
          Biotech, Inc. and Subsidiaries**
 **Consolidated
          Financial Statements**
 **Years
          Ended December 31, 2007 and 2006**
 
 **Contents**
 
 Page**Report
                    of Independent Registered Public Accounting Firm**Report
                    on 2007 consolidated financial statements
                
                
                F-1Report
                    on 2006 consolidated financial statements
                
                
                F-2**Financial
                    Statements:**Consolidated
                    Balance Sheets as of December 31, 2007 and 2006
                
                
                F-3Consolidated
                    Statements of Operations and Other Comprehensive Income for the
                    years
                    ended December 31, 2007 and 2006
                
                
                F-4Consolidated
                    Statement of Stockholders' Equity for the years ended December
                    31, 2007
                    and 2006
                
                
                F-5Consolidated
                    Statements of Cash Flows for the years ended December 31, 2007
                    and
                    2006
                
                
                F-6Notes
                    to Consolidated Financial Statements
                
                
                F-7**Financial
                    Statement Schedule:**Schedule
                    I – Condensed financial information or Registrant - Parent only
                    schedule Under Rule 5-04/4-08(e)(3) for the years ended December
                    31, 2007
                    and 2006
                
                
                F-28
 
 26
  **Report
          of Independent Registered Public Accounting Firm**
 
 ***MORGENSTERN,
          SVOBODA, & BAER, CPA’s, P.C.***
 
 *CERTIFIED
          PUBLIC ACCOUNTANTS*
 40
          Exchange Place, Suite 1820
 New
          York,
          NY 10005
 TEL:
          (212) 925-9490
 FAX:
          (212) 226-9134
 E-MAIL:
          MSBCPAS@GMAIL.COM
 
 Board
          of
          Directors and Stockholders of
 Bodisen
          Biotech, Inc.
 
 We
          have
          audited the accompanying consolidated balance sheets of Bodisen Biotech,
          Inc. (a
          Delaware corporation) and subsidiaries as of December 31, 2007, and the
          related
          consolidated statements of operations and other comprehensive loss,
          stockholders' equity, and cash flows for the year ended December 31, 2007
          and
          the financial statement schedule for the year ended December 31, 2007.
          These
          consolidated financial statements and financial statement schedule are
          the
          responsibility of the Company's management. Our responsibility is to express
          an
          opinion on these consolidated financial statements based on our
          audits.
 
 We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          consolidated financial statements are free of material misstatement. An
          audit
          includes examining, on a test basis, evidence supporting the amounts and
          disclosures in the financial statements. An audit also includes assessing
          the
          accounting principles used and significant estimates made by management,
          as well
          as evaluating the overall consolidated financial statement presentation.
          We
          believe that our audits provide a reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the consolidated financial position of Bodisen
          Biotech, Inc. and subsidiaries as of December 31, 2007, and the consolidated
          results of their operations and their consolidated cash flows for the year
          ended
          December 31, 2007, in conformity with U.S. generally accepted accounting
          principles. In addition, in our opinion, the financial statement schedule
          listed
          in the accompanying index presents fairly, in all material respects, the
          information set forth therein when read in conjunction with the related
          consolidated financial statements.
 
 The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company will continue as a going concern. However, as discussed in
          Note 19,
          there are certain law suits filed by investors against the Company and
          the
          Company is subject to potential claims.  These conditions raise substantial
          doubt about the Company's ability to continue as a going concern. Management's
          responses in regard to these matters are also described in Note19. The
          consolidated financial statements do not include any adjustments that might
          result from the outcome of this uncertainty.
 
 /s/
          Morgenstern, Svoboda & Baer, CPAs, P.C.
 Certified
          Public Accountants
 
 New
          York,
          NY
 March
          14,
          2008
 
 F-1
  **Report
          of Independent Registered Public Accounting Firm**
 
 Board
          of
          Directors and Stockholders of
 Bodisen
          Biotech, Inc.
 
 We
          have
          audited the accompanying consolidated balance sheets of Bodisen Biotech,
          Inc. (a
          Delaware corporation) and subsidiaries as of December 31, 2006, and the
          related
          consolidated statements of income and other comprehensive income, stockholders'
          equity, and cash flows for the year ended December 31, 2006 and the financial
          statement schedule for the year ended December 31, 2006. These consolidated
          financial statements and financial statement schedule are the responsibility
          of
          the Company's management. Our responsibility is to express an opinion on
          these
          consolidated financial statements based on our audits.
 
 We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          consolidated financial statements are free of material misstatement. An
          audit
          includes examining, on a test basis, evidence supporting the amounts and
          disclosures in the financial statements. An audit also includes assessing
          the
          accounting principles used and significant estimates made by management,
          as well
          as evaluating the overall consolidated financial statement presentation.
          We
          believe that our audits provide a reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the consolidated financial position of Bodisen
          Biotech, Inc. and subsidiaries as of December 31, 2006, and the consolidated
          results of their operations and their consolidated cash flows for the year
          ended
          December 31, 2006, in conformity with U.S. generally accepted accounting
          principles. In addition, in our opinion, the financial statement schedule
          listed
          in the accompanying index presents fairly, in all material respects, the
          information set forth therein when read in conjunction with the related
          consolidated financial statements.
 
 The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company will continue as a going concern. However, as discussed in
          Note 19,
          there are certain law suits filed by investors against the Company and
          the
          Company is subject to potential claims from certain investors who have
          a right
          to receive the Company's shares.  These conditions raise substantial doubt
          about the Company's ability to continue as a going concern. Management's
          responses in regard to these matters are also described in Note 11 and
          Note 19.
          The consolidated financial statements do not include any adjustments that
          might
          result from the outcome of this uncertainty.
 
 /s/
          Kabani & Company, Inc.
 **Certified
          Public Accountants**
 
 Los
          Angeles, California
 March
          26,
          2007
 
 F-2
  **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 
 **December
                    31,**
                
                **December
                    31,****2007**
                
                **2006****ASSETS****CURRENT
                    ASSETS:**Cash
                    & cash equivalents
                
                $
                617,406
                
                $
                11,824,327Accounts
                      receivable, net of allowance fordoubtful
                      accounts of $25,447,689 and $659,653
                
                
                618,052
                
                
                18,875,368Other
                    receivable
                
                
                2,292,763
                
                
                888,230Inventory
                
                
                1,179,448
                
                
                1,794,585Advances
                    to suppliers
                
                
                9,741,090
                
                
                12,662,139Prepaid
                    expense and other current assets
                
                
                5,066,015
                
                
                195,821Total
                    current assets
                
                
                19,514,774
                
                
                46,240,470**PROPERTY
                    AND EQUIPMENT, net**
                
                
                5,306,254
                
                
                5,195,283**CONSTRUCTION
                    IN PROGRESS**
                
                
                7,722,756
                
                
                3,669,807**MARKETABLE
                    SECURITY**
                
                
                14,239,999
                
                
                6,500,869**INTANGIBLE
                    ASSETS, net**
                
                
                2,050,652
                
                
                2,054,346**OTHER
                    ASSETS**
                
                
                3,720,785
                
                
                3,553,433**LOAN
                    RECEIVABLE**
                
                
                2,439,275
                
                
                1,982,410**TOTAL
                    ASSETS**
                
                $
                54,994,495
                
                $
                69,196,618**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****CURRENT
                    LIABILITIES:**Accounts
                    payable
                
                $
                1,186,768
                
                $
                1,022,352Accrued
                    expenses
                
                
                219,936
                
                
                347,948Total
                    current liabilities
                
                
                1,406,704
                
                
                1,370,300**STOCKHOLDERS'
                    EQUITY:**Preferred
                      stock, $0.0001 per share; authorized 5,000,000 shares;nil
                      issued and outstandingCommon
                      stock, $0.0001 per share; authorized 30,000,000 shares;issued
                      and outstanding 18,310,250 and 18,310,250
                
                
                1,831
                
                
                1,831Additional
                    paid-in capital
                
                
                33,860,062
                
                
                33,860,062Other
                    comprehensive income
                
                
                16,520,775
                
                
                5,431,910Statutory
                    reserve
                
                
                4,314,488
                
                
                4,314,488Retained
                    earnings (accumulated deficit)
                
                
                (1,109,365
                )
                
                24,218,027Total
                    stockholders' equity
                
                
                53,587,791
                
                
                67,826,318**TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                
                $
                54,994,495
                
                $
                69,196,618
  The
          accompanying notes are an integral part of these consolidated financial
          statements
 
 F-3
  **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
          (LOSS)**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
 **Years
                      Ended December 31,****2007**
                  
                  **2006****Net
                      Revenue**
                  
                  $
                  12,108,579
                  
                  $
                  43,626,984**Cost
                      of Revenue**
                  
                  
                  6,762,370
                  
                  
                  26,543,163**Gross
                      profit**
                  
                  
                  5,346,209
                  
                  
                  17,083,821Operating
                      expensesSelling
                      expenses
                  
                  
                  1,772,544
                  
                  
                  1,972,076General
                      and administrative expenses
                  
                  
                  29,137,160
                  
                  
                  1,553,374Total
                      operating expenses
                  
                  
                  30,909,704
                  
                  
                  3,525,450**Income
                      (loss) from operations**
                  
                  
                  (25,563,495
                  )
                  
                  13,558,371Non-operating
                      income (expense):Other
                      income (expense)
                  
                  
                  (69,519
                  )
                  
                  612,584Interest
                      income
                  
                  
                  348,113
                  
                  
                  240,527Interest
                      expense
                  
                  
                  (4,318
                  )
                  
                  (680,655
                  )Total
                      non-operating income (expense)
                  
                  
                  274,276
                  
                  
                  172,456**Loss
                      before provision for income taxes**
                  
                  
                  (25,289,219
                  )
                  
                  13,730,827**Provision
                      for income taxes**
                  
                  
                  38,173
                  
                  
                  -**Net
                      income (loss)**
                  
                  
                  (25,327,392
                  )
                  
                  13,730,827Other
                      comprehensive incomeForeign
                      currency translation gain (loss)
                  
                  
                  3,349,735
                  
                  
                  1,210,466Unrealized
                      gain (loss) on marketable equity security
                  
                  
                  7,739,130
                  
                  
                  (309,565
                  )**Comprehensive
                      Income (loss)**
                  
                  $
                  (14,238,527
                  )
                  $
                  14,631,728**Weighted
                      average shares outstanding :**Basic
                  
                  
                  18,310,250
                  
                  
                  17,966,090Diluted
                  
                  
                  18,310,250
                  
                  
                  18,072,433**Earnings
                      per share:**Basic
                  
                  $
                  (1.38
                  )
                  $
                  0.76Diluted
                  
                  $
                  (1.38
                  )
                  $
                  0.76
  The
          accompanying notes are an integral part of these consolidated financial
          statements
 
 F-4
  **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY**
 **FOR
          THE YEAR ENDED DECEMBER 31, 2007 AND 2006**
 
 **Retained****Other**
                
                
                
                **Earnings/**
                
                **Total****Common Stock**
                
                **Additional Paid**
                
                **Comprehensive**
                
                **Statutory**
                
                **(Accumulated**
                
                **Stockholders'****Shares**
                
                **Amount**
                
                **in
                    Capital**
                
                **Income**
                
                **Reserve**
                
                **Deficit)**
                
                **Equity****Balance,
                    December 31, 2005**
                
                
                16,120,902
                
                $
                1,613
                
                $
                12,082,793
                
                $
                4,531,009
                
                $
                2,366,931
                
                $
                12,434,757
                
                $
                31,417,103Sale
                      of common stock for cash, net of offering costs of
                      $6,132,708
                
                
                2,024,015
                
                
                202
                
                
                20,549,602
                
                
                
                
                
                
                
                
                
                
                
                20,549,804Exercise
                    of warrants for cash
                
                
                165,333
                
                
                16
                
                
                1,220,144
                
                
                
                
                
                
                
                
                
                
                
                1,220,160Value
                    of vested options issued directors
                
                
                
                
                
                
                
                
                7,523
                
                
                
                
                
                
                
                
                
                
                
                7,523Change
                    in foreign currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                1,210,466
                
                
                
                
                
                
                
                
                1,210,466Change
                    in unrealized gain on marketable equity security
                
                
                
                
                
                
                
                
                
                
                
                (309,565
                )
                
                
                
                
                
                
                
                (309,565
                )Net
                    income for the year ended December 31, 2006
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                13,730,827
                
                
                13,730,827Transfer
                    to statutory reserve
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,947,557
                
                
                (1,947,557
                )
                
                -**Balance,
                    December 31, 2006**
                
                
                18,310,250
                
                
                1,831
                
                
                33,860,062
                
                
                5,431,910
                
                
                4,314,488
                
                
                24,218,027
                
                
                67,826,318Change
                    in foreign currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                3,349,735
                
                
                
                
                
                
                
                
                3,349,735Change
                    in unrealized gain on marketable equity security
                
                
                
                
                
                
                
                
                
                
                
                7,739,130
                
                
                
                
                
                
                
                
                7,739,130Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (25,327,392
                )
                
                (25,327,392
                )Transfer
                    to statutory reserve
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                -**Balance,
                    December 31, 2007**
                
                
                18,310,250
                
                $
                1,831
                
                $
                33,860,062
                
                $
                16,520,775
                
                $
                4,314,488
                
                $
                (1,109,365
                )
                $
                53,587,791
  The
          accompanying notes are an integral part of these consolidated financial
          statements
 
 F-5
 **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
 
 **Years
                    Ended December 31,****2007**
                
                **2006****CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    income (loss)
                
                $
                (25,327,392
                )
                $
                13,730,827Adjustments
                      to reconcile net income (loss) to net cashprovided
                      by (used in) operating activities:Depreciation
                    and amortization
                
                
                478,027
                
                
                455,318Common
                    stock issued for interest expenseAmortization
                    of debt discounts
                
                
                -
                
                
                603,886Exchange
                    gain (loss)
                
                
                -
                
                
                (451,867
                )Value
                    of vested option issued to directors
                
                
                
                
                
                7,523Allowance
                    for bad debts
                
                
                23,777,908
                
                
                -(Increase)
                    / decrease in assets:Accounts
                    receivable
                
                
                (4,965,277
                )
                
                (10,906,475
                )Other
                    receivable & Loan Receivable
                
                
                (1,596,224
                )
                
                (1,759,543
                )Inventory
                
                
                711,601
                
                
                (562,179
                )Deposits
                
                
                (100,501
                )
                
                -Advances
                    to suppliers
                
                
                3,656,973
                
                
                (7,775,011
                )Prepaid
                    expense
                
                
                (4,566,786
                )
                
                (133,967
                )Other
                    assets
                
                
                
                
                
                3,482Increase
                    / (decrease) in current liabilities:Accounts
                    payable
                
                
                144,607
                
                
                959,335Other
                    payable
                
                
                (145,661
                )
                
                (15,168
                )Accrued
                    expenses
                
                
                -
                
                
                (76,258
                )Net
                    cash provided by (used in) operating activities
                
                
                (7,932,725
                )
                
                (5,920,097
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Payment
                    on loan receivableAcquisition
                    of property and equipment
                
                
                (94,607
                )
                
                (451,358
                )Additions
                    to construction in progress
                
                
                (3,648,750
                )
                
                (1,696,321
                )Investments
                
                
                
                
                
                -Purchase
                    of marketable securityPayments
                    for other assetsAcquistion
                    of other assets
                
                
                -
                
                
                (3,481,672
                )Net
                    cash used in investing activities
                
                
                (3,743,357
                )
                
                (5,629,351
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Payments
                    on note payable
                
                
                -
                
                
                (5,000,000
                )Loans
                    made to officers
                
                
                -
                
                
                -Repayments
                    of loans to officers
                
                
                -
                
                
                -Proceeds
                    from issuance of convertible note
                
                
                -
                
                
                -Proceeds
                    from issuance of note payable
                
                
                -
                
                
                -Proceeds
                    from issuance of common stock
                
                
                -
                
                
                26,682,511Payment
                    of offering costs
                
                
                -
                
                
                (6,132,707
                )Proceeds
                    from the exercise of warrants
                
                
                -
                
                
                1,220,160Net
                    cash provided by financing activities
                
                
                -
                
                
                16,769,964Effect
                    of exchange rate changes on cash and cash equivalents
                
                
                469,161
                
                
                326,914**NET
                    INCREASE /(DECREASE) IN CASH & CASH
                    EQUIVALENTS**
                
                
                (11,206,921
                )
                
                5,547,430**CASH
                    & CASH EQUIVALENTS, BEGINNING OF YEAR**
                
                
                11,824,327
                
                
                6,276,897**CASH
                    & CASH EQUIVALENTS, END OF YEAR**
                
                $
                617,406
                
                $
                11,824,327**SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:**Interest
                    paid
                
                $
                -
                
                $
                112,500Income
                    taxes paid
                
                $
                -
                
                $
                -
  The
          accompanying notes are an integral part of these consolidated financial
          statements
 F-6
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 **Note
          1 - Organization and Basis of Presentation**
 
 Organization
          and Line of Business
  Yang
          Ling
          Bodisen Biology Science and Technology Development Company Limited (“BBST”) was
          founded in the People’s Republic of China on August 31, 2001. BBST, located in
          Yang Ling Agricultural High-Tech Industries Demonstration Zone, is primarily
          engaged in developing, manufacturing and selling pesticides and compound
          organic
          fertilizers in the People’s Republic of China.
 
 On
          February 24, 2004, Bodisen International, Inc. (“BII”), the non-operative
          holding company of BBST (accounting acquirer) consummated a merger agreement
          with Stratabid.com, Inc. (legal acquirer) (“Stratabid”), a Delaware corporation,
          to exchange 12,000,000 shares of Stratabid to the stockholders of BII,
          in which
          BII merged into Bodisen Holdings, Inc. (BHI), an acquisition subsidiary
          of
          Stratabid, with BHI being the surviving entity. As a part of the merger,
          Stratabid cancelled 3,000,000 shares of its issued and outstanding stock
          owned
          by its former president and declared a stock dividend of three shares on
          each
          share of its common stock outstanding for all stockholders on record as
          of
          February 27, 2004.
 
 Stratabid
          was incorporated in the State of Delaware on January 14, 2000 and before
          the
          merger, was a start- up stage Internet based commercial mortgage origination
          business based in Vancouver, BC, Canada.
 
 The
          exchange of shares with Stratabid has been accounted for as a reverse
          acquisition under the purchase method of accounting because the stockholders
          of
          BII obtained control of Stratabid. On March 1, 2004, Stratabid was renamed
          Bodisen Biotech, Inc. (the “Company”). Accordingly, the merger of the two
          companies has been recorded as a recapitalization of the Company, with
          the
          Company (BII) being treated as the continuing entity. The historical financial
          statements presented are those of BII.
 
 As
          a
          result of the reverse merger transaction described above the historical
          financial statements presented are those of BBST, the operating
          entity.
 
 In
          March
          2005, Bodisen Biotech Inc. completed a $3 million convertible debenture
          private
          placement through an institutional investor. Approximately $651,000 in
          incremental and direct expenses relating to this private placement has
          been
          amortized over the term of the convertible debenture. None of the expenses
          were
          paid directly to the institutional investor. The net proceeds from this
          offering
          were invested as initial start-up capital in a newly created wholly-owned
          Bodisen subsidiary by the name of “Yang Ling Bodisen Agricultural Technology
          Co., Ltd. (“Agricultural”). In June 2005, Agricultural completed a transaction
          with Yang Ling Bodisen Biology Science and Technology Development Company
          Limited (“BBST”), Bodisen Biotech, Inc.’s operating subsidiary in China, which
          resulted in Agricultural owning 100% of BBST.
 
 In
          June
          2006, BBST created another wholly owned subsidiary in the Uygur autonomous
          region of Xinjiang, China by the name of Bodisen Agriculture Material Co.
          Ltd.
          (“Material”). Material had no operations during the year ended December 31,
          2006.
  F-7
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Basis
          of Presentation
 
 The
          accompanying consolidated financial statements have been prepared in conformity
          with accounting principles generally accepted in the United States of America.
          The Company’s functional currency is the Chinese Renminbi; however the
          accompanying consolidated financial statements have been translated and
          presented in United States Dollars ($).
 
 Foreign
          Currency Translation
 
 As
          of
          December 31, 2007 and 2006, the accounts of the Company were maintained,
          and
          their consolidated financial statements were expressed in the Chinese Yuan
          Renminbi (CNY). Such consolidated financial statements were translated
          into U.S.
          Dollars (USD) in accordance with Statement of Financial Accounts Standards
          ("SFAS") No. 52, "Foreign Currency Translation," with the CNY as the functional
          currency. According to the Statement, all assets and liabilities are translated
          at the exchange rate on the balance sheet date, stockholder's equity is
          translated at the historical rates and statement of operations items are
          translated at the weighted average exchange rate for the year. The resulting
          translation adjustments are reported under other comprehensive income in
          accordance with SFAS No. 130, "Reporting Comprehensive Income.”
 
 Going
          Concern
 
 The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company will continue as a going concern. However, as discussed in
          Note 19,
          there are certain law suits filed by investors against the Company and
          the
          Company is subject to potential claims from certain investors who have a
          right to receive the Company’s shares.  These conditions raise substantial
          doubt about the Company's ability to continue as a going concern.
 
 Management's
          responses in regard to these matters are also described in Note 19. The
          consolidated financial statements do not include any adjustments that might
          result from the outcome of this uncertainty.
 
 **Note
          2 – Summary of Significant Accounting Policies**
 
 Use
          of
          Estimates
 
 The
          preparation of financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect the reported amounts of assets and liabilities and disclosure of
          contingent assets and liabilities at the date of the financial statements
          and
          the reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.
 
 Cash
          and Cash Equivalents
 
 Cash
          and
          cash equivalents include cash in hand and cash in time deposits, certificates
          of
          deposit and all highly liquid debt instruments with original maturities
          of three
          months or less.
  F-8
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 
 Accounts
          Receivable
 
 The
          Company maintains reserves for potential credit losses on accounts receivable.
          Management reviews the composition of accounts receivable and analyzes
          historical bad debts, customer concentrations, customer credit worthiness,
          current economic trends and changes in customer payment patterns to evaluate
          the
          adequacy of these reserves. Terms of the sales vary from COD through a
          credit
          term up to 9 to 12 months. Reserves are recorded primarily on a specific
          identification basis. Allowance for doubtful accounts amounted to $25,447,689
          and $659,653 at December 31, 2007 and 2006, respectively.
 
 Advances
          to Suppliers
 
 The
          Company makes advances to certain vendors for purchase of its material.
          The
          advances to suppliers are interest free and unsecured. The advances to
          suppliers
          amounted to $9,741,090 and $12,662,139 at December 31, 2007 and 2006,
          respectively.
 
 Inventories
 
 Inventories
          are valued at the lower of cost (determined on a weighted average basis)
          or
          market. The Management compares the cost of inventories with the market
          value
          and allowance is made for writing down their inventories to market value,
          if
          lower.
 
 Loan
          Receivable
 
 In
          August
          2006, the Company entered into an agreement to loan $1,306,745 to an unrelated
          party. The loan is unsecured, payable by August 2008 and carries an interest
          rate of 13% per annum. Interest receivable on this loan was $192,472 and
          $68,191
          at December 31, 2007 and 2006, respectively.
 
 In
          November 2006, the Company entered into an agreement to loan $814,096 to
          an
          unrelated party. The loan is unsecured, payable by November 2008 and carries
          an
          interest rate of 13% per annum. Interest receivable on this loan was $125,962
          and $6,214, at December 31, 2007 and 2006, respectively.
 
 Property
          & Equipment & Capital Work In Progress
 
 Property
          and equipment are stated at cost. Expenditures for maintenance and repairs
          are
          charged to earnings as incurred; additions, renewals and betterments are
          capitalized. When property and equipment are retired or otherwise disposed
          of,
          the related cost and accumulated depreciation are removed from the respective
          accounts, and any gain or loss is included in operations. Depreciation
          of
          property and equipment is provided using the straight-line method for
          substantially all assets with estimated lives of:
  F-9
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Operating
                    equipment
                
                
                10
                    yearsVehicles
                
                
                8
                    yearsOffice
                    equipment
                
                
                5
                    yearsBuildings
                
                
                30
                    years
 
 At
          December 31, 2007 and 2006, the following are the details of the property
          and
          equipment:
 
 2007
                
                2006Operating
                    equipment
                
                $
                1,025,862
                
                $
                946,252Vehicles
                
                
                722,360
                
                
                597,239Office
                    equipment
                
                
                81,671
                
                
                74,944Buildings
                
                
                4,735,665
                
                
                4,426,5596,565,558
                
                
                6,044,994Less
                    accumulated depreciation
                
                
                (1,259,304
                )
                
                (849,711
                )$
                5,306,254
                
                $
                5,195,283
 
 Depreciation
          expense for the years ended December 31, 2007 and 2006 was $336,610 and
          $307,310, respectively.
 
 On
          December 31, 2007 and 2006, the Company has “Capital Work in Progress”
representing the construction in progress of the Company’s manufacturing plant
          amounting $7,722,756 and $3,669,807, respectively.
 
 Marketable
          Security
 
 Marketable
          security consists of 2,063,768 shares of China Natural Gas, Inc. (traded
          on the
          OTCBB: CHNG). This investment is classified as available-for-sale as the
          Company
          plans to hold this investment for the long-term. This investment is reported
          at
          fair value with unrealized gains and losses included in other comprehensive
          income. The fair value is determined by using the securities quoted market
          price
          as obtained from stock exchanges on which the security trades.
 
 Investment
          income, principally dividends, is recorded when earned. Realized capital
          gains
          and losses are calculated based on the cost of securities sold, which is
          determined by the "identified cost" method.
 
 Long-Lived
          Assets
 
 Effective
          January 1, 2002, the Company adopted Statement of Financial Accounting
          Standards
          No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
          144”), which addresses financial accounting and reporting for the impairment
          or
          disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
          Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
          Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
          the Results of Operations for a Disposal of a Segment of a Business.” The
          Company periodically evaluates the carrying value of long-lived assets
          to be
          held and used in accordance with SFAS 144. SFAS 144 requires impairment
          losses
          to be recorded on long-lived assets used in operations when indicators
          of
          impairment are present and the undiscounted cash flows estimated to be
          generated
          by those assets are less than the assets’ carrying amounts. In that event, a
          loss is recognized based on the amount by which the carrying amount exceeds
          the
          fair market value of the long-lived assets. Loss on long-lived assets to
          be
          disposed of is determined in a similar manner, except that fair market
          values
          are reduced for the cost of disposal. Based on its review, the Company
          believes
          that, as of December 31, 2007 there were no significant impairments of
          its
          long-lived assets.
  F-10
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Intangible
          Assets
 
 Intangible
          assets consist of Rights to use land and Fertilizers proprietary technology
          rights. The Company evaluates intangible assets for impairment, at least
          on an
          annual basis and whenever events or changes in circumstances indicate that
          the
          carrying value may not be recoverable from its estimated future cash flows.
          Recoverability of intangible assets, other long-lived assets and, goodwill
          is
          measured by comparing their net book value to the related projected undiscounted
          cash flows from these assets, considering a number of factors including
          past
          operating results, budgets, economic projections, market trends and product
          development cycles. If the net book value of the asset exceeds the related
          undiscounted cash flows, the asset is considered impaired, and a second
          test is
          performed to measure the amount of impairment loss.
 
 Fair
          Value of Financial Instruments
 
 Statement
          of financial accounting standard No. 107, Disclosures about fair value
          of
          financial instruments, requires that the Company disclose estimated fair
          values
          of financial instruments. The carrying amounts reported in the statements
          of
          financial position for current assets and current liabilities qualifying
          as
          financial instruments are a reasonable estimate of fair value.
 
 Revenue
          Recognition
 
 The
          Company’s revenue recognition policies are in compliance with Staff accounting
          bulletin (SAB) 104. Sales revenue is recognized at the date of shipment
          to
          customers when a formal arrangement exists, the price is fixed or determinable,
          the delivery is completed, no other significant obligations of the Company
          exist
          and collectibility is reasonably assured. Payments received before all
          of the
          relevant criteria for revenue recognition are satisfied are recorded as
          unearned
          revenue.
 
 The
          Company’s revenue is earned in three product lines, which are as
          follows:
 
 **For the Years End December 31,****2007**
                
                **2006**Compound
                    fertilizer
                
                $
                5,882,663
                
                $
                27,380,650Liquid
                    fertilizer
                
                
                4,225,933
                
                
                7,465,830Pesticide
                
                
                1,999,983
                
                
                8,780,504$
                12,108,579
                
                $
                43,626,984
  F-11
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Advertising
          Costs
 
 The
          Company expenses the cost of advertising as incurred or, as appropriate,
          the
          first time the advertising takes place. Advertising costs for the years
          ended
          December 31, 2007 and 2006 were insignificant.
 
 Stock-Based
          Compensation
 
 The
          Company adopted SFAS No. 123 (Revised 2004), *Share
          Based Payment* (“SFAS
          No. 123R”), under the modified-prospective transition method on
          January 1, 2006. SFAS No. 123R requires companies to measure and
          recognize the cost of employee services received in exchange for an award
          of
          equity instruments based on the grant-date fair value. Share-based compensation
          recognized under the modified-prospective transition method of SFAS
          No. 123R includes share-based compensation based on the grant-date fair
          value determined in accordance with the original provisions of SFAS
          No. 123, *Accounting
          for Stock-Based Compensation,* for
          all
          share-based payments granted prior to and not yet vested as of January 1,
          2006 and share-based compensation based on the grant-date fair-value determined
          in accordance with SFAS No. 123R for all share-based payments granted after
          January 1, 2006. SFAS No. 123R eliminates the ability to account for
          the award of these instruments under the intrinsic value method prescribed
          by
          Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
          for Stock Issued to Employees* ,
          and
          allowed under the original provisions of SFAS No. 123. Prior to the
          adoption of SFAS No. 123R, the Company accounted for our stock option plans
          using the intrinsic value method in accordance with the provisions of APB
          Opinion No. 25 and related interpretations.
 
 Primarily
          as a result of adopting SFAS No. 123R, the Company recognized $7,523 in
          share-based compensation expense for the year ended December 31, 2006.
          There
          were no new employee options granted during the year ended December 31,
          2006;
          however, the expense recognized of $7,523 relates to the vesting of options
          issued to employees prior to January 1, 2006. The impact of this share-based
          compensation expense on the Company’s basic and diluted earnings per share was
          $0.00 per share. The fair value of our stock options was estimated using
          the
          Black-Scholes option pricing model.
 
 For
          periods presented prior to the adoption of SFAS No. 123R, pro forma
          information regarding net income and earnings per share as required by
          SFAS
          No. 123R has been determined as if we had accounted for our employee stock
          options under the original provisions of SFAS No. 123. The fair value of
          these options was estimated using the Black-Scholes option pricing model.
          For
          purposes of pro forma disclosure, the estimated fair value of the options
          is
          amortized to
          expense over the option’s vesting period. The pro forma expense to recognize
          during the year ended December 31, 2005 is presented in Note
          12.
 
 Income
          Taxes
 
 The
          Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
          recognition of deferred tax assets and liabilities for the expected future
          tax
          consequences of events that have been included in the financial statements
          or
          tax returns. Under this method, deferred income taxes are recognized for
          the tax
          consequences in future years of differences between the tax bases of assets
          and
          liabilities and their financial reporting amounts at each period end based
          on
          enacted tax laws and statutory tax rates applicable to the periods in which
          the
          differences are expected to affect taxable income. Valuation allowances
          are
          established, when necessary, to reduce deferred tax assets to the amount
          expected to be realized.
  F-12
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 According
          to the Provisional Regulations of the People’s Republic of China on Income Tax,
          the Document of Reductions and Exemptions of Income Tax for the Company had been
          approved by the local tax bureau and the Yang Ling Agricultural High-Tech
          Industries Demonstration Zone. The Company was exempted from income tax
          through
          October 2007.
 
 In
          March
          2005, Bodisen Biotech Inc. formed Agricultural. Under Chinese law, a newly
          formed wholly owned subsidiary of a foreign company enjoys an income tax
          exemption for the first two years and a 50% reduction of normal income
          tax rates
          for the following 3 years. In order to extend such tax benefits, in June
          2005,
          Agricultural completed a transaction with BBST, which resulted in Agricultural
          owning 100% of BBST.
 
 If
          the
          Company had not been exempt from paying income taxes during the years ended
          December 31, 2007 and 2006, income tax expense would have been approximately
          $0
          and $4,668,000, respectively, and earnings per share would have been reduced
          by
          $0.0 and $0.26, respectively.
 
 Foreign
          Currency Transactions and Comprehensive Income
 
 Accounting
          principles generally require that recognized revenue, expenses, gains and
          losses
          be included in net income. Certain statements, however, require entities
          to
          report specific changes in assets and liabilities, such as gain or loss
          on
          foreign currency translation, as a separate component of the equity section
          of
          the balance sheet. Such items, along with net income, are components of
          comprehensive income. The functional currency of the Company is Chinese
          Renminbi. The unit of Renminbi is in Yuan. Translation gains of $5,148,122
          and
          $1,798,387 at December 31, 2007 and 2006, respectively, are classified
          as an
          item of other comprehensive income in the stockholders’ equity section of the
          consolidated balance sheet. During the years ended December 31, 2007 and
          2006,
          other comprehensive income in the consolidated statements of operations
          and
          other comprehensive income included translation gains of $3,349,735 and
          $1,210,466, respectively.
 
 Basic
          and Diluted Earnings Per Share
 
 Earnings
          per share is calculated in accordance with the Statement of Financial Accounting
          Standards No. 128 (SFAS No. 128), “Earnings per share.” SFAS No. 128 superseded
          Accounting Principles Board Opinion No.15 (APB 15). Net loss per share
          for all
          periods presented has been restated to reflect the adoption of SFAS No.
          128.
          Basic net loss per share is based upon the weighted average number of common
          shares outstanding. Diluted net loss per share is based on the assumption
          that
          all dilutive convertible shares and stock options were converted or exercised.
          Dilution is computed by applying the treasury stock method. Under this
          method,
          options and warrants are assumed to be exercised at the beginning of the
          period
          (or at the time of issuance, if later), and as if funds obtained thereby
          were
          used to purchase common stock at the average market price during the period.
  F-13
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Statement
          of Cash Flows
 
 In
          accordance with Statement of Financial Accounting Standards No. 95, “Statement
          of Cash Flows,” cash flows from the Company’s operations are calculated based
          upon the local currencies. As a result, amounts related to assets and
          liabilities reported on the statement of cash flows will not necessarily
          agree
          with changes in the corresponding balances on the balance sheet.
 
 Segment
          Reporting
 
 Statement
          of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure About
          Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
          is based on the way a company’s management organizes segments within the company
          for making operating decisions and assessing performance. Reportable segments
          are based on products and services, geography, legal structure, management
          structure, or any other manner in which management disaggregates a company.
          SFAS
          131 has no effect on the Company’s consolidated financial statements as the
          Company consists of one reportable business segment. All revenue is from
          customers in People’s Republic of China. All of the Company’s assets are located
          in People’s Republic of China.
 
 Reclassifications
 
 Certain
          prior period amounts have been reclassified to conform to the year ended
          December 31, 2007 presentation.
 
 Recent
          Pronouncements
  In
          September 2006, the Securities and Exchange Commission issued Staff Accounting
          Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
          Quantifying Misstatements in Current Year Financial Statements,” (“SAB
          108”),which provides interpretive guidance on the consideration of the effects
          of prior year misstatements in quantifying current year misstatements for
          the
          purpose of a materiality assessment. The Company adopted SAB 108 in the
          fourth
          quarter of 2006 with no impact on its consolidated financial statements.
  In
          September 2006, FASB issued SFAS 157 "Fair Value Measurements.” This Statement
          defines fair value, establishes a framework for measuring fair value in
          generally accepted accounting principles (GAAP), and expands disclosures
          about
          fair value measurements. This Statement applies under other accounting
          pronouncements that require or permit fair value measurements, the Board
          having
          previously concluded in those accounting pronouncements that fair value
          is the
          relevant measurement attribute. Accordingly, this Statement does not require
          any
          new fair value measurements. However, for some entities, the application
          of this
          Statement will change current practice. This Statement is effective for
          financial statements issued for fiscal years beginning after November 15,
          2007,
          and interim periods within those fiscal years. The management is currently
          evaluating the effect of this pronouncement on the Company’s financial
          statements.
  F-14
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
  In
          September 2006, FASB issued SFAS 158 “Employers’ Accounting for Defined Benefit
          Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
          88, 106, and 132(R).” This Statement improves financial reporting by requiring
          an employer to recognize the overfunded or underfunded status of a defined
          benefit postretirement plan (other than a multiemployer plan) as an asset
          or
          liability in its statement of financial position and to recognize changes
          in
          that funded status in the year in which the changes occur through comprehensive
          income of a business entity or changes in unrestricted net assets of a
          not-for-profit organization. This Statement also improves financial reporting
          by
          requiring an employer to measure the funded status of a plan as of the
          date of
          its year-end statement of financial position, with limited exceptions.
          An
          employer with publicly traded equity securities is required to initially
          recognize the funded status of a defined benefit postretirement plan and
          to
          provide the required disclosures as of the end of the fiscal year ending
          after
          December 15, 2006. An employer without publicly traded equity securities
          is
          required to recognize the funded status of a defined benefit postretirement
          plan
          and to provide the required disclosures as of the end of the fiscal year
          ending
          after June 15, 2007. However, an employer without publicly traded equity
          securities is required to disclose the following information in the notes
          to
          financial statements for a fiscal year ending after December 15, 2006,
          but
          before June 16, 2007, unless it has applied the recognition provisions
          of this
          Statement in preparing those financial statements. The requirement to measure
          plan assets and benefit obligations as of the date of the employer’s fiscal
          year-end statement of financial position is effective for fiscal years
          ending
          after December 15, 2008. The management is currently evaluating the effect
          of
          this pronouncement on the Company’s financial statements.
  In
          February of 2007 the FASB issued SFAS 159, “The Fair Value Option for Financial
          Assets and Financial Liabilities—Including an amendment of FASB Statement No.
          115.” The statement permits entities to choose to measure many financial
          instruments and certain other items at fair value. The objective is to
          improve
          financial reporting by providing entities with the opportunity to mitigate
          volatility in reported earnings caused by measuring related assets and
          liabilities differently without having to apply complex hedge accounting
          provisions. The statement is effective as of the beginning of an entity’s first
          fiscal year that begins after November 15, 2007. The Company is analyzing
          the
          potential accounting treatment.
  In
          December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
          Consolidated Financial Statements,” which is an amendment of Accounting Research
          Bulletin (“ARB”) No. 51.  This statement clarifies that a
          noncontrolling interest in a subsidiary is an ownership interest in the
          consolidated entity that should be reported as equity in the consolidated
          financial statements.  This statement changes the way the consolidated
          income statement is presented, thus requiring consolidated net income to
          be
          reported at amounts that include the amounts attributable to both parent
          and the
          noncontrolling interest.  This statement is effective for the fiscal
          years, and interim periods within those fiscal years, beginning on or after
          December 15, 2008.  Based on current conditions, the Company does not
          expect the adoption of SFAS 160 to have a significant impact on its results
          of
          operations or financial position.
 
 In
          December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
          Combinations.”  This statement replaces FASB Statement No. 141,
“Business Combinations.” This statement retains the fundamental requirements in
          SFAS 141 that the acquisition method of accounting (which SFAS 141 called
          the purchase method) be used for all business combinations and for an acquirer
          to be identified for each business combination. This statement defines
          the
          acquirer as the entity that obtains control of one or more businesses in
          the
          business combination and establishes the acquisition date as the date that
          the
          acquirer achieves control. This statement requires an acquirer to recognize
          the
          assets acquired, the liabilities assumed, and any noncontrolling interest
          in the
          acquiree at the acquisition date, measured at their fair values as of that
          date,
          with limited exceptions specified in the statement. This statement applies
          prospectively to business combinations for which the acquisition date is
          on or
          after the beginning of the first annual reporting period beginning on or
          after
          December 15, 2008. The Company does not expect the adoption of SFAS 160
          to have
          a significant impact on its results of operations or financial
          position.
  F-15
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
  FASB
          Interpretation 48 prescribes a recognition threshold and a measurement
          attribute
          for the financial statement recognition and measurement of a tax position
          taken
          or expected to be taken in a tax return. Benefits from tax positions should
          be
          recognized in the financial statements only when it is more likely than
          not that
          the tax position will be sustained upon examination by the appropriate
          taxing
          authority that would have full knowledge of all relevant information. The
          amount
          of tax benefits to be recognized for a tax position that meets the
          more-likely-than-not recognition threshold is measured as the largest amount
          of
          benefit that is greater than fifty percent likely of being realized upon
          ultimate settlement. Tax benefits relating to tax positions that previously
          failed to meet the more-likely-than-not recognition threshold should be
          recognized in the first subsequent financial reporting period in which
          that
          threshold is met or certain other events have occurred. Previously recognized
          tax benefits relating to tax positions that no longer meet the
          more-likely-than-not recognition threshold should be derecognized in the
          first
          subsequent financial reporting period in which that threshold is no longer
          met.
          Interpretation 48 also provides guidance on the accounting for and disclosure
          of
          tax reserves for unrecognized tax benefits, interest and penalties and
          accounting in interim periods. Interpretation 48 is effective for fiscal
          years
          beginning after December 15, 2006. The change in net assets as a result
          of
          applying this pronouncement will be a change in accounting principle with
          the
          cumulative effect of the change required to be treated as an adjustment
          to the
          opening balance of retained earnings on January 1, 2007, except in certain
          cases
          involving uncertainties relating to income taxes in purchase business
          combinations. In such instances, the impact of the adoption of Interpretation
          48
          will result in an adjustment to goodwill. The adoption of this standard
          had no
          material impact on the Company’s consolidated financial statements.
  **Note
          3 – Principles of Consolidation**
 
 The
          accompanying consolidated financial statements include the accounts of
          Bodisen
          Biotech, Inc., its 100% wholly-owned subsidiaries, Bodisen Holdings, Inc.
          (BHI),
          Yang Ling Bodisen Agricultural Technology Co., Ltd (Agricultural), which
          was
          incorporated in March 2005, and Bodisen Agriculture Material Co., Ltd.
          (Material), which was incorporated in June 2006, as well as the accounts
          of
          BHI’s 100% wholly-owned subsidiary, Yang Ling Bodisen Biology Science and
          Technology Development Company Limited (BBST). All significant inter-company
          accounts and transactions have been eliminated in consolidation.
 
 F-16
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 **Note
          4 – Advances to officers**
 
 During
          the six month period ending June 30, 2005, the Company advanced $2,383,217
          to 4
          officers as a short term loan. Said loan was interest free, unsecured,
          and
          payable upon demand. These loans were repaid during the quarter ended September
          30, 2005.
 
 **Note
          5 - Inventory**
 
 The
          inventory as of December 31, 2007 and 2006 consisted of the following
          :
 
 **2007**
                
                **2006**Raw
                    Material
                
                $
                425,542
                
                $
                1,257,883Packaging
                
                
                250,018
                
                
                161,923Finished
                    Goods
                
                
                691,730
                
                
                550,280Consumables
                
                
                336
                
                
                3951,367,626
                
                
                1,970,481Less
                    : Obsolescence Reserve
                
                
                (188,178
                )
                
                (175,896
                )Net
                    Inventory
                
                $
                1,179,448
                
                $
                1,794,585
 **Note
          6 – Marketable Security**
 
 During
          the year ended December 31, 2005, the Company purchased 2,063,768 shares
          of
          China Natural Gas, Inc. (traded on the OTCBB: CHNG) for $2,867,346. At
          December
          31, 2007 and 2006, the fair value of this investment was $14,239,999 and
          $6,500,869, respectively, which resulted in an unrealized gain (loss) of
          $7,739,130 and ($309,565) for the years ended December 31, 2007 and 2006,
          respectively, which is included in other comprehensive income. At December
          31,
          2006, this represented a 7.1% interest in China Natural Gas, Inc. The CEO
          of
          China Natural Gas was a former board member of the Company.  See
          Note
          19 for litigation regarding these shares of common stock of China Natural
          Gas.
 
 **Note
          7 –Other Long-term Assets**
 
 During
          the year ended December 31, 2006, the Company acquired a 19.5% and a 19.8%
          interest in two local companies by investing a total amount of $1,156,861
          in
          cash.
 
 In
          August, 2006, the Company entered into a land lease agreement for 30 years.
          The
          annual lease expense approximately amounts to $169,580. The lease expense
          for
          the next 15 years amounting to $2,529,818 has been prepaid on signing of
          the
          agreement. The payment schedule for the remaining 15 years as follows
          :
  ·
              in
                  November, 2021 - prepayment for next 8 years commencing on November
                  2021
                  and ·
              in
                  November, 2029 - prepayment of remaining 7 years commencing on
                  November
                  2029  F-17
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 The
          land
          lease prepayment as of December 31, 2007 and 2006 can be summarized as
          follows:
 
 **2007**
                
                **2006**Prepaid
                    Lease (for 15 years)
                
                $
                2,617,962
                
                $
                2,569,818Current
                    portion
                
                
                185,344
                
                
                173,246Long-term
                    portion
                
                $
                2,432,618
                
                $
                2,396,572
 
 The
          amortization expense as of December 31, 2007 and 2006 was $185,344 and
          $28,264,
          respectively.
 
 Amortization
          expense for the prepayment of land lease over the next five fiscal years
          is
          estimated to be: 2008-$169,500, 2009-$169,500, 2010-$169,500, 2011-$169,500
          and
          2012-$169,500.
 
 **Note
          8 – Intangible Assets**
 
 Net
          intangible assets at December 31, 2007 and 2006 were as follows:
  **2007**
                
                **2006**Rights
                    to use land
                
                $
                1,873,929
                
                $
                1,768,386Fertilizers
                    proprietary technology rights
                
                
                1,096,704
                
                
                1,025,1202,970,633
                
                
                2,793,506Less
                    Accumulated amortization
                
                
                (919,981
                )
                
                (739,160
                )$
                2,050,652
                
                $
                2,054,346
 
 The
          Company’s office and manufacturing site is located in Yang Ling Agricultural
          High-Tech Industries Demonstration Zone in the province of Shaanxi, People’s
          Republic of China. The Company leases land per a real estate contract with
          the
          government of People’s Republic of China for a period from November 2001 through
          November 2051. Per the People’s Republic of China’s governmental regulations,
          the Government owns all land.
 
 During
          July 2003, the Company leased another parcel of land per a real estate
          contract
          with the government of the People’s Republic of China for a period from July
          2003 through June 2053.
 
 The
          Company has recognized the amounts paid for the acquisition of rights to
          use
          land as intangible asset and amortizing over a period of fifty years. The
          “Rights to use land” is being amortized over a 50 year period.
 
 The
          Company acquired Fluid and Compound Fertilizers proprietary technology
          rights
          with a life ending December 31, 2011. The Company is amortizing these
          proprietary technology rights over a period of ten years.
 
 Amortization
          expense for the Company’s intangible assets for the years ended December 31,
          2007 and 2006 amounted to $141,416 and $134,636, respectively.
  F-18
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Amortization
          expense for the Company’s intangible assets over the next five fiscal years is
          estimated to be: 2008-$130,000, 2009-$130,000, 2010-$130,000, 2011-$130,000
          and
          2012-$130,000.
 
 **Note
          9 – Note Payable**
 
 On
          December 8, 2005, the Company issued a $5,000,000 note payable to Amaranth
          Partners LLC that accrued interest at 9% per annum and was due on March
          8, 2006.
          In connection with this note payable agreement, the Company also issued
          to
          Amaranth Partners LLC a warrant to purchase 133,333 shares of the Company’s
          common stock for $7.50 per share. The Company first determined the value
          of the
          note and the fair value of the detachable warrants issued in connection
          with
          this note payable. The estimated value of the warrants of $968,282 was
          determined using the Black-Scholes option pricing model and the following
          assumptions: term of 5 years, a risk free interest rate of 4.00%, a dividend
          yield of 0% and volatility of 31%. The face amount of the note payable
          of
          $5,000,000 was proportionately allocated to the note payable and the warrant
          in
          the amount of $4,188,810 and $811,190, respectively. The amount allocated
          to the
          warrants of $811,190 was recorded as a discount on the note payable and
          will be
          amortized over the year life of the note payable. For the year ended December
          31, 2006 $603,886, had been amortized to interest expense. The $5,000,000
          note
          plus $112,500 of accrued interest were repaid in March 2006.
  **Note
          10 – Convertible Debenture** ****
 
 On
          March
          16, 2005, the Company completed a private placement offering. The Company
          received $3,000,000 and issued a one year 9% debenture convertible into
          shares
          of common stock by dividing the aggregate principal and accrued interest
          by a
          conversion price of $4.80; and three year warrants to purchase 187,500
          shares of
          common stock at $4.80 per share and three year warrants to purchase 40,000
          shares of common stock at $6.88 per share.
 
 This
          debenture was considered to have an embedded beneficial conversion feature
          because the conversion price was less than the quoted market price at the
          time
          of the issuance. The Company allocated the proceeds of the debt between
          the
          warrant and the debt based on relative fair values, which amounted to $365,881
          and $2,634,119. The beneficial conversion feature of $803,381 was recorded
          separately based on the intrinsic value method per EITF 00-27. During the
          year
          ended December 31, 2005, the entire $3,000,000 convertible debenture and
          $155,564 of accrued interest were converted into 657,402 shares of the
          Company’s
          common stock. In addition, because the entire principal balance of the
          convertible debenture was converted into common stock, the entire debt
          discount
          of $1,169,262 was amortized to interest expense.
  **Note
          11 – Stockholders’ Equity**
 
 During
          the year ended December 31, 2005, the Company issued 657,402 shares of
          its
          common stock in connection with the conversion of a $3,000,000 convertible
          debenture and $155,564 of accrued interest. In addition, the Company also
          issued
          195,500 shares of common stock upon the exercise of warrants and received
          proceeds of $955,040.
  F-19
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 On
          February 3, 2006, the Company entered into a placing agreement (the "Placing
          Agreement") with Charles Stanley & Company Limited ("Charles Stanley”)
          relating to the sale of up to 1,643,836 shares of the Company's common
          stock.
          Pursuant to the Placing Agreement, Charles Stanley agreed to use its reasonable
          efforts to sell all such shares of common stock at a price of 730 pence
          (approximately US$12.99) per share, resulting in gross proceeds of approximately
          12 million British pounds sterling (US$21,360,005). The Company incurred
          offering costs and expenses of $5,144,356 related to this sale of common
          stock.
          Of this amount $3,385,481 was paid to a firm that is associated with Benjamin
          Wey (who is the president of New York Global Group).
 
 In
          connection with the placement, the Company's shares were admitted to trading
          on
          the AIM Market of the London Stock Exchange. The Company's shares continued
          to
          be listed on the American Stock Exchange at such time.
 
 On
          March
          15, 2006, the Company completed financing of $5,322,506 by issuing 380,179
          restricted shares of common stock of the Company at $14.00 per share to
          institutional investors in a private placement pursuant to Regulation S.
          The
          Company incurred offering costs and expenses of $988,351 related to this
          sale of
          common stock. Of this amount $778,346 was paid to a firm that is associated
          with
          Benjamin Wey. The proceeds from this financing were used to repay the $5
          million
          short term note that the Company entered in December 2005.
 
 During
          the year ended December 31, 2006, 165,333 warrants were exercised and the
          Company received proceeds of $1,220,160.
  Prior
          to
          the Company effectuating a reverse merger, various individuals (the “Investors”)
          provided investment capital to a predecessor entity.  After its formation,
          the Company issued share certificates of common stock to reflect the value
          of
          these investments.  Pursuant to apparent agreement with the Investors, the
          Company issued the share certificates to certain individuals other than
          the
          Investors, including two officers of the Company, who held title to those
          shares
          as nominee for the benefit of the Investors.  In late 2005, some of the
          Investors began to request that the beneficially-held shares be transferred
          to
          them so that they could hold the shares in their own names.  All of the
          shares thus owned were transferred with the exception of approximately
          738,000
          shares.
 
 The
          nominees apparently do not assert any interest in or make any claim to
          the
          remaining shares.  The Company holds the original certificates representing
          approximately 738,000 shares in its office in Xi’an, China, for the benefit of
          the Investors or their assigns. The Company does not contest the rights
          of the
          appropriate investors on the certificate and remains willing to effectuate
          the
          transfer of the shares to appropriate investors or their assigns as the
          law
          allows. The record holders of the share certificates do not dispute the
          rights
          of the affected investors to receive the transfer of the shares as the
          law
          permits.
 
 The
          Company is not aware that any of the Investors has expressed the right to
          receive any monetary compensation in the form of damages, interest or otherwise
          in connection with the delivery of the shares.  In consequence, the Company
          expresses no view as to whether or not an unfavorable outcome would be
          probable
          or remote or provide an estimate or range of potential loss if the outcome
          were
          unfavorable in the event that an Investor or Investors asserts a
          claim.
  F-20
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 **Note
          12 – Stock Options and Warrants**
 
 Stock
          Options
 
 In
          December 2002, the FASB issued SFAS No. 148 “Accounting for Stock Based
          Compensation- Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123,
“Accounting for Stock Based Compensation,” to provide alternative methods of
          transition for a voluntary change to the fair value based method of accounting
          for stock-based employee compensation. In addition, this Statement amends
          the
          disclosure requirements of Statement 123 to require prominent disclosures
          in
          both annual and interim financial statements about the method of accounting
          for
          stock-based employee compensation and the effect of the method used, on
          reported
          results. The Statement is effective for the Companies’ interim reporting period
          ending January 31, 2003.
 
 In
          compliance with FAS No. 148, the Company has elected to continue to follow
          the
          intrinsic value method in accounting for its stock-based employee compensation
          plan as defined by APB No. 25 and has made the applicable disclosures below.
 
 In
          2004
          the board of directors approved the creation of the 2004 Stock Option Plan.
          This
          plan provides for the grant of incentive stock options to employees, directors
          and consultants. Options issued under this plan will expire over a maximum
          term
          of five years from the date of grant.
 
 Pursuant
          to the Stock Option Plan, during the year ended December 31, 2004, the
          Company
          granted 110,000 stock options to two directors (55,000 options each), of
          which
          100,000 stock options were granted on June 4, 2004 and the balance of the
          10,000
          was granted on December 28, 2004.
 
 On
          the
          first 100,000 stock options granted, 50,000 stock options vested immediately
          and
          50,000 stock options became vested over 8 equal quarterly installments,
          with the
          first installment vesting at the end of the second quarter of 2004. The
          10,000
          stock options granted on December 28, 2004 vested on December 31, 2004.
 
 The
          option exercise price was $5 for the first 100,000 stock options, which
          was the
          same as fair value of the shares at the time of granting of the options.
          The
          option exercise price was $5.80 for the second 10,000 stock options, which
          was
          the same as fair value of the shares at the time of granting of the options.
 
 On
          October 4, 2005, the Company granted 26,000 stock options to two directors
          (13,000 options each). 20,000 stock options vested immediately and the
          remaining
          6,000 stock options became vested over the next three months. The option
          exercise price was $6.72, which was the same as fair value of the shares
          at the
          time of granting of the options.
  F-21
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Following
          is a summary of the stock option activity:
 
 Options
                  outstanding
                
                Weighted
                  Average
                  Exercise
                  Price
                
                Aggregate
                  Intrinsic ValueOutstanding,
                    December 31, 2005
                
                
                136,000
                
                $
                5.39Granted
                
                
                -
                
                
                -Forfeited
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -Outstanding,
                    December 31, 2006
                
                
                136,000
                
                $
                5.39
                
                $
                50,000Granted
                
                
                -
                
                
                -Forfeited
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -Outstanding,
                    December 31, 2007
                
                
                136,000
                
                $
                5.39
                
                $
                0
 
 Following
          is a summary of the status of options outstanding at December 31, 2007:
 
 Outstanding Options
                
                
                
                Exercisable OptionsExercise
                  Price
                
                Number
                
                Average
                    Remaining Contractual
                  Life
                
                Average Exercise
                    Price
                
                Number
                
                Average
                  Exercise
                  Price$5.00
                
                
                100,000
                
                
                1.42
                
                $
                5.00
                
                
                93,750
                
                $
                5.00$5.80
                
                
                10,000
                
                
                1.99
                
                $
                5.80
                
                
                10,000
                
                $
                5.80$6.72
                
                
                26,000
                
                
                2.76
                
                $
                6.72
                
                
                24,000
                
                $
                6.72
 
 Warrants
 
 Following
          is a summary of the warrant activity:
 
 Outstanding,
                    December 31, 2005
                
                
                165,333Granted
                
                
                -Forfeited
                
                
                -Exercised
                
                
                (165,333
                )Outstanding,
                    December 31, 2006
                
                
                -Granted
                
                
                -Forfeited
                
                
                -Exercised
                
                
                -Outstanding,
                    December 31, 2007
                
                
                -
  F-22
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 **Note
          13 – Supplemental Disclosure of Cash Flows**
 
 The
          Company prepares its statements of cash flows using the indirect method
          as
          defined under SFAS No. 95.
 
 The
          Company paid $4,318 and $112,500 of interest and $0 and $0 of income taxes
          during the years ended December 31, 2007 and 2006, respectively.
 
 **Note
          14 – Employee Welfare Plans**
 
 The
          Company has established its own employee welfare plan in accordance with
          Chinese
          law and regulations. The Company makes annual contributions of 14% of all
          employees’ salaries to the employee welfare plan. The total expense for the
          welfare plan was $0 and $3,713 for the years ended December 31, 2007 and
          2006,
          respectively. The Company has recorded welfare payable of $71,908 and $263,064
          at December 31, 2007 and 2006, respectively, which is included in accrued
          expenses in the accompanying consolidated balance sheet.
 **Note
          15 – Statutory Common Welfare Fund**
 
 As
          stipulated by the Company Law of the People’s Republic of China (PRC), net
          income after taxation can only be distributed as dividends after appropriation
          has been made for the following:
 
 i.
              Making
                  up cumulative prior years’ losses, if any; 
 ii.
              Allocations
                  to the “Statutory surplus reserve” of at least 10% of income after tax, as
                  determined under PRC accounting rules and regulations, until the
                  fund
                  amounts to 50% of the Company’s registered capital; 
 iii.
              Allocations
                  of 5-10% of income after tax, as determined under PRC accounting
                  rules and
                  regulations, to the Company’s “Statutory common welfare fund,” which is
                  established for the purpose of providing employee facilities and
                  other
                  collective benefits to the Company’s employees; and 
 iv.
              Allocations
                  to the discretionary surplus reserve, if approved in the stockholders’
                  general meeting. 
 Pursuant
          to the new Corporate Law effective on January 1, 2006, there is now only
          one
          "Statutory surplus reserve" requirement. The reserve is 10 percent of income
          after tax, not to exceed 50 percent of registered capital.
  F-23
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 Pursuant
          to the "Circular of the Ministry of Finance ( MOF) on the Issue of Corporate
          Financial Management after the Corporate Law Enforced" (No.67 [2006]),
          effective
          on April 1, 2006, issued by the MOF, the companies will transfer the balance
          of
          SCWF as of December 31, 2005 to Statutory Surplus Reserve. Any deficit
          in the
          SCWF will be charged in turn to Statutory Surplus Reserve, additional paid-in
          capital and undistributed profit of previous years. If a deficit still
          remains,
          it should be transferred to retained earnings and be reduced to zero by
          a
          transfer from after tax profit of following years. At December 31, 2006,
          the
          Company did not have a deficit in the SCWF.
 
 The
          Company has appropriated $0 and $1,947,557 as reserve for the statutory
          surplus
          reserve and welfare fund for the years ended December 31, 2007 and 2006,
          respectively.
 
 **Note
          16 – Factory Location and Lease Commitments**
 
 BBST’s
          principal executive offices are located at North Part of Xinquia Road,
          Yang Ling
          Agricultural High-Tech Industries Demonstration Zone Yang Ling, Shaanxi
          province, People’s Republic of China. BBST owns two factories, which includes
          three production lines, an office building, one warehouse, and two research
          labs
          and, is located on 10,900 square meters of land. These leases require monthly
          rental payments of $2,180 and the leases expire in 2013.
 
 F-24
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 **Note
          17 – Earnings Per Share**
 
 Earnings
          per share for years ended December 31, 2007 and 2006 were determined by
          dividing
          net income for the periods by the weighted average number of both basic
          and
          diluted shares of common stock and common stock equivalents outstanding.
 
 The
          following is an analysis of the differences between basic and diluted earnings
          per common share in accordance with Statement of Financial Accounting Standards
          No. 128, “Earnings Per Share.”
 
 **Year
                    Ended December 31,****2007**
                
                **2006****Per**
                
                
                
                
                
                **Per****Income**
                
                **Shares**
                
                **Share**
                
                **Income**
                
                **Shares**
                
                **Share****Basic
                    earnings per share**Net
                    income (loss)
                
                $
                (25,327,392
                )
                
                
                
                
                
                
                $
                13,730,827Weighed
                    shares outstanding
                
                
                
                
                
                18,310,250
                
                
                
                
                
                
                
                
                17,966,090$
                (1.38
                )
                
                
                
                
                
                
                $
                0.76**Diluted
                    earnings per share**Net
                    income (loss)
                
                $
                (25,327,392
                )
                
                
                
                
                
                
                $
                13,730,827Weighed
                    shares outstanding
                
                
                
                
                
                18,310,250
                
                
                
                
                
                
                
                
                17,966,090Effect
                    of dilutive securitiesOptions
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                66,074Warrants
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                40,26918,072,433$
                (1.38
                )
                
                
                
                
                
                
                $
                0.76
 
 F-25
 
 **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
 
 **Note
          18 – Current Vulnerability Due to Certain
          Concentrations**
 
 Two
          vendors provided 70.3% and 10.5% of the Company’s raw materials for the year
          ended December 31, 2007. Three vendors provided 47.5%, 17.7% and 12.5%
          of the
          Company’s raw materials for the year ended December 31, 2006. Four vendors
          provided 29.9%, 22.4%, 11.6% and 11.2% of the Company’s raw materials for the
          year ended December 31, 2005.
 
 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, by the general state
          of
          the PRC’s economy. The Company’s business may 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.
 
 **Note
          19 – Litigation**
  The
          Company is involved in a variety of claims, suits, investigations and
          proceedings that arise from time to time in the ordinary course of its
          business,
          including actions with respect to contracts, intellectual property (IP),
          product
          liability, employment, benefits, securities, and other matters.  These
          actions may be commenced by a number of different constituents, including
          competitors, partners, clients, current or former employees, government
          and
          regulatory agencies, stockholders, and representatives of the locations
          in
          which it does business. The following is a discussion of some of the more
          significant legal matters involving the Company.
  In
          late
          2006, various shareholders of the Company filed eight purported class actions
          in
          the U.S. District Court for the Southern District of New York against the
          Company and certain of its officers and directors (among others), asserting
          claims under the federal securities laws.  The complaints contain
          allegations about prior financial disclosures and its internal controls
          and a
          prior, now-terminated relationship with a financial advisor.
  The
          eight
          actions are Stephanie Tabor vs. Bodisen, Inc., et al., Case No. 06-13220
          (filed
          November 2006), Fraser Laschinger vs. Bodisen, Inc., et al., Case No. 06-13254
          (filed November 2006), Anthony DeSantis vs. Bodisen, Inc., et. al., Case
          No. 06-13454 (filed November 2006), Yuchen Zhou vs. Bodisen, Inc., et. al.,
          Case No. 06-13567 (filed November 2006), William E. Cowley vs. Bodisen,
          Inc., et. al., Case No. 06-13739 (filed December 2006), Ronald Stubblefield
          vs. Bodisen, Inc., et. al., Case No. 06-14449 (filed December 2006), Adam
          Cohen vs. Bodisen, Inc., et. al., Case No. 06-15179 (filed December 2006)
          and Lawrence M. Cohen vs. Bodisen, Inc., et. al., Case No. 06-15399 (filed
          December 2006). Plaintiffs have not specified an amount of damages they
          seek.
          Last year, the Court consolidated each of the actions into a single
          proceeding.
  F-26
  **Bodisen
          Biotech, Inc. and Subsidiaries**
 **Notes
          to Consolidated Financial Statements**
 **For
          the Years Ended December 31, 2007 and 2006**
  Earlier
          this year, defendants in the action, including the Company, filed motions
          to
          dismiss the proceeding. Defendants are due in April to file additional
          papers in
          support of the dismissal motions. The Court has not scheduled a hearing
          on the
          motions to dismiss.
  Because
          these consolidated actions are in an early stage, the Company cannot
          comment on whether an adverse outcome is probable or otherwise. 
While the Company believes it has meritorious defenses to each of
          these actions and intends to defend them vigorously, an adverse outcome
          in one
          or more of these matters could have a material adverse effect on its
          business, financial condition, results of operations or liquidity.
  In
          2007, Ji Xiang, a shareholder of China Natural Gas (and son of
          its Chairman and CEO) instituted litigation in the Chinese court system
          in
          Shaanxi province challenging the validity of the Company’s ownership of
          2,063,768 shares of China Natural Gas common stock. The Company obtained
          these
          shares in September 2005 in a share transfer agreement and asserts that
          it has
          fully performed its obligations under the agreement and is entitled to
          own the
          shares. The parties in the Chinese litigation have submitted their evidence
          and
          now await a decision from the Chinese court. Also, in January 2008, the
          same
          shareholder instituted litigation in a Utah state court against Yangling
          Bodisen
          Biotech Development Co. Ltd. and Interwest Transfer Co. (China Natural
          Gas’s
          transfer agent) seeking to prevent the Company from selling its shares
          in China
          Natural Gas. Plaintiff obtained an *ex
          parte* order
          from the Utah court, without providing the Company an opportunity to be
          heard,
          temporarily preventing the Company from selling the China Natural Gas shares.
          A
          further hearing is scheduled in April to review this order. The Company
          intends
          to vigorously and thoroughly defend itself against this claim. While the
          Company
          believes it will prevail in these litigation matters and establish its
          right of
          ownership to the China Natural Gas shares, an adverse outcome could have
          a
          material adverse effect on its business, financial condition, results of
          operations or liquidity.
  F-27
  **FINANCIAL
        STATEMENT SCHEDULES**
 
 **SCHEDULE
        I**
 
 **BODISEN
        BIOTECH, INC.**
 **BALANCE
        SHEET - US HOLDING COMPANY ONLY**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 
 **2007**
              
              **2006****ASSETS****INTERCOMPANY
                  RECEIVABLE, net**
              
              $
              23,869,674
              
              $
              26,503,350**TOTAL
                  ASSETS**
              
              $
              23,869,674
              
              $
              26,503,350**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES:**Accounts
                  payable
              
              $
              547,471
              
              $
              10,427Accrued
                  expenses
              
              
              10,623
              
              
              10,623Total
                  current liabilities
              
              
              558,094
              
              
              21,050**STOCKHOLDERS'
                  EQUITY:**Preferred
                  stock, $0.0001 per share; authorized 5,000,000 shares; none issued
                  nil
                  issued and outstandingCommon
                    stock, $0.0001 per share; authorized 30,000,000 shares; 18,161,450
                    and
                    16,120,902 issued and outstanding
              
              
              1,831
              
              
              1,831Additional
                  paid-in capital
              
              
              28,645,058
              
              
              28,645,058Retained
                  earnings
              
              
              (5,335,309
              )
              
              (2,164,589
              )Total
                  stockholders' equity
              
              
              23,311,580
              
              
              26,482,300**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              23,869,674
              
              $
              26,503,350
  F-28
  **BODISEN
        BIOTECH, INC.**
 **STATEMENTS
        OF OPERATIONS - US HOLDING COMPANY ONLY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2007 and 2006**
 
 **2007**
              
              **2006****Net
                  Revenue**
              
              $
              -
              
              $
              -**Cost
                  of Revenue**
              
              
              -
              
              
              -**Gross
                  profit**
              
              
              -
              
              
              -Operating
                  expensesSelling
                  expenses
              
              
              -
              
              
              -General
                  and administrative expenses
              
              
              3,170,720
              
              
              7,523Total
                  operating expenses
              
              
              3,170,720
              
              
              7,523**Loss
                  from operations**
              
              
              (3,170,720
              )
              
              (7,523
              )Non-operating
                  income (expense):Other
                  income (expense)
              
              
              -
              
              
              -Interest
                  income
              
              
              -
              
              
              -Interest
                  expense
              
              
              -
              
              
              (603,886
              )Total
                  non-operating income (expense)
              
              
              -
              
              
              (603,886
              )**Net
                  loss**
              
              $
              (3,170,720
              )
              $
              (611,409
              )
  F-29
  **BODISEN
        BIOTECH, INC.**
 **STATEMENT
        OF CASH FLOWS - US HOLDING COMPANY ONLY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
 
 **2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  loss
              
              $
              (3,170,720
              )
              $
              (611,409
              )Adjustments
                  to reconcile net loss to net cash provided in operating
                  activities:Common
                  stock issued for interest expense
              
              
              -
              
              
              -Amortization
                  of debt discounts
              
              
              -
              
              
              603,886Value
                  of vested option issued to directors
              
              
              -
              
              
              7,523Increase
                  in accounts payable
              
              
              537,044Net
                  cash provided by operating activities
              
              
              (2,633,676
              )
              
              -**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Advances
                  from (to) Chinese subsidiaries
              
              
              2,633,676
              
              
              (17,548,310
              )Net
                  cash used in investing activities
              
              
              2,633,676
              
              
              (17,548,310
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from issuance of convertible note
              
              
              -
              
              
              -Proceeds
                  from issuance of note payable
              
              
              -
              
              
              -Proceeds
                  from issuance of common stock
              
              
              -
              
              
              26,682,511Payment
                  of offering costs
              
              
              -
              
              
              (5,354,361
              )Proceeds
                  from the exercise of warrants
              
              
              -
              
              
              1,220,160Payment
                  on notes payable
              
              
              -
              
              
              (5,000,000
              )Net
                  cash provided by financing activities
              
              
              -
              
              
              17,548,310**NET
                  INCREASE IN CASH & CASH EQUIVALENTS**
              
              
              -
              
              
              -**CASH
                  & CASH EQUIVALENTS, BEGINNING BALANCE**
              
              
              -
              
              
              -**CASH
                  & CASH EQUIVALENTS, ENDING BALANCE**
              
              $
              -
              
              $
              -**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:**Interest
                  paid
              
              $
              -
              
              $
              -Income
                  taxes paid
              
              $
              -
              
              $
              -


F-30


**ITEM
      9.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





None.





**ITEM
      9A (T).**  **CONTROLS
      AND PROCEDURES**





**Disclosure
      Controls and Procedures**





Our
      Chief
      Executive Officer and Chief Financial Officer conducted an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
      of
      1934, as amended (the Exchange Act)) as of December 31, 2007. Based on that
      evaluation, our Chief Executive Officer and Chief Financial Officer concluded
      that our disclosure controls and procedures were not effective as of the end
      of
      the period covered by this report to ensure that information required to be
      disclosed in the reports that we file or submit under the Exchange Act is
      accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Financial Officer, as appropriate to allow timely decisions
      regarding required disclosures. The reasons that our Chief Executive Officer
      and
      Chief Financial Officer arrived at this conclusion include:





·
            *Our
                inability to timely file this annual report on Form 10-K*.
                Effective disclosure controls and procedures ensure that management
                receives information as appropriate to allow timely decisions regarding
                required disclosures. As discussed in our previous filings with the
                Commission on Form 8-K and on Form 8-K/A, we changed our independent
                public accountants in 2007. Due in part to this change we have experienced
                difficulties in assembling all of the necessary information required
                to be
                included in this annual report on Form 10-K, including financial
                information, with sufficient time to permit timely filing of this
                annual
                report on Form 10-K. For this reason, we were not able to file this
                annual
                report within the time period prescribed and our management is not
                able to
                make a determination at this time that our disclosure controls and
                procedures were effective as of the end of the period covered by
                this
                report.·
            *Our
                inability to complete the Management’s Annual Report on Internal Control
                over Financial Reporting*.
                For the reasons described below under “Internal Control over Financial
                Reporting,” our management’s assessment of our internal control over
                financial reporting for the years ended December 31, 2006 and 2007
                have
                not been completed. Because we were not able to complete the internal
                control reports within the time periods prescribed and include such
                reports in our annual reports on Form 10-K for the years ended December
                31, 2006 and 2007, our management is not able to make a determination
                at
                this time that our disclosure controls and procedures were effective
                as of
                December 31, 2007.





Notwithstanding
      the conclusion that our disclosure controls and procedures were not effective
      as
      of the end of the period covered by this report, the Chief Executive Officer
      and
      the Chief Financial Officer believe that the financial statements and other
      information contained in this annual report present fairly, in all material
      respects, our business, financial condition and results of
      operations.





**Internal
      Control over Financial Reporting**





*Management’s
      Annual Report on Internal Control over Financial Reporting*





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
      under the Exchange Act. Our internal control over financial reporting is
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with generally accepted accounting principles. Our internal control
      over financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of our assets, (2) provide reasonable
      assurances that transactions are recorded as necessary to permit preparation
      of
      financial statements in accordance with generally accepted accounting
      principles, and that our receipts and expenditures are being made only in
      accordance with authorizations of our management and directors; and (3) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of our assets that could have a material effect
      on the consolidated financial statements.





27


Although
      we are now a “smaller reporting company,” in prior periods we were considered to
      be an “accelerated filer” under the rules and regulations of the Commission. As
      an accelerated filer, we were required to evaluate and assess our internal
      control over financial reporting, as required by Section 404 of the
      Sarbanes-Oxley Act of 2002 (“SOX 404”) as of the end of the period covered by
      our annual report on Form 10-K for the year ended December 31, 2006. Although
      we
      had engaged an outside consulting firm in September 2006 to assist us in
      preparing to implement SOX 404, we did not know that we would be considered
      an
“accelerated filer” until the end of 2006 and would thus be required to include
      such report on our 2006 annual report. Because we did not have an accurate
      understanding of when compliance with SOX 404 was required, our work to
      implement SOX 404 was not sufficiently advanced in order for us to complete
      the
      evaluation on a timely basis with respect to the period ending December 31,
      2006. Moreover, management has been unable to fully complete its evaluation
      and
      assessment with respect to the period ending December 31, 2007 prior to the
      filing of this Form 10-K for the year ended December 31, 2007. Management
      believes that any such assessment should be based on the criteria established
      in
      the “Internal Control - Integrated Framework” issued by the Committee of
      Sponsoring Organizations of the Treadway Commission (COSO). Although our
      independent registered public accounting firm, Morgenstern, Svoboda & Baer,
      P.C.. has not specifically identified any significant deficiencies or material
      weaknesses, our management has concluded that its internal control over
      financial reporting for the period ending December 31, 2007 was not effective.





Our
      inability to complete the required report for the year ended December 31, 2006
      prevented our former independent registered public accounting firm, Kabani
&
Company, Inc., from being able to satisfactorily complete an audit of our
      internal control over financial reporting pursuant to SOX 404, which was
      required to be included in our annual report on Form 10-K for the year ended
      December 31, 2006. For this reason, Kabani & Company, Inc. disclaimed an
      opinion on our internal control over financial reporting for the year ended
      December 31, 2006.





This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting. Had
      management been able to complete its assessment, such report would not have
      been
      subject to attestation by our registered public accounting firm pursuant to
      temporary rules of the Securities and Exchange Commission that permit us to
      provide only management’s report in this annual report for the year ended
      December 31, 2007.





Notwithstanding
      the conclusion that our internal control over financial reporting was not
      effective as of the end of the period covered by this report, the Chief
      Executive Officer and the Chief Financial Officer believe that the financial
      statements and other information contained in this annual report present fairly,
      in all material respects, our business, financial condition and results of
      operations.





*Changes
      in Internal Control over Financial Reporting*





There
      were no changes in internal control over financial reporting (as defined in
      Rule
      13a-15f under the Exchange Act) that occurred during the fourth quarter of
      2007
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.





**ITEM
      9B.**  **OTHER
      INFORMATION**





None.




28


**PART
      III**




**ITEM
      10.**  **DIRECTORS,
      EXECUTIVE OFFICERS** ******AND
      CORPORATE GOVERNANCE**





Below
      are
      the names and certain information regarding our current executive officers
      and
      directors:




**Name**
            **Age**
            **Position**Bo
                Chen
            50
            Chairman,
                Chief Executive Officer and PresidentQiong
                Wang
            42
            DirectorPatrick
                McManus
            53
            DirectorLinzhang
                Zhu
            56
            DirectorChunsheng
                Wang
            44
            Chief
                Operating OfficerJunyan
                Tong
            36
            Chief
                Financial Officer





Officers
      are elected annually by the Board of Directors, at our annual meeting, to hold
      such office until an officer’s successor has been duly appointed and qualified,
      unless an officer sooner dies, resigns or is removed by the Board.





On
      June
      4, 2007 and as previously disclosed on a Current Report on Form 8-K, Yiliang
      Lai
      resigned as our Chief Financial Officer, and our Board of Directors appointed
      Junyan Tong as our Chief Financial Officer with immediate effect. On February
      19, 2008 and as previously disclosed on a Current Report on Form 8-K, David
      Gatton resigned from our Board of Directors. Mr. Gatton’s resignation was due to
      personal reasons and not because of any disagreement with the Company on any
      matter relating to the Company’s operations, policies or
      procedures.





**Background
      of Executive Officers and Directors**





**Bo
      Chen,** Chairman,
      Chief Executive Officer and President of Bodisen; Director
      and President of our subsidiary, Yang Ling - Mr. Chen is one of Bodisen’s
      original founders and stockholders. He has served as Bodisen’s Chairman and
      Chief Executive Officer since January 5, 2007, and as President since 2004.
      From
      August 1997 to August 2001, Mr. Bo Chen was Chief Operations Officer and Chief
      Technology Officer of Shaanxi Bodisen Chemical Co., Ltd. From July 1994 to
      December 1997, he was the Chief Executive Officer and President of Yang Ling
      Shikanglu Chemurgical Technology Development Co., Ltd. Mr. Chen received his
      Bachelor of Science degree from Shaanxi Normal College in July 1984.





**Qiong
      Wang,** Director
      of Bodisen; Director of Yang Ling - Mrs. Wang Qiong has served as a Director
      of
      Bodisen since the merger of Bodisen Holding and Bodisen International and she
      has been on the board of Yang Ling since Yang Ling was founded in August 2001.
      She also served as the Chairman of the Board of Bodisen Biotech, Inc. until
      January 5, 2007. Mrs. Wang Qiong has over 10 years experience in the fertilizer
      and chemical industry. From 1997 to May 2001, she was the Chief Executive
      Officer and President of Shaanxi Bodisen Chemical Co., Ltd., which changed
      its
      name to Yang Ling Bodisen Biology Science and Technology Development
      Company Limited on August 31, 2001. From May 1996 to December 1997, she was
      the President of Yang Ling Kangyuan Agricultural Chemical Company, a company
      dedicated to the research and development of agricultural products. Mrs. Wang
      Qiong graduated from North-West Agronomy College, with a Bachelor of Science
      degree in 1986.





**Patrick
      McManus,** Director
      of Bodisen - Mr. Patrick McManus, CPA, J.D., joined Bodisen’s Board of Directors
      on May 1, 2004 as an independent board member. Mr. McManus brings over 25 years
      of experience in business, finance and law to Bodisen. He was elected Mayor
      of
      the City of Lynn, Massachusetts in 1992 and served in this position until his
      retirement to the private practice of law and accounting in 2002. While serving
      the City of Lynn as its Mayor, he was elected a member and trustee of the
      Executive Committee of the U.S. Conference of Mayors (USCM) with responsibility
      for developing policy for the USCM. He also served as the Chairman of the USCM
      Science and Technology Subcommittee, the Urban Water Council, and the USCM
      Audit
      Committee. Mr. McManus started his career in business with the General Electric
      Company in 1979, and was a Professor of Business and Finance at Salem State
      College in Massachusetts. He was instrumental in establishing a close alliance
      as well as coordinating a regular exchange of visits by members of the U.S.
      Conference of Mayors and the China Association of Mayors. Mr. McManus has been
      a
      Certified Public Accountant since 1985. Mr. McManus received his Juris Doctorate
      from Boston College Law School and an MBA from Suffolk University. Mr. McManus
      also serves as a director of Harbin Electric Co., which is based in Harbin,
      China.


29


**Linzhang
      Zhu,** Director
      of Bodisen - Mr. Linzhang Zhu joined Bodisen’s Board of Directors in October
      2006 as an independent board member. Mr. Zhu was the Vice-Chairman of the
      Yangling government from December 1997 until 2000. Mr. Zhu was appointed as
      Chairman of the Yangling government in December 2000 and retired in October
      2006. Mr. Zhu received a degree from China Center Cadre Training Institute
      in
      1993.





**Chunsheng
      Wang,** Chief
      Operating Officer of Bodisen, Executive Vice President and Chief Operating
      Officer of Yang Ling - Mr. Wang Chunsheng joined Bodisen in September 2001
      as
      Chief Operating Officer. From September 1999 to August 2001, Mr. Wang Chunsheng
      was Vice General Manager of the Shaanxi Bodisen Chemical Co. Ltd. responsible
      for sales and marketing. From January 1997 to July 1999, he held a position
      as
      Senior Sales Manager with the Yang Ling Kangyuan Agricultural Chemical Company.
      Mr. Wang Chunsheng holds an agronomist certification.





**Junyan
      Tong,** Chief
      Financial Officer of Bodisen and Yang Ling - Promoted to the position of Chief
      Financial Officer on June 4, 2007. Since 2005, Ms. Tong was serving as the
      Company’s Assistant Chief Financial Officer. From 1998-2002, Ms. Tong was Chief
      Financial Officer of Shenzhen Rongxun Industry Co., Ltd, a fitness equipment
      manufacturing company, where she was in charge of banking, tax matters, foreign
      currency issues, general ledgers, budgeting and financial analysis. From
      1995-1998, Ms. Tong served as Financial Manager of Guangdong Zhongyunhui
      Electric Co., Ltd., a telecommunications company. There, Ms. Tong was
      responsible for cost control, budgeting and foreign currency issues. From
      1991-1995, Ms. Tong was Accounting Manager at Guangdong Dongguan Anbao Industry
      Co., Ltd., a China-based electronics appliance company. As Accounting Manager,
      Ms. Tong handled financial statements, general ledger and cost control matters.
      Ms. Tong holds a degree in financial management from Harbin Economic Management
      Institute





**Board
      of Directors**





Our
      Directors are elected by the vote of a plurality in interest of the holders
      of
      our voting stock and hold office for a term of one year and until a successor
      has been elected and qualified.





A
      majority of the authorized number of directors constitutes a quorum of the
      Board
      for the transaction of business. The directors must be present at the meeting
      to
      constitute a quorum. However, any action required or permitted to be taken
      by
      the Board may be taken without a meeting if all members of the Board
      individually or collectively consent in writing to the action.





**Committees**





Our
      Board
      of Directors has a Nominating Committee and a Compensation Committee.





The
      committees and the committee members are listed below:





1.
            
            Nominating
                Committee: Linzhang Zhu (Chairman) and Patrick McManus2.
            
            Compensation
                Committee: Patrick McManus (Chairman) and Linzhang
                Zhu





As
      previously reported in a Current Report on Form 8-K, at a July 30, 2007 meeting
      of our Board of Directors, in light of the fact that our securities are no
      longer listed on a national securities exchange or listed in an automated
      inter-dealer quotation system of a national securities association, our Board
      of
      Directors took action to disband our audit committee effective July 30,
      2007.





**Board
      Compensation**





Directors
      may receive compensation for their services and reimbursement for their expenses
      as shall be determined from time to time by resolution of the
      Board.





30


**Employment
      Agreements**





There
      are
      currently no employment agreements between the Company and any of its named
      executive officers. Further details regarding executive compensation are
      provided in Item 11 of this report.





**Family
      Relationships**





Mr.
      Chungsheng Wang, our Chief Operating Officer, and Ms. Qiong Wang, a member
      of
      our Board of Directors are siblings.





**Beneficial
      Ownership Reporting Compliance**




Section
      16(a) of the Exchange Act, as amended, requires our executive officers,
      directors and persons who beneficially own more than 10% of our shares of common
      stock to file reports of their beneficial ownership and changes in ownership
      (Forms 3, 4 and 5, and any amendment thereto) with the SEC. Executive officers,
      directors and greater-than-10% holders are required to furnish us with copies
      of
      all Section 16(a) forms they file.




Based
      upon a review of the Forms 3, 4 and 5 (and amendments thereto) furnished to
      us
      for the fiscal year ended December 31, 2007, we have determined that our
      directors, officers and greater-than-10% beneficial owners complied with all
      applicable Section 16 filing requirements, except  Junyan Tong has not
      filed a Form 3 as an executive officer of Bodisen. Due to an inadvertent
      oversight, there was a failure to comply with Section 16(a) filing requirements
      upon appointment. We understand that Ms. Tong was not aware of her obligation
      to
      file a Form 3, and we are working with Ms. Tong to prmptly rectify the
      problem.




**Code
      of Ethics**




The
      Company has adopted a Code of Ethics that applies to all officers, directors
      and
      employees of the Company, including the Company’s principal executive officer,
      principal financial officer, principal accounting officer and controller. A
      copy
      of the Company’s Code of Ethics is included as an exhibit to this annual report.
      Stockholders may request a free copy of the Code of Ethics by contacting the
      Investor Relations Department at our corporate offices by calling
      +86.29. 87895373, or
      by
      sending an e-mail message to info@bodisen.com.





**Nominating
      Procedures**





During
      2007 there were no material changes to the procedures by which security holders
      may recommend nominees to our Board of Directors.




**ITEM
      11.**  **EXECUTIVE
      COMPENSATION**





**Compensation
      Discussion and Analysis**





Intentionally
      omitted.




**Executive
      Compensation**




The
      following table contains information concerning the compensation of our
      executive officers and other most highly compensated executive officers for
      the
      fiscal year ended December 31, 2007.




31




**Summary
      Compensation Table**




**Name
                And Principal Position**
              
              **(a)**
            **Year**
              
              **(b)**
            **Salary**(1)
              **($)**
              
              **(c)**
            **Bonus**
              **($)**
              
              **(d)**
            **Stock
                Awards**
              **($)**
              
              **(e)**
            **Option
                Awards**
              **($)**
              
              **(f)**
            **Non-Equity
                Incentive**
              **Plan
                Compen-sation**
              **($)**
              
              **(g)**
            **Nonqualified
                Deferred Compen-sation Earnings**
              **($)**
              
              **(h)**
            **All
                Other**
              **Compensation**
              **($)**
              
              **(i)**
            **Total**
              **($)**
              
              **(j)**Qiong
                Wang, former Chief Executive Officer
            2007
            6,025
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            6,0252006
            5,373
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            5,373Bo
                Chen
              President
                and current Chief Executive Officer
            2007
            5,188
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            5,1882006
            4,605
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            4,605Junyan
                Tong
              current
                Chief Financial Officer
            2007
            3,138
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            3,1382006
            2,558
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            2,558Chunsheng
                Wang
              Chief
                Operating Officer
            2007
            4,351
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            4,3512006
            3,838
            N/A
            N/A
            N/A
            N/A
            N/A
            N/A
            3,838




(1) All
      compensation for the officers identified in this table was paid in Chinese
      Renminbi, and is expressed in U.S. dollars based on the exchange rate in effect
      as of the last day of the relevant period. The exchange rates between the
      Renminbi and the U.S. dollar were 7.17 and 7.8 Renminbi to every one U.S. dollar
      at December 31, 2007 and 2006, respectively.




**Outstanding
      Equity Awards at Fiscal Year-End**




None
      of
      our named executive officers had unexercised options, stock that has not vested,
      or equity incentive plan awards outstanding as of December 31,
      2007.




**Compensation
      of Directors**




Directors
      of the Company receive compensation for their services and reimbursement for
      their expenses as determined by the Board of Directors from time to time.




**Name**
              
              **(a)**
            **Fees
                Earned or Paid in Cash**
              **($)**
              
              **(b)**
            **Stock
                Awards**
              **($)**
              
              **I**
            **Option
                Awards**
              **($)**
              
              **(d)**
            **Non-Equity
                Incentive**
              **Plan
                Compen-sation**
              **($)**
              
              **(e)**
            **Nonqualified
                Deferred Compensation Earnings**
              **($)**
              
              **(f)**
            **All
                Other**
              **Compensation**
              **($)**
              
              **(g)**
            **Total**
              **($)**
              
              **(h)**Patrick
                McManus
            24,000
            N/A
            N/A
            N/A
            N/A
            N/A
            24,000David
                Gatton*
            24,000
            N/A
            N/A
            N/A
            N/A
            N/A
            24,000Linzhang
                Zhu
            3,682
            N/A
            N/A
            N/A
            N/A
            N/A
            3,682_______________
              *
                Mr. Gatton resigned from our Board effective February 19,
                2008.




Messrs.
      McManus and Gatton each earned $24,000 in fees for their service as the
      Company’s U.S.-based directors in 2007, none of which was deferred.




**Compensation
      Committee**





Our
      Board
      of Directors has a Compensation Committee ,
      which
      is composed of Patrick McManus and Linzhang Zhu. The function of the
      Compensation Committee is to evaluate, recommend to the Board of Directors,
      and/or determine, the compensation levels of the Company’s executives, including
      the Chief Executive Officer, and the equity allocations relating to the
      Company’s equity programs.




32




**ITEM
      12.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**





**Securities
      Authorized for Issuance Under Equity Compensation Plans**





Pursuant
      to our 2004 Stock Option Plan, we are authorized to issue stock options for
      up
      to 1,000,000 shares of our common stock. On June 4, 2004, we granted David
      Gatton and Patrick McManus, who were each members of our Board of Directors
      at
      such time, 50,000 stock options each, having an exercise price of $5.00 per
      share, which was the same as the market price of the shares at the time of
      granting of the option. Of the options subject to such grants, 25,000 of each
      grant vested immediately and the remaining 25,000 vested over 8 equal quarterly
      installments, where the first installment vested at the end of the second
      quarter 2004.





We
      granted Messrs. Gatton and McManus an additional 5,000 options each on December
      28, 2004, which vested on December 31, 2004. The option exercise price for
      these
      options was $5.80 per share, which was the same as the market price of the
      shares at the time of granting of the options.





On
      October 4, 2005, we granted an additional 13,000 stock options to each Messrs.
      Gatton and McManus. Of each grant, 10,000 stock options vested immediately,
      with
      the remaining 3,000 stock options vesting over the next three months. The option
      exercise price was $6.72, which was the same as fair value of the shares at
      the
      time of granting of the options.





Mr.
      Gatton resigned from our Board of Directors effective February 19,
      2008.





**Equity
                Compensation Plan Information****Plan
                category**
            
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
              
              **(a)**
            
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
              
              **(b)**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a)**
              
              **(c)**Equity
                compensation plans approved by security holders.........................
            
            
            N/A
            
            
            N/A
            
            
            N/AEquity
                compensation plans not approved by security
                holders.........................
            
            
            136,000
            
            $
            5.39
            
            
            864,000Total.....................
            
            
            136,000
            
            
            
            
            
            864,000





**Security
      Ownership of Certain Beneficial Owners and Management**





The
      following table sets forth certain information, as of April 14, 2008 with
      respect to the beneficial ownership of the outstanding common stock by (i)
      any
      holder of more than five (5%) percent of our common stock; (ii) each of our
      current executive officers and directors; and (iii) our current directors and
      executive officers as a group. Except as otherwise indicated, each of the
      stockholders listed below has sole voting and investment power over the shares
      beneficially owned.





33


**Name
                of Beneficial Owner****(1)**
            **Number
                of Shares**
              **Beneficially
                Owned**
            **Percentage
                of Shares**
              **Beneficially
                Owned****(2)**Qiong
                Wang
            720,000
            3.9%Bo
                Chen
            690,000
            3.7%Patrick
                McManus(3)
            68,000
            *Chunsheng
                Wang
            0
            *Junyan
                Tong
            0
            *Linzhang
                Zhu
            0
            *All
                officers and directors as a group (6 persons)
            1,478,000
            8.1%




*
            Less
                than 1%.(1)
            Except
                as otherwise indicated, the address of each beneficial owner is c/o
                Bodisen Biotech, Inc., Room 2001, FanMei Building, No. 1 Naguan Zhengjie,
                Xi’an, Shaanxi, China,710068.(2)
            Applicable
                percentage ownership is based on18,310,520shares
                of common stock outstanding as of April 14, 2008, together with securities
                exercisable or convertible into shares of common stock within 60
                days of
                April 14, 2008 for each stockholder. Beneficial ownership is determined
                in
                accordance with the rules of the Securities and Exchange Commission
                and
                generally includes voting or investment power with respect to securities.
                Shares of common stock that are currently exercisable or exercisable
                within 60 days of April 14, 2008 are deemed to be beneficially owned
                by
                the person holding such securities for the purpose of computing the
                percentage of ownership of such person, but are not treated as outstanding
                for the purpose of computing the percentage ownership of any other
                person.(3)
            Number
                of shares beneficially owned reflect stock options held by Mr.
                McManus.





No
      Director, executive officer, affiliate or any owner of record or beneficial
      owner of more than 5% of any class of our voting securities is a party adverse
      to us or has a material interest adverse to us.





**ITEM
      13.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS  AND DIRECTOR
      INDEPENDENCE**





**Related
      Party Transactions**





None.





**Director
      Independence**





Our
      Board
      of Directors
      has determined that Patrick McManus and Linzhang Zhu meet the criteria for
      independence set forth in Rule 10A-3(b)(1) of the Securities Exchange Act of
      1934, as amended (the “Exchange Act”). Our Board of Directors has also
      determined that these persons have no material relationships with us - either
      directly or as a partner, stockholder or officer of any entity which could
      be
      inconsistent with a finding of their independence as members of our Board of
      Directors.





**ITEM
      14.**  **PRINCIPAL
      ACCOUNTING FEES AND SERVICES**





Morgenstern,
      Svoboda & Baer, P.C. was our independent registered public accounting firm
      engaged to examine our consolidated financial statements for the fiscal year
      ended December 31, 2007.





Kabani
      & Co. Inc., Certified Public Accountants, was our independent registered
      public accounting firm engaged to examine our consolidated financial statements
      for the fiscal year ended December 31, 2006.





As
      previously disclosed on a Current Report on Form 8-K dated July 30, 2007 and
      as
      amended on September 28, 2007, Kabani & Co., Inc. resigned as our
      independent registered public accounting firm on July 30, 2007.




34


**Fees
      for the fiscal years ended December 31, 2007 and 2006**




*Audit
      Fees*




The
      aggregate fees billed for each of the fiscal years ended December 31, 2007
      and
      2006 for professional services rendered by the principal accountant for the
      audit of our annual financial statements and review of the financial statements
      included in our Form 10-K or services that are normally provided by the
      accountant in connection with statutory and regulatory filings or engagements
      for those fiscal years were approximately $57,500 and $137,500, respectively.




*Audit
      Related Fees*




The
      aggregate fees billed in the fiscal years ended December 31, 2007 and 2006
      for
      assurance and related services by the principal accountant that are reasonably
      related to the performance of the audit or review of our financial statements
      and are not reported under the paragraph captioned “Audit Fees” above are
      $27,997 and $32,500, respectively. The
      Audit
      Related Fees include fees for the auditors’ review of registration statements
      and annual and quarterly reports filed with the SEC. “Audit Related Fees”
include fees for the 404 audit and review of the internal controls.




*Tax
      Fees*




The
      aggregate fees billed in the fiscal years ended December 31, 2007 and 2006
      for
      professional services rendered by the principal accountant for tax compliance,
      tax advice and tax planning were approximately $0 and $0, respectively.




*All
      Other Fees*




The
      aggregate fees billed in the fiscal years ended December 31, 2007 and 2006
      for
      products and services provided by the principal accountant, other than the
      services reported above under other captions of this Item 14 are $0 and $0,
      respectively.




**Pre-Approval
      Policies and Procedures**




Because
      we no longer have an audit committee, the following protocol by which we approve
      in advance any audit or permissible non-audit services to be provided to the
      Company by its independent auditor is now performed by our full Board of
      Directors. Prior to the engagement of the independent auditor for any fiscal
      year’s audit, our Board discusses with management anticipated recurring audit,
      audit-related, tax and other services expected to be provided by the auditor
      during that fiscal year. The Board establishes terms for the performance of
      the
      recurring services that it has pre-approved, and informs on a timely basis,
      and
      in any event for the next scheduled meeting, of any such services rendered
      by
      the independent auditor and the related fees.





The
      fees
      for any services thus approved are budgeted, and our Board requires the
      independent auditor and management to report actual fees versus the budget
      periodically throughout the year. Our Board will require additional pre-approval
      if circumstances arise where it becomes necessary to engage the independent
      auditor for additional services above the amount of fees originally
      pre-approved. Any audit or non-audit service must be separately pre-approved
      by
      our Board on a case-by-case basis.





Every
      request to provide services that are not pre-approved must include a statement
      by the independent auditor as to whether, in its view, the request is consistent
      with the SEC’s rules on auditor independence.




Our
      Board
      will not grant approval for:




·
            any
                services prohibited by applicable law or by any rule or regulation
                of the
                SEC or other regulatory body applicable to the
                Company;




·
            provision
                by the independent auditor to the Company of strategic consulting
                services
                of the type typically provided by management consulting firms;
                or




35




·
            the
                retention of the independent auditor in connection with a transaction
                initially recommended by the independent auditor, the tax treatment
                of
                which may not be clear under the Internal Revenue Code and related
                regulations and which it is reasonable to conclude will be subject
                to
                audit procedure during an audit of the Company’s financial
                statements.




Tax
      services proposed to be provided by the auditor to any director, officer or
      employee of the Company who is in an accounting role or financial reporting
      oversight role must be approved by our Board on a case-by-case basis where
      such
      services are to be paid for the by the Company, and our Board will be informed
      of any services to be provided to such individuals that are not to be paid
      for
      by the Company.




In
      determining whether to grant pre-approval of any non-audit services in the
“all
      other” category, our Board will consider all relevant facts and circumstances,
      including the following four basic guidelines:




·
            whether
                the service creates a mutual or conflicting interest between the
                auditor
                and the Company;




·
            whether
                the service places the auditor in the position of auditing his or
                her own
                work;




·
            whether
                the service results in the auditor acting as management or an employee
                of
                the Company; and




·
            whether
                the service places the auditor in a position of being an advocate
                for the
                Company.




36


**PART
      IV**





**ITEM
      15.****EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES**





**Exhibit**
              **Number**
            **Description
                of Exhibit**3.1
            Certificate
                of Incorporation (incorporated by reference to Company’s Form SB-2 filed
                September 3, 2002)3.2
            By-Laws
                (incorporated by reference to Company’s Form SB-2 filed September 3,
                2002).10.1
            Bodisen
                Biotech, Inc. 2004 Stock Option Plan (incorporated by reference to
                Company’s Form 10-KSB filed March 31, 2005)10.2
            Form
                of Bodisen Biotech, Inc. Nonstatutory Stock Option Agreement (incorporated
                by reference to Company’s Form 10-KSB filed March 31,
                2005)14.1
            Code
                of Ethics and Business Conduct for Officers, Directors and Employees
                of
                Bodisen Biotech, Inc. (incorporated by reference to the Company’s Form
                10-K filed April 30 ,2007)21.1
            Schedule
                of Subsidiaries (incorporated by reference to the Company’s Form 10-K
                filed April 30 ,2007)31.1
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended31.2
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d
                14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002




37


SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




Bodisen
                Biotech, Inc.By:
            /s/
                Bo ChenBo
                ChenChief
                Executive Officer
              (Principal
                Executive Officer)By:
            /s/
              Junyan
              TongJunyan
                TongChief
                Financial Officer(Principal
                Financial and Accounting
                Officer)





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.




SIGNATURE
            
            TITLE
            
            DATE/s/
                  Bo ChenBo
                Chen
            
            Chairman,
                Chief Executive Officer and President
            
            April
                15, 2008/s/
Junyan
                TongJunyan
                Tong
            
            Chief
                Financial Officer
            
            April
                15, 2008/s/
Wang
                QiongWang
                Qiong
            
            Director
            
            April
                15, 2008/s/
Patrick
                McManusPatrick
                McManus
            
            Director
            
            April
                15, 2008/s/
Linzhang
              ZhuLinzhang
                Zhu
            
            Director
            
            April
                15, 2008





38


**EXHIBIT
      INDEX**





**Exhibit**
              **Number**
            **Description
                of Exhibit**3.1
            Certificate
                of Incorporation (incorporated by reference to Company’s Form SB-2 filed
                September 3, 2002)3.2
            By-Laws
                (incorporated by reference to Company’s Form SB-2 filed September 3,
                2002).10.1
            Bodisen
                Biotech, Inc. 2004 Stock Option Plan (incorporated by reference to
                Company’s Form 10-KSB filed March 31, 2005)10.2
            Form
                of Bodisen Biotech, Inc. Nonstatutory Stock Option Agreement (incorporated
                by reference to Company’s Form 10-KSB filed March 31,
                2005)14.1
            Code
                of Ethics and Business Conduct for Officers, Directors and Employees
                of
                Bodisen Biotech, Inc. (incorporated by reference to the Company’s Form
                10-K filed April 30, 2007)21.1
            Schedule
                of Subsidiaries (incorporated by reference to the Company’s Form 10-K
                filed April 30 ,2007)31.1
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended*31.2
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d
                14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended*32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 *





*
      Filed
      herewith





39