**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
 
 **FORM
          10-KSB/A**
 **(Amendment
          No. 1)**
 
 **[X]**
              **ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934**
  For
        the
        fiscal year ended December 31, 2005
 
 **[
                 ]**
              **TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT****OF
                  1934**
 
 *Commission
        File Number: 000-31539*
 
 **BODISEN
        BIOTECH, INC.**
 (Name
        of
        small business issuer in its charter)
 
 Delaware
              98-0381367State
                  or other jurisdiction of incorporation or organization
              I.R.S.
                  Employer Identification Number
 
 North
        Part of Xinquia Road, Yang Ling AG
 High-Tech
        Industries Demonstration Zone
 Yang
        Ling, China 712100
 (Address
        of principal executive office)
 
 Issuer's
        telephone number: 86-29-870749
 
 Securities
        registered under Section 12(b) of the Exchange Act: None
 
 Securities
        registered under Section 12(g) of the Exchange Act: None
 
 Check
        whether the Issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 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 [ ]
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of the Registrant's knowledge, in definitive proxy
        or
        information statements incorporated by reference in Part III of this Form
        10-KSB
        or any amendment to this Form 10-KSB. [ ]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act) Yes [ ] No [X]
 
 The
        Issuer's revenues for the year ending December 31, 2005 were $30,975,350.
 
 As
          of
          July 31, 2006 the number of shares outstanding of the Issuer's common stock
          was
          18,176,917.
 
 As
          of
          July 31, 2006 the aggregate number of shares held by non-affiliates was
          approximately 10,844,041.
 
 As
          of
          July 31, 2006 the aggregate market value of the Issuer's common stock held
          by
          non-affiliates was $145,960,791.88, based on the average high and low price
          of
          $13.46 per share as of July 31, 2006.
  **DOCUMENTS
        INCORPORATED BY REFERENCE**  None
  
  **FORM
        10-KSB**
  **FOR
        THE FISCAL YEAR ENDED DECEMBER 31, 2004**
 
 **INDEX**
  **INDEX**
 
 PagePART
                      I
                  4ITEM
                      1. DESCRIPTION OF BUSINESS
                  4ITEM
                      2. DESCRIPTION OF PROPERTY
                  7ITEM
                      3. LEGAL PROCEEDINGS
                  8ITEM
                      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
                  8PART
                      II
                  9ITEM
                      5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
                      MATTERS AND
                      SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
                  9ITEM
                      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                      OPERATION
                  9ITEM
                      7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                  14ITEM
                      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                      AND
                      FINANCIAL DISCLOSURE
                  15ITEM
                      8A. CONTROLS AND PROCEDURES
                  15ITEM
                      8B. OTHER INFORMATION
                  15PART
                      III
                  16ITEM
                      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
                  16ITEM
                      10. EXECUTIVE COMPENSATION
                  18ITEM
                      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                      AND
                      RELATED STOCKHOLDER MATTERS
                  19ITEM
                      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                  20ITEM
                      13. EXHIBITS
                  21ITEM
                      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
                  21
  STATEMENT
        REGARDING FORWARD-LOOKING STATEMENTS
 
 In
        this
        annual report, references to “Bodisen Biotech,” “BBC,” “the Company,” “we,”
“us,” and “our” refer to Bodisen Biotech, Inc.
 
 Except
        for the historical information contained herein, some of the statements in
        this
        Report contain forward-looking statements that involve risks and uncertainties.
        These statements are found in the sections entitled "Business," "Management's
        Discussion and Analysis or Plan of Operation," and "Risk Factors." They include
        statements concerning: our business strategy; expectations of market and
        customer response; liquidity and capital expenditures; future sources of
        revenues; expansion of our proposed product line; and trends in industry
        activity generally. In some cases, you can identify forward-looking statements
        by words such as "may," "will," "should," "expect," "plan," "could,"
        "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal,"
        or "continue" or similar terminology. These statements 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. For example, assumptions that could cause actual results to vary
        materially from future results include, but are not limited to: our ability
        to
        successfully develop and market our products to customers; our ability to
        generate customer demand for our products in our target markets; the development
        of our target markets and market opportunities; our ability to manufacture
        suitable products at competitive cost; market pricing for our products and
        for
        competing products; the extent of increasing competition; technological
        developments in our target markets and the development of alternate, competing
        technologies in them; and sales of shares by existing shareholders. 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. Unless we are required to do so under US federal securities
        laws or other applicable laws, we do not intend to update or revise any
        forward-looking statements.
  
  **PART
        I**
  ITEM
        1.
        DESCRIPTION OF BUSINESS
 
 **Overview
        of Business**
  We
        were
        incorporated on January 14, 2000 in Delaware and our principal place of business
        is based in the People’s Republic of China. We are located at: Bodisen Biotech,
        Inc., North Part of Xinquia Road, Yang Ling AG, High-Tech Industries
        Demonstration Zone, Yang Ling, China 712100, Telephone: +862987074957. We
        are
        primarily engaged in developing, manufacturing and selling organic fertilizers
        and pesticides in the People’s Republic of China.
 
 **Business**
 
 Our
          sole
          operating subsidiary, Yang Ling Bodisen Biology Science and Technology
          Development Company Limited (“ BBST ”),
          was
          founded in The People’s Republic of China on August 31, 2001 and is
          headquartered in the Shaanxi Province, People’s Republic of China. BBST primarily manufactures and markets organic fertilizers and pesticides to
          20
          agricultural provinces of China. We produce numerous proprietary product
          lines,
          from pesticides to crop specific fertilizer, which are then marketed and
          sold to
          farmers. We conduct research and development to further improve existing
          products and to develop new formulas and products.
 
 **History**
 
 Prior
        to
        March 1, 2004, the Company was called Stratabid.com, Inc. The Company was
        a
        startup stage Internet-based commercial mortgage origination business. The
        Company operated primarily through its wholly-owned subsidiary, Stratabid.com
        Online (B.C.) Ltd. (“Stratabid.com Online”), which provided services throughout
        Canada.
 
 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, was
          primarily
          engaged in developing, manufacturing and selling pesticides and compound
          organic
          fertilizers in the People’s Republic of China. On November 19, 2003, BBST incorporated Bodisen International, Inc. (“ BII ”),
          a
          Delaware corporation, as a non-operative holding company.
 
 On December
          15, 2003, BII (legal acquirer) entered in to an agreement with all the
          stockholders of BBST (accounting acquirer) to exchange all of the outstanding
          stock of BII for all the issued and outstanding stock of BBST. After the
          consummation of the agreement, the former stockholders of BBST own 1,500
          shares
          of common stock of BII, which represent 100% of BII’s issued and outstanding
          shares. For U.S. Federal income tax purpose, the transaction is intended
          to be
          qualified as a tax-free transaction under section 351 of the Internal Revenue
          Code of 1986, as amended.
 
 The
          exchange of shares with BBST has been accounted for as a reverse acquisition
          under the purchase method of accounting since the stockholders of the BBST
          obtained control of the consolidated entity. Accordingly, the merger of
          the two
          companies has been recorded as a recapitalization of BBST, with BBST being
          treated as the continuing entity. The historical financial statements presented
          are those of BBST. The continuing company (BBST) has retained December
          31 as its
          fiscal year end. The financial statements of the legal acquirer are not
          significant; therefore, no pro forma financial information is
          submitted.
 
 On January
          14, 2004, Stratabid created a wholly-owned subsidiary corporation known
          as
          Bodisen Holdings, Inc., a Delaware corporation, (“BHI”), to pursue a merger with BII the
          parent of BBST .
          On
          February 11, 2004, Stratbid and BHI entered into an Agreement and Plan
          of Merger
          with BII and the
          shareholders of BII ,
          providing for the merger of BII into
          BHI, with BHI 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, Stratabid acquired 100% of BII ’s
          outstanding stock in exchange for the issuance of 3,000,000 shares of its
          Common
          Stock to the holders of BII shares.
          The Common Stock issued in the merger constituted approximately 66% of
          the
          outstanding shares of the Company after the merger. After the merger, the
          Company paid a 3 for 1 stock dividend and then, by prior agreement, cancelled
          3,000,000 post dividend shares held by the Company’s former CEO. After these
          transactions, the shareholders of BII held
          approximately 79% of the Common Stock outstanding. On February 25, 2004,
          the
          Company sold Stratabid.com Online to Derrek Wasson, the Company’s former CEO. In
          consideration of the sale, Mr. Wasson returned 750,000 (pre dividend) Common
          Shares to Stratabid for cancellation. In addition, Mr. Wasson forgave all
          indebtedness owed by Stratabid to Mr. Wasson. Other than indebtedness of
          BII,
          Stratabid 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. On
          March
          1, 2004, the Company changed its name from Stratabid.com, Inc. to Bodisen
          Biotech, Inc. Accordingly, subsequent to the foregoing transactions, Bodisen
          Biotech, Inc. owned 100% of Bodisen Holding, Inc, which in turn owned 100%
          of BBST ,
          the
          operating company in China.
  4
 The
          exchange of shares with BBST has been
          accounted for as a reverse acquisition under the purchase method of accounting
          since the stockholders of the BBST obtained
          control of the consolidated entity. Accordingly, the merger of the two
          companies
          has been recorded as a recapitalization of BBST ,
          with BBST being
          treated as the continuing entity. The historical financial statements presented
          are those of BBST .
          The
          continuing company has retained December 31 as its fiscal year end. The
          financial statements of the legal acquirer are not significant; therefore,
          no
          pro forma financial information is submitted.
 
 The
          exchange of shares with Stratabid has been accounted for as a reverse
          acquisition under the purchase method of accounting since the stockholders
          of BII obtained
          control of Stratabid. Accordingly, the merger of the two companies has
          been
          recorded as a recapitalization of the Company, with the Company being treated
          as
          the continuing entity. The financial statements of legal acquirer are not
          significant; therefore, no pro forma financial information was
          required.
 
 In
          March
          2005 Bodisen Biotech, Inc. formed a new wholly-owned subsidiary by the
          name of
“Yang Ling Bodisen Agricultural Technology Co., Ltd. (“Agricultural”). In June
          2005, Agricultural completed a transaction with BBST ,
          Bodisen
          Biotech, Inc.’s operating subsidiary in China, which resulted in Agricultural
          owning 100% of BBST .
          Accordingly; Bodisen Biotech, Inc. now owns 100% of Agricultural, which
          in turn
          owns 100% of BBST .
 
 The
          Company has developed a product line of over 60 items, and, management
          believes,
          been successful in building the Bodisen brand name. The central government
          of
          The People’s Republic of China has mandated that farmers increase crop yields in
          order to decrease the nation’s dependence on food imports, as well as the
          growing emphasis on the need to use “environmentally friendly” fertilizers, has
          also been a factor in the growth of the business of the
          Company.
 
 **Products**
 
 The
          Company manufactures over 60 products, which are broken down into 3 product
          line
          categories:
 
 *Organic
        compound fertilizer*
 
 These
          products are the Company’s leading product category, accounting for
          approximately 67% of the Company’s revenue. Plants tend to easily absorb organic
          fertilizer without 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. The International
          Organization for Standardization (ISO 9001: 2000) has qualified Bodisen’s
          organic compound fertilizer products.
  Organic
        fertilizers improve the cation exchange capacity, or “CEC” of soil which is its
        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. Principal functions include:
 
 •
              preserving
                  nitrogen and improving soil fertility;
 
 •
              allowing
                  phosphorous and potash fertilizer to gradually dissolve;
 
 •
              promoting
                  diseases resistance; and
 
 •
              activating
                  and maintaining soil moisture content.
 
 *Liquid
        fertilizers*
 
 These
          products account for approximately 19% the Company’s revenue. 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. The
          liquid
          fertilizer increases the plant’s yield and shortens the time to harvest whilst
          heightening the colour and lustre of fruit and vegetables.
 
 5
 Liquid
        fertilizer is sold to the farmer in a concentrated form and needs to be mixed
        by
        the farmer with water before spraying onto the plant. Since the liquid
        fertilizer is applied directly to the plant it is more easily
        absorbed.
 
 *Pesticides*
 
 These
          products account for approximately 14% the Company’s revenue. Bodisen’s
          pesticide products can be applied to all fruit trees and vegetable crops.
          They
          kill harmful insects that reduce overall crop yields.
 
 **Market
        information**
 
 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. To encourage farmers, of which there are
          800
          million in the People’s Republic of China, to remain on their land, the
          government recently eliminated the agriculture tax, which effectively increased
          farmers’ disposable income by 20%. Although organic compound fertilizers are
          more expensive than chemical fertilizers, management believes that the
          extra
          cost is justified by the increase of yield and quality and, consequently,
          the
          increased margin attained at the market.
 
 **Sales
        and Marketing**
 
 The
        Company’s products are sold directly to over 150 wholesalers in the People’s
        Republic of China, through written sales contracts.
 
 The
        Bodisen brand has been marketed and promoted through trade fairs, conventions
        and the print media, and through television and radio advertising in the
        People’s Republic of China. Since the end-user for its products is the local
        farmer, educational seminars to promote products and organic fertilizers
        directly to farmers are extensively used. To capture a share of the market,
        free
        samples of the products are distributed to allow a trial period to take place,
        the results of which are made know to the surrounding area. The cost of this
        is
        not material and is typically offset by new sales in that test zone.
 
 The
          primary tasks in respect of sales goals are to strengthen the home market
          in the
          Shaanxi province and to expand the market outside the Shaanxi province
          into new
          districts where the Company’s products are not well established.
 
 It
        is our
        intention to increase marketing in regions where our products are not well
        known. In addition, promotion of the products through national newspapers
        in
        China explaining the advantages of the high-tech nature of its environmentally
        friendly product lines will be undertaken. In order to enter the untapped
        markets of western China, the Company will explore selling exclusive franchise
        opportunities to new wholesale agents.
 
 **Raw
        materials**
 
 There
        are
        numerous suppliers of raw materials in Shaanxi Province. To manufacture organic
        compound fertilizer Bodisen uses carbamide, ammonium, potassium chloride
        and
        zeolite powder. Carbamide, potassium chloride, bluestone, zinc sulfate, borax,
        citric acid and bitter salt, together with other materials are used to
        manufacture liquid fertilizer. Pesticides are manufactured using Mieduowie,
        zinc
        sulphur phosphor, emulsification agents, Dimethylbenzene, sulfur powder and
        Fumeishuang.
 
 The
          Company has short-term material supplier contracts with its 19 major suppliers.
          Business with other suppliers is conducted on an order-by-order basis,
          a
          practice that is typical throughout the agrochemical industry in The People’s
          Republic of China. Management believes that the Company has very good relations
          with the agricultural supplier community.
 
 6
 **Research
        and Development**
 
 The
        research and development team consists of four professionals, who perform
        administrative and ministerial functions. Much of the research is done in
        close
        cooperation with universities and research laboratories in the Yang Ling
        and
        Xian Metropolitan areas with related costs incurred by such universities
        and
        research laboratories and not by the Company. In 2005, the Company budgeted
        to
        spend U.S.$130,000 on research and development, the majority of which was
        dedicated to existing research programs. The following projects were commenced
        in 2004 and are currently scheduled for completion in 2006:
 
 *Pesticides
        projects*
 
 Project
        Ion is the study of copper, zinc and manganese ions in combination with silver
        ions to control and remove crop disease brought about by fungi. The objective
        is
        to determine whether the combination of these metal ions will prohibit the
        release of an intrusive enzyme from fungi that kills crops in China.
 
 Project
        Fly is the development of a protein abstract from a common fly to develop
        bacteria-based pesticides, which may have a better effect on a plant’s
        resistance to insects. This project seeks to isolate a series of anti-bacteria
        peptides from the proteins of a common fly. This kind of anti-bacteria peptide
        could effectively control many pathogens which may prove more effective than
        the
        pesticides which are currently available.
 
 *Fertilizer
        projects*
 
 Project
        Amino Acid is a program that was developed to build a new compound fertilizer
        product, based on a proactive amino acid enzyme.
 
 Project
        Build utilizes a technique for the manufacturing of organic compound fertilizer,
        which could enhance the quality of organic fertilizer products.
 
 **Intellectual
        property**
 
 The
          Company owns trademarks in the “Bodisen” name, which is used on all products.
          Bodisen is also a recognized trade name in the provinces in The People’s
          Republic of China in which the Company conducts business. Bodisen protects
          its
          proprietary technology and formulae by keeping such technology and formulae
          confidential. If such technology or formulae are disclosed to a third party
          that
          is not under an obligation of confidentiality or are accidentally disclosed,
          Bodisen may not be able to protect its technology against being exploited
          by
          third parties. Management believes this is adequate protection. The Company
          acquired rights for fluid and compound fertilizer technology from a third
          party.
          Most intellectual property was developed in-house or with various universities
          and research laboratories (which may not be owned by Bodisen). Only certain
          key
          executives of the Company have knowledge of such proprietary technology
          and
          formulae. Management believes believe that there are adequate systems in
          place
          to prevent disclosure of the proprietary technology and formulae. Since
          the
          Company does not hold patents for its products, the Company may not be
          in a
          position to adequately protect its intellectual property rights. See “Risk
          Factors” in Part I.
 
 **Government
        and Environmental Regulation**
 
 Bodisen’s
          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 state, local
          governments and industry agencies, which are controlled and monitored through
          the issuance of licenses. To date, the Company has been compliant with
          all
          registrations and requirements for the issuance and maintenance of all
          licenses
          required by the governing bodies. As of the date of this document, all
          license
          fees and filings are current. These licenses obtained by the Company 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. The National Certificate for Production of
        Industrial Products will be valid until February 26, 2009.
 
 7
 *Certificate
        for pesticide registration*
 
 Pesticide
        registration is required for the production of liquid fertilizer and issued
        by
        Ministry of Agriculture, People’s Republic of China.
 
 *Production
        standard*
 
 The
        Company is 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 the Company were to lose
          any
          of these licenses, it would only have a limited time to reapply for such
          licenses and would face possible regulatory fines. The Company is subject
          to
          relevant environmental laws and regulations that require outlay of capital
          and
          the obtaining of relevant permits in order to engage in business
          operations.
 
 **Competition**
 
 Management
          considers that the compound 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. Bodisen has not yet identified any competition
          in
          the Shaanxi province that operates in all three segments (compound, liquid
          and
          pesticide) of the organic fertilizer business. Management believes that
          the
          Company’s most significant Chinese competitor is Tian Bang Shaanxi and that the
          only international competitor company is DuPont.
 
 **Employees**
 
 As
        of
        March 17, 2006 we had a total of 543 employees of which approximately 6 are
        executive and senior managers, 80 are business and accounting staff, 10 are
        warehouse and purchasing staff, 12 are drivers or secretaries and the balance
        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.
 
 ITEM
        2.
        DESCRIPTION OF PROPERTY
 
 The
          Company’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, 712100 and the telephone number is
          +86-29-87074957. The Company owns two factories, which include three production
          lines, an office building, one warehouse, and two research laboratories
          which
          are located on 10,900 square meters of land. The rent for the office building
          is
          $121 a month from May 20, 2004 through May 20, 2005. The Company also leases
          a
          warehouse in Yang Ling near the site of its factories. This warehouse is
          300
          square meters in area. The rent of the warehouse is $194 a month from January
          2005 through May 2005. The Company completed a new 609,840 square foot
          manufacturing facility on March 15, 2005 and in November 2005 the Company
          broke
          ground on a new facility, adjacent to the facility completed in March 2005,
          for
          production of a new product line. Management believes that its owned and
          leased
          property, along with the properties being developed in its current facility
          expansion plans, will be sufficient for its current and immediately foreseeable
          operating needs.
 
 ITEM
        3.
        LEGAL PROCEEDINGS
 
 From
        time to time, we may become involved in various lawsuits and legal proceedings,
        which arise in the ordinary course of business. However, litigation is subject
        to inherent uncertainties, and an adverse result in these or other matters
        may
        arise from time to time that may harm our business. We are currently not
        aware
        of any such legal proceedings or claims that we believe will have, individually
        or in the aggregate, a material adverse affect on our business, financial
        condition or operating results.
 
 ITEM
        4.
        SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
 
 None
  8
 **PART
        II**
 
 ITEM
        5.
        MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
        BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
 
 Our
        common stock is traded on the American Stock Exchnage under the symbol “BBC.”
Prior to August 29, 2005, our common stock traded on the Over-the-Counter
        Bulletin Board under the symbol "BBOI." 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.
  **2005****High*******
                
                **Low*******1stQuarter
                
                $
                6.30
                
                $
                5.052ndQuarter
                
                
                6.25
                
                
                5.043rdQuarter
                
                
                7.87
                
                
                5.104thQuarter
                
                
                15.94
                
                
                6.12
  **High*******
                
                **Low*******1stQuarter
                
                $
                13.90
                
                $
                0.252ndQuarter
                
                
                7.62
                
                
                4.403rdQuarter
                
                
                8.60
                
                
                6.104thQuarter
                
                
                7.31
                
                
                5.60
  As
          of
          March 24, 2006, there were approximately 896 holders of record of our common
          stock.
 
 **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
          (“PRC”), 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 PRC 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 PRC 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 5% of net income
          to the
          welfare fund in 2005 and 2004. The amount included in the statutory reserve
          for
          the years ended December 31, 2005 and 2004 amounted to $449,675 and $251,370,
          respectively.
 
 **Recent
        Issuances of Unregistered Securities.**
 
 On
        February 24, 2004, the Company issued 3.0 million shares of its Common Stock
        to
        the stockholders of Bodisen International, Inc., in connection with the
        acquisition of the Company’s current sole operating subsidiary, Yang Ling
        Bodisen Biology Science and Technology Development Company Limited. See Item
        1,
“Description of Business, Introduction and Background,” above. The sale was
        effective pursuant to a private placement under Section 4(2) and/or Regulation
        D
        of the Securities Act of 1933, as amended.
 
 9
 ITEM
        6.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 **INTRODUCTION**
 
 The
        following discussion should be read in conjunction with the Financial Statements
        and Notes thereto. Our fiscal year ends December 31. ****** This
        document contains certain forward-looking statements including, among others,
        anticipated trends in our financial condition and results of operations and
        our
        business strategy. (See “Factors Which May Affect Future Results”). These
        forward-looking statements are based largely on our current expectations
        and are
        subject to a number of risks and uncertainties. Actual results could differ
        materially from these forward-looking statements. Important factors to consider
        in evaluating such forward-looking statements include (i) changes in external
        factors or in our internal budgeting process which might impact trends in
        our
        results of operations; (ii) unanticipated working capital or other cash
        requirements; (iii) changes in our business strategy or an inability to execute
        our strategy due to unanticipated changes in the industries in which the
        Company
        operates; and (iv) various competitive market factors that may prevent us
        from
        competing successfully in the marketplace.
 
 **Overview**
 
 The
          Company is incorporated under the laws of the state of Delaware and its
          operating subsidiary, BBST ,
          is
          headquartered in the Shaanxi Province, the People’s Republic of China. The
          Company engages in the business of manufacturing and marketing organic
          fertilizers and pesticides in the People’s Republic of China. It produces
          numerous product lines, from pesticides to crop specific fertilizers. These
          products are then marketed and sold to over 150 wholesalers throughout
          the 20
          provinces of The People’s Republic of China. The Company conducts research and
          development to further improve existing products and develop new formulas
          and
          products.
 
 **Critical** **Accounting Policies**
 
 *Use
        of estimates*
 
 The
          preparation of financial statements in conformity with generally accepted
          accounting principles requires the Company 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. It
          is
          possible that accounting estimates and assumptions may be material to the
          company due to the levels of subjectivity and judgment
          involved.
 
 *Accounts
        receivable*
 
 The
          Company maintains reserves for potential credit losses on accounts receivable.
          It reviews the composition of accounts receivable and analyzes historical
          bad
          debts, customer concentrations, customer credit worthiness, current economic
          trends and changes in customer payment patterns to evaluate the adequacy
          of
          these reserves. Reserves are recorded primarily on a specific identification
          basis.
 
 *Inventories*
 
 Inventories
          are valued at the lower of cost (determined on a weighted average basis)
          or
          market. The Company compares the cost of inventories with the market value
          and
          allowance is made for writing down the inventories to their market value,
          if
          lower.
 
 *Property
        and equipment*
 
 Property
        and equipment are stated at cost. Expenditures for maintenance and repairs
        are
        charged to earnings as incurred; additions, renewals and betterments are
        capitalized. When property and equipment are retired or otherwise disposed
        of,
        the related cost and accumulated depreciation are removed from the respective
        accounts, and any gain or loss is included in operations. Depreciation of
        property and equipment is provided using the straight-line method for
        substantially all assets with estimated lives of: 30 years for building,
        10
        years for machinery, 5 years for office equipment and 8 years for vehicles.
 
 10
 *Intangible
        assets*
 
 Intangible
          assets consist of rights to use land and proprietary technology rights
          to
          fertilizers. 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 , and other
          long-lived assets 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.
 
 *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 by 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.
 
 *Stock-based
        compensation*
 
 In
          October 1995, the FASB issued SFAS No. 123, “Accounting for Stock-Based
          Compensation”. SFAS No. 123 prescribes accounting and reporting standards for
          all stock-based compensation plans, including employee stock options, restricted
          stock, employee stock purchase plans and stock appreciation rights. SFAS
          No. 123
          requires compensation expense to be recorded (i) using the new fair value
          method
          or (ii) using the existing accounting rules prescribed by Accounting Principles
          Board Opinion No. 25, “Accounting for stock issued to employees” (APB 25) and
          related interpretations with proforma disclosure of what net income and
          earnings
          per share would have been had the Company adopted the new fair value method.
          The
          Company uses the intrinsic value method prescribed by APB 25 and have opted
          for
          the disclosure provisions of SFAS No. 123.
 
 *Income
        taxes*
 
 The
          Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
          recognition of deferred tax assets and liabilities for the expected future
          tax
          consequences of events that have been included in the financial statements
          or
          tax returns. Under this method, deferred income taxes are recognized for
          the tax
          consequences in future years of differences between the tax bases of assets
          and
          liabilities and their financial reporting amounts at each period end based
          on
          enacted tax laws and statutory tax rates applicable to the periods in which
          the
          differences are expected to affect taxable income. Valuation allowances
          are
          established, when necessary, to reduce deferred tax assets to the amount
          expected to be realized.
 
 According
          to the Provisional Regulations of the People’s Republic of China on Income Tax,
          the Document of Reductions and Exemptions of Income Tax for the Company
          have
          been approved by the local tax bureau and the Management Regulation of
          Yang Ling
          Agricultural High-Tech Industries Demonstration Zone. The Company is exempted
          from income tax in its first two years of operations.
 
 *Foreign
        currency transactions and comprehensive income (loss)*
 
 Accounting
        principles generally require that recognized revenue, expenses, gains and
        losses
        be included in net income. Certain statements, however, require entities
        to
        report specific changes in assets and liabilities, such as gain or loss on
        foreign currency translation, as a separate component of the equity section
        of
        the balance sheet. Such items, along with net income, are components of
        comprehensive income. Transactions occur in Chinese Renminbi. The unit of
        Renminbi is in Yuan.
 
 **Recent
        Accounting Pronouncements**
 
 In
        November 2004, the FASB has issued FASB Statement No. 151, “Inventory Costs, an
        Amendment of ARB No. 43, Chapter 4” (“FAS No. 151”). The amendments made by FAS
        No. 151 are intended to improve financial reporting by clarifying that abnormal
        amounts of idle facility expense, freight, handling costs, and wasted materials
        (spoilage) should be recognized as current-period charges and by requiring
        the
        allocation of fixed production overheads to inventory based on the normal
        capacity of the production facilities.
 
 11
 The
        guidance is effective for inventory costs incurred during fiscal years beginning
        after June 15, 2005. Earlier application is permitted for inventory costs
        incurred during fiscal years beginning after November 23, 2004. The provisions
        of FAS No. 151 will be applied prospectively. The Company does not expect
        the
        adoption of FAS No. 151 to have a material impact on its consolidated financial
        position, results of operations or cash flows.
 
 In
        December 2004, the FASB issued FASB Statement No. 123R, “Share-Based Payment, an
        Amendment of FASB Statement No. 123” (“FAS No. 123R”). FAS No. 123R requires
        companies to recognize in the statement of operations the grant- date fair
        value
        of stock options and other equity-based compensation issued to employees.
        FAS
        No. 123R is effective beginning in the Company’s second quarter of fiscal 2005.
        The Company is in process of evaluating the impact of this pronouncements
        on its
        consolidated financial position, results of operations or cash flows.
 
 In
        December 2004, the FASB issued SFAS Statement No. 153, “Exchanges of
        Non-monetary Assets.” The Statement is an amendment of APB Opinion No. 29 to
        eliminate the exception for non-monetary exchanges of similar productive
        assets
        and replaces it with a general exception for exchanges of non- monetary assets
        that do not have commercial substance. The Company believes that the adoption
        of
        this standard will have no material impact on its financial statements.
 
 In
        March
        2004, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No.
        03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to
        Certain Investments.” The EITF reached a consensus about the criteria that
        should be used to determine when an investment is considered impaired, whether
        that impairment is other-than-temporary, and the measurement of an impairment
        loss and how that criteria should be applied to investments accounted for
        under
        SFAS No. 115, “Accounting In Certain Investments In Debt And Equity Securities.”
EITF 03-01 also included accounting considerations subsequent to the recognition
        of an other-than-temporary impairment and requires certain disclosures about
        unrealized losses that have not been recognized as other-than-temporary
        impairments. Additionally, EITF 03-01 includes new disclosure requirements
        for
        investments that are deemed to be temporarily impaired. In September 2004,
        the
        Financial Accounting Standards Board (FASB) delayed the accounting provisions
        of
        EITF 03-01; however the disclosure requirements remain effective for annual
        reports ending after June 15, 2004. The Company will evaluate the impact
        of EITF
        03-01 once final guidance is issued.
 
 *Year
        Ended December 31, 2005 compared to Year Ended December 31,
        2004*
 
 Revenue.
        The Company generated revenues of $30,975,350 for the twelve months ended
        December 31, 2005, an increase of $14,749,454 or 90.9%, compared to $16,225,896
        for the twelve months ended December 31, 2004. The growth in revenue was
        primarily attributable to the increase in our customer base as we continue
        to
        aggressively market our products and the growing awareness in the agricultural
        industry in the markets in which we do business of the efficacy of our products.
        The Bodisen brand name has become synonymous with proven higher crop yields.
        The
        completion of our new factory in early 2005 enabled us to meet the growing
        demand for all of our products.
 
 Gross
          profit. The Company achieved a gross profit of $11,504,229 for the twelve
          months
          ended December 31, 2005, an increase of $4,932,298 or 75.1%, compared to
          $6,571,931 for the twelve months ended December 31, 2004. Gross margin,
          as a
          percentage of revenues, decreased from 40.5% for the twelve months ended
          December 31, 2004, to 37.1% for the twelve months ended December 31, 2005.
          The
          decrease in gross margin was primarily attributable to increased costs
          of raw
          materials, as well as an increase in the costs of shipping our products.
          The
          widespread increase in the cost of all raw materials in China lead us to
          seek
          the $5,000,000 short term note payable in December 2005, so that we could
          lock
          in raw materials prices at off season levels for 2006. Gross profit is
          calculated by deducting from revenues the raw materials used to produce
          the
          finished products as well as charges for depreciation, employee welfare,
          repairs
          to machinery and equipment, all inventoriable costs and all other costs incident
          to or necessary for the production of our products.
 
 Operating
          expenses. The Company incurred operating expenses of $2,431,753 for the
          twelve
          months ended December 31, 2005, an increase of $908,403 or 59.6%, compared
          to
          $1,523,350 for the twelve months ended December 31, 2004. These operating
          expenses are related to increased sales and marketing costs related to
          the 90.9%
          increase in sales for 2005.
 
 The
          Company incurred expenses of $935,444 for the twelve months ended December
          31,
          2005, an increase of $319,895 or 52%, compared to $615,549 for the twelve
          months
          ended December 31, 2004. Selling expenses are related to costs associated
          with
          sales and marketing of the Company's products and with transportation of
          Company's products. As we continue to grow revenues, we are selling Bodisen
          products greater distances from our factories, leading to increased shipping
          costs, most notably on the compound fertilizer product which is sold in
          50
          kilogram (110 pounds) units. The increase in the cost of fuel experienced
          in the
          second, third and fourth quarters of 2005 has also had an effect on operating
          expenses. Operating expenses include general and administrative expenses
          of
          $1,496,309 for the twelve months ended December 31, 2005 and $907,801 for
          the
          twelve months ended December 31, 2004, an increase of $588,508 or 64.8%.
          Operating expenses are related to cost of maintaining the company's non
          manufacturing facilities, salaries of administrative and sales staff, and
          other
          non manufacturing expenses.
 
 12
 Non
          Operating Income and Expenses. The company had other non operating expense
          of
          $121,410 for the twelve months ended December 31, 2005, this relates to
          $108,165
          loss on the sale of fixed assets and a $13,245 exchange loss on foreign
          currency
          transaction, compared to non operating income of $7,623 for the twelve
          months
          ended December 31, 2004. The company had interest income of $137,870 for
          the
          twelve months ended December 31, 2005 compared to $45,338 for the twelve
          months
          ended December 31, 2004. Interest expense for the twelve months ended December
          31, 2005 was $1,667,824 compared to $74,139. The majority of the interest
          expense in 2005 relates to the $3 million convertible debenture issued
          March 16,
          2005 and the $5 million note payable issued December 8, 2005.
 
 Net
        Income. Net income increased by 47.6% to $7,421,112, an increase of $2,393,709,
        from $5,027,403. Earnings per share (EPS) rose to $0.48 in 2005 from $0.33
        in
        2004. The increase was attributed to the growth in the demand for the Company's
        products as we enter new markets throughout China. This growth occurred as
        a
        result of management's discipline with respect to costs and attention to
        the
        bottom line despite a decrease in gross margins.
 
 **Liquidity
        and Capital Resources**
 
 As
        of
        December 31, 2005 Bodisen Biotech, Inc. had $6,276,897 cash and cash equivalents
        on hand, compared to $2,121,811 cash and cash equivalents on hand as of December
        31, 2004.
 
 The
          Company’s accounts receivable for the year ended December 31, 2005, were
          $7,478,152. For December 31, 2005 accounts payable was $49,893, other payables
          were $18,773 and short term loans was $4,396,114, reflecting the $5,000,000
          note
          issued December 8, 2005 and subsequently paid. Cash outflows for investing
          activities increased from $2,778,136 to $5,768,028 as a result of additions
          made
          to construction in progress, acquisitions of property and equipment and
          the
          purchase of marketable securities. The Company's accounts receivable for
          the
          year ended December 31, 2005, were $7,478,152. Based on past performance
          and
          current expectations, we believe our cash and cash equivalents, cash generated
          from operations as well as from recent financings will satisfy our working
          capital needs, capital expenditures and other liquidity requirements associated
          with our operations for the short term. Upon, completion of the two factories
          that we expect to build in the Northwest and Northeast of China from the
          proceeds of the February 3, 2006 listing of the company’s common stock on the
          AIM Market of the London Stock Exchange, we will reevaluate our capital
          needs.
 
 On
          March
          16, 2005, we completed a $3 million convertible debenture private placement
          through an institutional investor. We 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, In connection with the
          placement a three year warrant was issued to purchase 40,000 shares of
          common
          stock at $6.88 per share. During the course of 2005 the note was fully
          converted
          to 657,402 shares of common stock. All of the warrants were exercised during
          December 2005 and January 2006. The net proceeds from this offering were
          used
          towards capital contribution of the registration of a wholly-owned Bodisen
          subsidiary, Yang Ling Bodisen Agricultural Technology Co., Ltd. During
          December
          2005, 195,500 warrants were exercised, the proceeds from these warrants
          was
          $955,040. In January 2006 a total of 32,000 warrants were exercised, the
          proceeds were $220,160. The proceeds from the exercise of the warrants
          was used
          for general corporate purposes.
 
 On
        February 3, 2006, we entered into an agreement to sell 1,643,836 shares of
        our
        common stock at 730 pence (approximately $12.99). These shares are to be
        traded
        on the AIM Market of the London Stock Exchange. The resulting proceeds were
        approximately 12,000,000 British pounds sterling (approximately $21,360,000).
        The proceeds are intended for construction of two factories in the Northwest
        and
        Northeast of China, allowing us to greatly increase the geographical area
        in
        which we can sell our products by overcoming the logistical issues in selling
        and shipping our products over increasingly greater distances. In addition,
        proceeds will also be used to purchase raw materials and for general corporate
        purposes.
 
 On
          March
          15, 2006 we completed a financing of US$5,322,506 by issuing 380,179 restricted
          shares of common stock at $14.00 per share to private institutional investors
          in
          a private placement. The proceeds of this financing are to be used to repay
          the
          $5,000,000 short term note plus interest which we entered into on December
          2005.
 
 13
 The
        majority of Bodisen Biotech, Inc. revenues and majority of the expenses in
        2005
        were denominated primarily in Renminbi ("RMB"), the currency of the People's
        Republic of China. 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. We do not engage in currency hedging. Inflation has not had
        a
        material impact on our business.
  14
 ITEM
        7.
        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 **Bodisen
        Biotech, Inc. and Subsidiaries**
 **Consolidated
        Financial Statements**
 **Years
        Ended December 31, 2005 and 2004**
  Page**Report
                        of Independent Registered Public Accounting Firm**
                    F-1**Financial
                        Statements:**Consolidated
                        Balance Sheet as of December 31, 2005
                    F-2Consolidated
                        Statements of Income and Other Comprehensive Income for the
                        years ended
                        December 31, 2005 and 2004
                    F-3Consolidated
                        Statement of Stockholders' Equity for the years ended December
                        31, 2005
                        and 2004
                    F-4Consolidated
                        Statements of Cash Flows for the years ended December 31,
                        2005 and
                        2004
                    F-5Notes
                        to Consolidated Financial Statements
                    F-6**Financial
                      Statement Schedule:**Schedule
                        I - Condensed financial information of Registrant-Parent-only
                        scheduleunder
                        Rule 5-04/4-08(e)(3) for the year ended December 31,
                        2005
                    F-36
  15
   ***Report
            of Independent Registered Public Accounting
            Firm***
 
 Board
          of
          Directors and Stockholders of
 Bodisen
          Biotech, Inc.
 
 We
            have
            audited the accompanying consolidated balance sheet of Bodisen Biotech,
            Inc. (a
            Delaware corporation) and subsidiaries as of December 31, 2005, and the
            related
            consolidated statements of income and other comprehensive income, stockholders'
            equity, and cash flows for the years ended December 31, 2005 and 2004
            and the
            financial statement schedule for the years ended December 31, 2005 and
            2004.
            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, 2005, and the consolidated
            results of their operations and their consolidated cash flows for the
            years
            ended December 31, 2005 and 2004, 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.
  /s/
            Kabani & Company, Inc.
 **Certified
          Public Accountants**
 
 Los
          Angeles, California
 February
            22, 2006, except the the financial statement schedule listed in the accompanying
            index, for which the date is June 6, 2006.
 
 F-1
 **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEET**
 **AS
          OF DECEMBER 31, 2005**
 
 **December
                    31,****2005****ASSETS****CURRENT
                    ASSETS:**Cash
                    & cash equivalents
                
                $
                6,276,897Accounts
                    receivable, net of allowance for doubtful accounts of
                    $263,376
                
                
                7,478,152Other
                    receivable
                
                
                1,037,683Inventory
                
                
                1,180,007Advances
                    to suppliers
                
                
                4,563,471Prepaid
                    expense
                
                
                60,635Other
                    current assets
                
                
                3,440Total
                    current assets
                
                
                20,600,285**PROPERTY
                    AND EQUIPMENT, net**
                
                
                4,887,841**CONSTRUCTION
                    IN PROGRESS**
                
                
                1,872,945**MARKETABLE
                    SECURITY**
                
                
                6,810,434**INTANGIBLE
                    ASSETS**
                
                
                2,119,587**TOTAL
                    ASSETS**
                
                $
                36,291,092**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****CURRENT
                    LIABILITIES:**Note
                    payable, net of discount of $603,886
                
                $
                4,396,114Accounts
                    payable
                
                
                49,893Other
                    payables
                
                
                18,773Accrued
                    expenses
                
                
                409,209Total
                    current liabilities
                
                
                4,873,989**STOCKHOLDERS'
                    EQUITY:**Preferred
                    stock, $0.0001 per share; authorized 5,000,000 shares; none
                    issuedCommon
                    stock, $0.0001 per share; authorized 30,000,000 shares; issued
                    and
                    outstanding 16,120,902
                
                
                1,613Additional
                    paid-in capital
                
                
                12,082,793Other
                    comprehensive income
                
                
                4,531,009Statutory
                    reserve
                
                
                2,366,931Retained
                    earnings
                
                
                12,434,757Total
                    stockholders' equity
                
                
                31,417,103**TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                
                $
                36,291,092
  The
          accompanying notes are an integral part of these consolidated financial
          statements
 
 F-2
 **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
  **Years
                      Ended December 31,****2005**
                  
                  **2004****Net
                      Revenue**
                  
                  $
                  30,975,350
                  
                  $
                  16,225,896**Cost
                      of Revenue**
                  
                  
                  19,471,121
                  
                  
                  9,653,965**Gross
                      profit**
                  
                  
                  11,504,229
                  
                  
                  6,571,931Operating
                      expensesSelling
                      expenses
                  
                  
                  935,444
                  
                  
                  615,549General
                      and administrative expenses
                  
                  
                  1,496,309
                  
                  
                  907,801Total
                      operating expenses
                  
                  
                  2,431,753
                  
                  
                  1,523,350**Income
                      from operations**
                  
                  
                  9,072,476
                  
                  
                  5,048,581Non-operating
                      income (expense):Other
                      income (expense)
                  
                  
                  (121,410
                  )
                  
                  7,623Interest
                      income
                  
                  
                  137,870
                  
                  
                  45,338Interest
                      expense
                  
                  
                  (1,667,824
                  )
                  
                  (74,139
                  )Total
                      non-operating income (expense)
                  
                  
                  (1,651,364
                  )
                  
                  (21,178
                  )**Net
                      income**
                  
                  $
                  7,421,112
                  
                  $
                  5,027,403Other
                      comprehensive incomeForeign
                      currency translation gain
                  
                  
                  519,066
                  
                  
                  68,855Unrealized
                      gain on marketable equity security
                  
                  
                  3,943,088
                  
                  
                  —**Comprehensive
                      Income**
                  
                  $
                  11,883,266
                  
                  $
                  5,096,258**Weighted
                      average shares outstanding:**Basic
                  
                  
                  15,427,494
                  
                  
                  15,268,000Diluted
                  
                  
                  15,589,336
                  
                  
                  15,328,356**Earnings
                      per share:**Basic
                  
                  $
                  0.48
                  
                  $
                  0.33Diluted
                  
                  $
                  0.48
                  
                  $
                  0.33
  The
          accompanying notes are an integral part of these consolidated financial
          statements
  F-3
   **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
  **Common
                          Stock****Shares**
                      
                      **Amount**
                      
                      **Additional**
                          **Paid**
                            **in
                              Capital**
                      
                      **Other**
                          **Comprehensive**
                          **Income**
                      
                      **Statutory**
                            **Reserve**
                      
                      **Retained**
                          **Earnings**
                      
                      **Total**
                          **Stockholders'**
                            **Equity****Balance
                          January 1, 2004**
                      
                      
                      15,268,000
                      
                      $
                      1,527
                      
                      $
                      5,991,823
                      
                      $
                      —
                      
                      $
                      263,794
                      
                      $
                      2,089,379
                      
                      $
                      8,346,523Cumulative
                          translation adjustment
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      68,855
                      
                      
                      
                      
                      
                      
                      
                      
                      68,855Net income
                            for the year ended December 31, 2004
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      5,027,403
                      
                      
                      5,027,403Transfer
                          to statutory reserve
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      754,111
                      
                      
                      (754,111
                      )
                      
                      —**Balance
                          December 31, 2004**
                      
                      
                      15,268,000
                      
                      
                      1,527
                      
                      
                      5,991,823
                      
                      
                      68,855
                      
                      
                      1,017,905
                      
                      
                      6,362,671
                      
                      
                      13,442,781Conversion
                            of convertible debenture and interest to common stock
                      
                      
                      657,402
                      
                      
                      66
                      
                      
                      3,155,498
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      3,155,564Exercise
                          of warrants for cash
                      
                      
                      195,500
                      
                      
                      20
                      
                      
                      955,020
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      955,040Value
                            of beneficial conversion feature in connectionwith
                            $3 million convertible note
                      
                      
                      
                      
                      
                      
                      
                      
                      803,381
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      803,381Value
                                of warrants issued in connectionwith
                                $3 million convertible note
                      
                      
                      
                      
                      
                      
                      
                      
                      365,881
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      365,881Value
                                of warrants issued in connectionwith
                                $5 million note payable
                      
                      
                      
                      
                      
                      
                      
                      
                      811,190
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      811,190Change
                          in foreign currency translation gain
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      519,066
                      
                      
                      
                      
                      
                      
                      
                      
                      519,066Change
                          in unrealized gain on marketable equity security
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      3,943,088
                      
                      
                      
                      
                      
                      
                      
                      
                      3,943,088Net
                          Income for the year ended December 31, 2005
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      7,421,112
                      
                      
                      7,421,112Transfer
                          to statutory reserve
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      1,349,026
                      
                      
                      (1,349,026
                      )
                      
                      —**Balance
                          December 31, 2005**
                      
                      
                      16,120,902
                      
                      $
                      1,613
                      
                      $
                      12,082,793
                      
                      $
                      4,531,009
                      
                      $
                      2,366,931
                      
                      $
                      12,434,757
                      
                      $
                      31,417,103
 The
          accompanying notes are an integral part of these consolidated financial
          statements
 
 F-4
 **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENT OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
  **2005**
                  
                  **2004****CASH
                      FLOWS FROM OPERATING ACTIVITIES:**Net
                      income
                  
                  $
                  7,421,112
                  
                  $
                  5,027,403Adjustments
                          to reconcile net income to net cashprovided
                          in operating activities:Depreciation
                      and amortization
                  
                  
                  324,638
                  
                  
                  302,803Common
                      stock issued for interest expense
                  
                  
                  155,564
                  
                  
                  —Amortization
                      of debt discounts
                  
                  
                  1,376,566
                  
                  
                  —(Increase)
                      / decrease in assets:Accounts
                      receivable
                  
                  
                  (2,333,365
                  )
                  
                  (3,166,143
                  )Other
                      receivable
                  
                  
                  (987,322
                  )Inventory
                  
                  
                  (388,251
                  )
                  
                  51,612Advances
                      to suppliers
                  
                  
                  (3,732,975
                  )
                  
                  1,178,306Prepaid
                      expense
                  
                  
                  (45,290
                  )Other
                      assets
                  
                  
                  (3,388
                  )
                  
                  (48,736
                  )Increase
                      / (decrease) in current liabilities:Accounts
                      payable
                  
                  
                  (63,927
                  )
                  
                  (1,521,819
                  )Unearned
                      revenue
                  
                  
                  —
                  
                  
                  (15,888
                  )Other
                      payables
                  
                  
                  (11,716
                  )
                  
                  (35,350
                  )Accrued
                      expenses
                  
                  
                  111,369
                  
                  
                  196,031Net
                      cash provided by operating activities
                  
                  
                  1,823,015
                  
                  
                  1,968,219**CASH
                      FLOWS FROM INVESTING ACTIVITIES**Issuance
                      of loan receivable
                  
                  
                  —
                  
                  
                  (968,000
                  )Payment
                      on loan receivable
                  
                  
                  976,368
                  
                  
                  —Acquisition
                      of property and equipment
                  
                  
                  (3,642,530
                  )
                  
                  (435,814
                  )Additions
                      to construction in progress
                  
                  
                  (234,520
                  )
                  
                  (1,374,322
                  )Purchase
                      of marketable security
                  
                  
                  (2,867,346
                  )
                  
                  —Net
                      cash used in investing activities
                  
                  
                  (5,768,028
                  )
                  
                  (2,778,136
                  )**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Payments
                      on note payable
                  
                  
                  (976,368
                  )
                  
                  (111,900
                  )Loans
                      made to officers
                  
                  
                  (2,383,217
                  )
                  
                  —Repayments
                      of loans to officers
                  
                  
                  2,383,217
                  
                  
                  —Proceeds
                      from issuance of convertible note
                  
                  
                  3,000,000
                  
                  
                  —Proceeds
                      from issuance of note payable
                  
                  
                  5,000,000
                  
                  
                  —Proceeds
                      from the exercise of warrants
                  
                  
                  955,040
                  
                  
                  —Net
                      cash provided by (used in) financing activities
                  
                  
                  7,978,672
                  
                  
                  (111,900
                  )Effect
                      of exchange rate changes on cash and cash equivalents
                  
                  
                  121,427
                  
                  
                  68,855**NET
                      INCREASE (DECREASE) IN CASH & CASH
                      EQUIVALENTS**
                  
                  
                  4,155,086
                  
                  
                  (852,962
                  )**CASH
                      & CASH EQUIVALENTS, BEGINNING BALANCE**
                  
                  
                  2,121,811
                  
                  
                  2,974,773**CASH
                      & CASH EQUIVALENTS, ENDING BALANCE**
                  
                  $
                  6,276,897
                  
                  $
                  2,121,811**SUPPLEMENTAL
                      DISCLOSURE OF CASH FLOW INFORMATION:**Interest
                      paid
                  
                  $
                  68,144
                  
                  $
                  60,231Income
                      taxes paid
                  
                  $
                  —
                  
                  $
                  —
 The
            accompanying notes are an integral part of these consolidated financial
            statements
 
 F-5
  **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 since 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. The financial statements of legal
            acquirer are not significant; therefore, no pro forma financial information
            is
            submitted.
 
 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.
 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, 2005 and 2004, the accounts of the Company were maintained,
            and
            their consolidated financial statements were expressed in the Chinese
            Yuan
            Renminbi (RMB). 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 RMB as the
            functional currency. According to the Statement, all assets and liabilities
            were
            translated at the exchange rate on the balance sheet date, stockholder's
            equity
            are 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
 
 F-6
 
 **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.
 
 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 debts amounted to $263,376
          as at
          December 31, 2005.
 
 Advances
          to Suppliers
 
 The
          Company advances to certain vendors for purchase of its material. The advances
          to suppliers are interest free and unsecured. The advances to suppliers
          amounted
          to $4,563,471 at December 31, 2005.
 
 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
 
 On
          December 8, 2004, the Company entered in to an agreement to loan $968,000
          to an
          unrelated party. The loan was unsecured, payable by December 7, 2005 and
          carried
          an interest rate of 8.7% per annum. The amount was repaid in full by the
          due
          date.
 
 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:
  Operating
                    equipment
                10
                    yearsVehicles
                8
                    yearsOffice
                    equipment
                5
                    yearsBuildings
                30
                    years
 
 F-7
 
 At
          December 31, 2005, the following are the details of the property and
          equipment:
  Operating
                    equipment
                
                $
                923,688Vehicles
                
                
                362,780Office
                    equipment
                
                
                63,403Buildings
                
                
                4,142,1295,492,000Less
                    accumulated depreciation
                
                
                (604,159
                )$
                4,887,841
 
 Depreciation
          expense for the years ended December 31, 2005 and 2004 was $193,634 and
          $172,622, respectively.
 
 On
          December 31, 2005, the Company has “Capital Work in Progress” representing the
          construction in progress of the Company’s manufacturing plant amounting
          $1,872,945.
 
 Marketable
          Securities
 
 Marketable
          securities consist 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, 2005 there were no significant impairments of
          its
          long-lived assets.
 
 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 and other long-lived assets 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.
 
 F-8
 
 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.
 
 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, 2005 and 2004 were insignificant.
 
 Stock-Based
          Compensation
 
 In
          October 1995, the FASB issued SFAS No. 123, “Accounting for Stock-Based
          Compensation”. SFAS No. 123 prescribes accounting and reporting standards for
          all stock-based compensation plans, including employee stock options, restricted
          stock, employee stock purchase plans and stock appreciation rights. SFAS
          No. 123
          requires compensation expense to be recorded (i) using the new fair value
          method
          or (ii) using the existing accounting rules prescribed by Accounting Principles
          Board Opinion No. 25, “Accounting for stock issued to employees” (APB 25) and
          related interpretations with proforma disclosure of what net income and
          earnings
          per share would have been had the Company adopted the new fair value method.
          The
          Company uses the intrinsic value method prescribed by APB 25 and has opted
          for
          the disclosure provisions of SFAS No.123.
 
 Income
          Taxes
 
 The
          Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
          recognition of deferred tax assets and liabilities for the expected future
          tax
          consequences of events that have been included in the financial statements
          or
          tax returns. Under this method, deferred income taxes are recognized for
          the tax
          consequences in future years of differences between the tax bases of assets
          and
          liabilities and their financial reporting amounts at each period end based
          on
          enacted tax laws and statutory tax rates applicable to the periods in which
          the
          differences are expected to affect taxable income. Valuation allowances
          are
          established, when necessary, to reduce deferred tax assets to the amount
          expected to be realized.
 
 According
          to the Provisional Regulations of the People’s Republic of China on Income Tax,
          the Document of Reductions and Exemptions of Income Tax for the Company
          had been
          approved by the local tax bureau and the Yang Ling Agricultural High-Tech
          Industries Demonstration Zone. The Company is exempted from income tax
          through
          October 2007.
 
 In
            March
            2005, Bodisen Biotech Inc. formed a new 100% wholly-owned subsidiary
            named Yang
            Ling Bodisen Agricultural Technology Co., Ltd. (“Agricultural”) in China. 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 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.
 
 If
          the
          Company had not been exempt from paying income taxes during the years ended
          December 31, 2005 and 2004, income tax expense would have been approximately
          $2,859,000 and $1,659,000, respectively, and earnings per share would have
          been
          reduced by $0.19 and $0.11, 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 $587,921
          at
          December 31, 2005 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, 2005 and 2004, other comprehensive income in the consolidated
          statements of income and other comprehensive income included translation
          gains
          of $519,066 and $68,855, respectively.
 
 F-9
 
 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.
 
 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.
  Revenues
            by product line are as follows:
  **For
                      the Years End December 31,****2005**
                  
                  **2004**Compound
                      fertilizer
                  
                  $
                  20,639,633
                  
                  $
                  10,013,292Liquid
                      fertilizer
                  
                  
                  5,877,151
                  
                  
                  4,987,276Pesticide
                  
                  
                  4,458,566
                  
                  
                  1,225,328$
                  30,975,350
                  
                  $
                  16,225,896
 
 Recent
          Pronouncements
 
 In
          May
          2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections."
          This statement applies to all voluntary changes in accounting principle
          and
          requires retrospective application to prior periods' financial statements
          of
          changes in accounting principle, unless this would be impracticable. This
          statement also makes a distinction between "retrospective application"
          of an
          accounting principle and the "restatement" of financial statements to reflect
          the correction of an error. This statement is effective for accounting
          changes
          and corrections of errors made in fiscal years beginning after December
          15,
          2005.
 
 In
          February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
          Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
          Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
          for Transfers and Servicing of Financial Assets and Extinguishments of
          Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
          financial instrument that contains an embedded derivative that otherwise
          would
          require bifurcation, clarifies which interest-only strips and principal-only
          strips are not subject to the requirements of SFAS No. 133, establishes
          a
          requirement to evaluate interest in securitized financial assets to identify
          interests that are freestanding derivatives or that are hybrid financial
          instruments that contain an embedded derivative requiring bifurcation,
          clarifies
          that concentrations of credit risk in the form of subordination are not
          embedded
          derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
          qualifying special-purpose entity from holding a derivative financial instrument
          that pertains to a beneficial interest other than another derivative financial
          instrument. This statement is effective for all financial instruments acquired
          or issued after the beginning of the Company’s first fiscal year that begins
          after September 15, 2006.
 
 In
          December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
          an
          Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
          companies to recognize in the statement of operations the grant- date fair
          value
          of stock options and other equity-based compensation issued to employees.
          FAS
          No. 123R is effective beginning in the Company's first quarter of fiscal
          2006.
 
 In
          June
          2005, the EITF reached consensus on Issue No. 05-6, Determining the Amortization
          Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance
          on
          determining the amortization period for leasehold improvements acquired
          in a
          business combination or acquired subsequent to lease inception. The guidance
          in
          EITF 05-6 will be applied prospectively and is effective for periods beginning
          after June 29, 2005. EITF 05-6 is not expected to have a material effect
          on its
          consolidated financial position or results of operations.
 
 F-10
 
 The
          Company believes that the adoption of these standards will have no material
          impact on its financial statements.
 
 **Note
          3 - Principles of Consolidation**
 
 The
            accompanying consolidated financial statements include the accounts of
            Bodisen
            Biotech, Inc., its 100% wholly-owned subsidiary Bodisen Holdings, Inc.
            (“BHI”),
            BHI’s 100% wholly- owned subsidiary Yang Ling Bodisen Biology Science and
            Technology Development Company Limited (BBST) , and a 100% wholly-owned
            subsidiary, incorporated in March 2005, named Yang Ling Bodisen Agricultural
            Technology Co., Ltd. (Agricultural). All significant inter-company accounts
            and
            transactions have been eliminated in consolidation.
 
 **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 - 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, 2005, the fair value of this investment was $6,810,434 which resulted
          in an
          unrealized gain of $3,943,088 which is included in other comprehensive
          income.
          At December 31, 2005, this represented a 10.2% interest in China Natural
          Gas,
          Inc.
 
 **Note
          6 - Intangible Assets**
 
 Net
          intangible assets at December 31, 2005 were as follows:
  Rights
                    to use land
                
                $
                1,693,833Fertilizers
                    proprietary technology rights
                
                
                991,3042,685,137Less
                    Accumulated amortization
                
                
                (565,550
                )$
                2,119,587
 
 The
          Company’s office and manufacturing site is located in Yang Ling Agricultural
          High-Tech Industries Demonstration Zone in the province of Shanxi, People’s
          Republic of China. The Company leases land per a real estate contract with
          the
          government of People’s Republic of China for a period from November 2001 through
          November 2051. Per the People’s Republic of China’s governmental regulations,
          the Government owns all land.
 
 During
          July 2003, the Company leased another parcel of land per a real estate
          contract
          with the government of the People’s Republic of China for a period from July
          2003 through June 2053.
 
 The
          Company has recognized the amounts paid for the acquisition of rights to
          use
          land as intangible asset and amortizing over a period of fifty years. The
          “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 Fertilizers
          proprietary technology rights over a period of ten years.
 
 Amortization
          expense for the Company’s intangible assets for the years ended December 31,
          2005 and 2004 amounted to $131,004 and $130,181, respectively.
 
 F-11
 
 Amortization
          expense for the Company’s intangible assets over the next five fiscal years is
          estimated to be: 2006-$130,000, 2007-$130,000, 2008-$130,000, 2009-$130,000
          and
          2010-$130,000.
 
 **Note
          7 - Short-Term Loans**
 
 At
          December 31, 2004, the Company had three short-term notes payable outstanding
          that totaled $980,100. During the year ended December 31, 2005, all three
          notes
          were repaid in full.
 
 **Note
          8 - Note Payable**
 
 On
          December 8, 2005, the Company issued a $5,000,000 note payable to Amaranth
          Partners LLC that accrues interest at 9% per annum and is 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
          common
          stock for $7.50 per shares. 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,
          2005
          $207,304 has been amortized to interest expense, due to the passage of
          time. The
          unamortized discount at December 31, 2005 amounted to $603,886.
 
 **Note
          9 - 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, since 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
          10 - Stockholders’ Equity**
  On
          February 24, 2004, BII entered into a merger agreement with Stratabid.com,
          Inc.
          (Stratabid) to exchange 12,000,000 shares of Stratabid to the stockholders
          of
          BII (Note 18). As a part of the merger, Stratabid cancelled 3,000,000 shares
          of
          its issued and outstanding stock owned by a majority stockholder 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, after the merger
          agreement.
 
 During
          the year ended December 31, 2005, the Company issued 657,402 share of 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-12
 
 **Note
          11 - 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 was 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.
 
 Following
            is a summary of the stock option activity:
 Outstanding,
                    December 31, 2003
                
                
                —Granted
                
                
                110,000Forfeited
                
                
                —Exercised
                
                
                —Outstanding,
                    December 31, 2004
                
                
                110,000Granted
                
                
                26,000Forfeited
                
                
                —Exercised
                
                
                —Outstanding,
                    December 31, 2005
                
                
                136,000
 
 F-13
 
 Following
          is a summary of the status of options outstanding at December 31,
          2005:
 
 Outstanding
                    Options
                
                Exercisable
                    OptionsExercise
                  Price
                Number
                Average
                    RemainingContractual Life
                AverageExercise
                    Price
                Number
                AverageExercise
                    Price$5.00
                100,000
                3.42
                $5.00
                93,750
                $5.00$5.80
                10,000
                3.99
                $5.80
                10,000
                $5.80$6.72
                26,000
                4.76
                $6.72
                24,000
                $6.72
  For
            options granted during the year ended December 31, 2005, the weighted-average
            fair value of such options was $3.76.
 
 The
            assumptions used in calculating the fair value of options granted using
            the
            Black-Scholes option- pricing model are as follows:
 Risk-free
                    interest rate
                4.0%Expected
                    life of the options
                5.00
                    yearsExpected
                    volatility
                62%Expected
                    dividend yield
                0
 
 For
          options granted during the year ended December 31, 2004, the weighted-average
          fair value of such options was $1.92.
 
 The
          assumptions used in calculating the fair value of options granted using
          the
          Black-Scholes option- pricing model are as follows:
 First
          100,000 stock options granted on June 4, 2004:
 
 Risk-free
                    interest rate
                4.0%Expected
                    life of the options
                5.00
                    yearsExpected
                    volatility
                35%Expected
                    dividend yield
                0
 
 Second
          10,000 stock options granted on December 28, 2004
  Risk-free
                    interest rate
                4.0%Expected
                    life of the options
                5.00
                    yearsExpected
                    volatility
                40%Expected
                    dividend yield
                0
 
 Had
          the
          Company determined employee stock based compensation cost based on a fair
          value
          model at the grant date for its stock options under SFAS 123, the Company’s net
          earnings per share would have been adjusted to the pro forma amounts for
          the
          years ended December 31, 2004 as follow ($ in thousands, except per share
          amounts):
 
 2005
                
                2004Net
                    income:As
                    reported
                
                $
                7,421,112
                
                $
                5,027,403Stock-Based
                    employee compensation expense includedin reported net income, net of
                    tax
                
                
                —
                
                
                —Total
                    stock-based employee compensation expense determinedunder
                    fair-value-based method for all rewards, net of tax
                
                
                (106,000
                )
                
                (153,000
                )Pro
                    forma
                
                $
                7,315,112
                
                $
                4,874,403Basic
                    earnings per share:As
                    reported
                
                $
                0.48
                
                $
                0.33Pro
                    forma
                
                $
                0.47
                
                $
                0.32Diluted
                    earnings per share:As
                    reported
                
                $
                0.48
                
                $
                0.33Pro
                    forma
                
                $
                0.47
                
                $
                0.32
 
 F-14
  Warrants
 
 Following
          is a summary of the warrant activity:
 
 Outstanding,
                    December 31, 2004
                
                
                —Granted
                
                
                360,833Forfeited
                
                
                —Exercised
                
                
                195,500Outstanding,
                    December 31, 2005
                
                
                165,333
 
 Following
              is a summary of the status of warrants outstanding at December 31,
              2005:
 Outstanding
                    Warrants
                
                Exercisable
                    WarrantsExercise
                  Price
                Number
                Average
                    RemainingContractual Life
                AverageExercise
                    Price
                Number
                AverageExercise
                    Price$6.88
                32,000
                2.21
                $6.88
                32,000
                $6.88$7.50
                133,333
                4.94
                $7.50
                133,333
                $7.50
 
 **Note
          12 - Supplemental Disclosure of Cash Flows**
 
 The
          Company prepares its statements of cash flows using the indirect method
          as
          defined under the Financial Accounting Standard No. 95.
 
 **Note
          13 - 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 employee welfare plan. The total expense for the above
          plan $82,705 and $80,761 for the years ended December 31, 2005 and 2004,
          respectively. The Company has recorded welfare payable of $260,071 at December
          31, 2005 which is included in accrued expenses in the accompanying consolidated
          balance sheet.
 
 **Note
          14 - 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.
 
 F-15
 
 The
          Company established a reserve for the annual contribution of 5% of net
          income to
          the welfare fund in 2005 and 2004. The amount included in the statutory
          reserve
          for the years ended December 31, 2005 and 2004 amounted to $449,675 and
          $251,370, respectively.
  **Note
          15 - Statutory Reserve**
 
 In
          accordance with the Chinese Company Law, the company has allocated 10%
          of its
          annual net income, amounting $899,351 and $502,741 as statutory reserve
          for the
          years ended December 31, 2005 and 2004, 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, Shaanzi
          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. The rent of the office
          building
          is $121 a month from May 20, 2004 through May 20, 2005. BBST also leases
          warehouses in Yang Ling near the site of Bodisen’s factories. The rent of the
          warehouses is $194 a month from January 2005 through May 2005. Total future
          commitment through June 30, 2005 amounts to $1,573.
 
 The
          Company has committed to pay $18,150 to an advertising agency for an advertising
          campaign, by October 2006.
  F-16
  **Note
          17 - Earnings Per Share**
 
 Earnings
          per share for years ended December 31, 2005 and 2004 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,****2005**
                
                **2004****Income**
                
                **Shares**
                
                **Per
                    Share**
                
                **Income**
                
                **Shares**
                
                **Per
                    Share****Basic
                    earnings per share**Net
                    income
                
                $
                7,421,112
                
                
                
                
                
                
                
                $
                5,027,403Weighed
                    shares outstanding
                
                
                
                
                
                15,427,494
                
                
                
                
                
                
                
                
                15,268,000$
                0.48
                
                
                
                
                
                
                
                $
                0.33**Diluted
                    earnings per share**Net
                    income
                
                $
                7,421,112
                
                
                
                
                
                
                
                $
                5,027,403Weighed
                    shares outstanding
                
                
                
                
                
                15,427,494
                
                
                
                
                
                
                
                
                15,268,000Effect
                    of dilutive securitiesOptions
                
                
                
                
                
                83,663
                
                
                
                
                
                
                
                
                60,356Warrants
                
                
                
                
                
                78,179
                
                
                
                
                
                
                
                
                —15,589,336
                
                
                
                
                
                
                
                
                15,328,356$
                0.48
                
                
                
                
                
                
                
                $
                0.33
  **Note
          18 - Merger Agreement**
  On
          February 11, 2004, Stratabid entered into an Agreement and Plan of Merger
          with
          Bodisen Acquisition Corp., a Delaware corporation (“BAC”) wholly-owned by
          Stratabid, Bodisen International, Inc., a Delaware corporation (“BII”) and the
          stockholders of BII. BII has one 100% wholly-owned subsidiary in Shaanxi,
          China,
          Yang Ling Bodisen Biology Science and Technology Development Company Limited
          (“BBST”). Under the terms of the agreement, BAC acquired 100% of BII’s stock in
          exchange for the issuance by Stratabid of three million shares of its common
          stock to the holders of BII. The new shares constitute approximately 79%
          of the
          outstanding shares of Stratabid, which changed its name to Bodisen Biotech,
          Inc.
          (the “Company”). The Agreement and Plan of Merger was closed on February 24,
          2004.
 
 BII’s
          Chairman of the Board was appointed the Company’s Chief Executive
          Officer.
 
 F-17
  At
          the
          Effective Time, by virtue of the Merger and without any action on the part
          of
          the BAC, BII or the BII Stockholders, the shares of capital stock of each
          of BII
          and the BAC were converted as follows:
 
 i.
                Capital
                    Stock of the BAC. Each issued and outstanding share of the BAC’s capital
                    stock continued to be issued and outstanding and was converted
                    into one
                    share of validly issued, fully paid, and non- assessable common
                    stock of
                    the Surviving Company (Bodisen Holdings, Inc.). Each stock certificate
                    of
                    the BAC evidencing ownership of any such shares continued to
                    evidence
                    ownership of such shares of capital stock of the Surviving
                    Company.
 
 ii.
                Conversion
                    of BII Shares. Each BII Share that was issued and outstanding
                    at the
                    Effective Time was automatically cancelled and extinguished and
                    converted,
                    without any action on the part of the holder thereof, into the
                    right to
                    receive at the time and in the amounts described in the Agreement
                    an
                    amount of Acquisition Shares equal to the number of Acquisition
                    Shares
                    divided by the number of BII Shares outstanding immediately prior
                    to
                    Closing. All such BII Shares, so converted, were no longer outstanding
                    and
                    were automatically cancelled and retired and ceased to exist,
                    and each
                    holder of a certificate representing any such shares ceased to
                    have any
                    rights with respect thereto, except the right to receive the
                    Acquisition
                    Shares paid in consideration therefore upon the surrender of
                    such
                    certificate in accordance with the
                    Agreement.
 
 iii.
                  Within
                      thirty (30) days from the Closing Date, Stratabid was required
                      to sell its
                      business operations, as they exist immediately prior to the
                      Closing, to
                      Derek Wasson, former president. As part of the merger transaction
                      and in
                      consideration of the sale, Mr. Wasson returned 750,000 (3,000,000
                      post-split) Common Shares to Stratabid for cancellation. The
                      return of
                      750,000 (3,000,000 post-split) shares by Mr. Wasson was canceled
                      concurrently with the merger as part of the recapitalization
                      of the
                      Company. The return of these shares was recorded by Stratabid
                      just prior
                      to the merger; therefore, the cancellation of these shares
                      is not
                      presented in the accompanying financial statements since the
                      merger has
                      been accounted for as a recapitalization of the Company. The
                      accompanying
                      financial statements are those of the Company, not Stratabid.
                      The net
                      assets of Stratabid recorded as part of recapitalization were
                      after
                      accounting for the returned shares by Mr. Wasson. In addition,
                      Mr. Wasson
                      forgave all indebtedness owed by Stratabid to Mr. Wasson. Other
                      than
                      indebtedness of BII, Stratabid 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.
  **Note
          19 - Current Vulnerability Due to Certain Concentrations**
 
 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 and four vendors provided 25.9%, 19.9%,
          14.0% and 10.0% of the Company’s raw materials for the year ended December 31,
          2004. The payable balance for these parties amounted to $0 at 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
          20 - Reclassifications**
 
 Certain
          prior period amounts have been reclassified to conform to the year ended
          December 31, 2005 presentation.
  **Note
          21 - Subsequent Events (Unaudited)**
  On
          February 3, 2006, the Company entered into a placing agreement (the "Placing
          Agreement") with Charles Stanley Securities ("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 has agreed to use its reasonable effort
          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 (approximately US$21,360,000).
  In
          connection with the placement, the Company's shares would be admitted to
          trading
          on the AIM Market of the London Stock Exchange. The Company's shares will
          continue to be listed on the American Stock Exchange.
  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.
          Issuance of these new shares are subject to approval by the American Stock
          Exchange and admission to the London AIM market. The Company has obtained
          approval of the American Stock Exchange. The proceeds from this financing
          will
          be used to fulfill repayment obligations of a $5 million short term note
          that
          the Company entered in December 2005 which was used to fund raw materials
          purchases
 
 F-18
 **BODISEN
          BIOTECH, INC. AND SUBSIDIARIES**
 **FINANCIAL
          STATEMENT SCHEDULE - PARENT ONLY FINANCIAL STATEMENTS**
 
 **BODISEN
              BIOTECH, INC.**
 **BALANCE
              SHEET - US HOLDING COMPANY ONLY**
 **AS
              OF DECEMBER 31, 2005**
 **December
                      31,****2005****ASSETS****INTERCOMPANY
                      RECEIVABLE**
                  
                  
                  8,955,040**TOTAL
                      ASSETS**
                  
                  $
                  8,955,040**LIABILITIES
                      AND STOCKHOLDERS' EQUITY****CURRENT
                      LIABILITIES:**Note
                      payable, net of discount of $603,886
                  
                  $
                  4,396,114Accounts
                      payable
                  
                  
                  10,427Accrued
                      expenses
                  
                  
                  10,623Total
                      current liabilities
                  
                  
                  4,417,164**STOCKHOLDERS'
                      EQUITY:**Preferred
                      stock, $0.0001 per share; authorized 5,000,000 shares; none
                      issuedCommon
                      stock, $0.0001 per share; authorized 30,000,000 shares;issued
                      and outstanding 16,120,902
                  
                  
                  1,613Additional
                      paid-in capital
                  
                  
                  6,089,443Accumulated
                      Deficit
                  
                  
                  (1,553,180
                  )Total
                      stockholders' equity
                  
                  
                  4,537,876**TOTAL
                      LIABILITIES AND STOCKHOLDERS' EQUITY**
                  
                  $
                  8,955,040
 
 F-19
 
 **BODISEN
              BIOTECH, INC.**
 **STATEMENTS
              OF OPERATIONS - US HOLDING COMPANY ONLY**
 **FOR
              THE YEARS ENDED DECEMBER 31, 2005 and 2004**
 **2005**
                  
                  **2004****Net
                      Revenue**
                  
                  $
                  -
                  
                  $
                  -**Cost
                      of Revenue**
                  
                  
                  -**Gross
                      profit**
                  
                  
                  -
                  
                  
                  -Operating
                      expensesSelling
                      expenses
                  
                  
                  -
                  
                  
                  -General
                      and administrative expenses
                  
                  
                  -
                  
                  
                  -Total
                      operating expenses
                  
                  
                  -
                  
                  
                  -**Income
                      from operations**Non-operating
                      income (expense):Other
                      income (expense)
                  
                  
                  -
                  
                  
                  -Interest
                      income
                  
                  
                  -
                  
                  
                  -Interest
                      expense
                  
                  
                  (1,532,130
                  )
                  
                  -Total
                      non-operating income (expense)
                  
                  
                  (1,532,130
                  )
                  
                  -**Net
                      loss**
                  
                  $
                  (1,532,130
                  )
                  $
                  -
 
 F-20
 
 **BODISEN
              BIOTECH, INC.**
 **STATEMENT
              OF CASH FLOWS - US HOLDING COMPANY ONLY**
 **FOR
              THE YEARS ENDED DECEMBER 31, 2005 and 2004**
  **2005**
                  
                  **2004****CASH
                      FLOWS FROM OPERATING ACTIVITIES:**Net
                      loss
                  
                  $
                  (1,532,130
                  )
                  $
                  -Adjustments
                      to reconcile net loss to net cash
                      provided
                        in operating activities:Common
                      stock issued for interest expense
                  
                  
                  155,564
                  
                  
                  -Amortization
                    of debt discounts
                  
                  
                  1,376,566
                  
                  
                  -Net
                      cash provided by operating activities
                  
                  
                  -
                  
                  
                  -**CASH
                      FLOWS FROM INVESTING ACTIVITIES**Advances
                      to Chinese subsidiaries
                  
                  
                  (8,955,040
                  )
                  
                  -Net
                      cash used in investing activities
                  
                  
                  (8,955,040
                  )
                  
                  -**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                      from issuance of convertible note
                  
                  
                  3,000,000
                  
                  
                  -Proceeds
                      from issuance of note payable
                  
                  
                  5,000,000
                  
                  
                  -Proceeds
                      from the exercise of warrants
                  
                  
                  955,040
                  
                  
                  -Net
                      cash provided by financing activities
                  
                  
                  8,955,040
                  
                  
                  -**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-21
  ITEM
        8.
        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE
 
 None
 
 ITEM
        8A.
        CONTROLS AND PROCEDURES
 
 The
          Chief
          Executive Officer and Chief Financial Officer conducted an evaluation of
          the
          effectiveness of the design and operation of the Company's 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 the end of the period covered
          by
          this report. Based on that evaluation, the Chief Executive Officer and
          Chief
          Financial Officer concluded that the Company's disclosure controls and
          procedures were effective as of the end of the period covered by this report.
          There were nochanges
          in internal control over financial reporting (as defined in Rule 13a-15f
          under
          the Exchange Act) that occurred during the fourth quarter of 2004 that
          have
          materially affected, or are reasonably likely to materially affect, the
          Company's internal control over financial reporting.
  ITEM
        8B.
        OTHER INFORMATION
  None.
  16
 **PART
        III**
  ITEM
        9. DIRECTORS,
        EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
        SECTION 16(a) OF THE EXCHANGE ACT.
 
 Below
        are
        the names and certain information regarding our executive officers and
        directors:
  **Name**
              **Age**
              **Position**Wang
                  Qiong
              41
              Chairman
                  and Chief Executive OfficerBo
                  Chen
              48
              Executive
                  Director and PresidentPatrick
                  McManus
              51
              DirectorDavid
                  Gatton
              52
              DirectorWeirui
                  Wan
              64
              DirectorWang
                  Chunsheng
              42
              Chief
                  Operating OfficerYiliang
                  Lai
              40
              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.
 
 **Background
        of Executive Officers and Directors**
 
 **Wang
          Qiong,** Chairman
          and Chief Executive Officer of Bodisen and BBST - Mrs.
          Wang Qiong has served as the Chairman of the Board of Bodisen since the
          merger
          of BHI and BII and she has been on the board of BBST since BBST was
          founded in August 2001. 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.
 
 **Bo
          Chen,** Director
          and President of Bodisen and BBST - Mr.
          Chen, the President of Bodisen, is one of its original founders and
          stockholders. 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
          currently sits on the Board of Directors of China Natural Gas, Inc. Mr.
          Chen
          received his Bachelor of Science degree from Shaanxi Normal College in
          July
          1984.
 
 **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. Mayor 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. Mayor McManus is an expert on China. 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
 
 **David
        Gatton,** Director
        of Bodisen - Mr. Gatton joined Bodisen’s Board of Directors on May 1, 2004 as an
        independent board member. Since 1985 Mr. Gatton has served as the Chairman
        and
        President of Development Initiatives, Inc, a Washington, DC-based government
        relations firm specializing in urban affairs, business development and
        marketing, serving a variety of public and private clients. Mr. Gatton advises
        cities, organizations, and companies on business development strategies,
        public/private partnerships and marketing initiatives. He has advised various
        organizations on tax reform, economic development initiatives and a variety
        of
        environmental laws, including the reauthorization of the following Acts of
        the
        United States: the Clean Water Act, the Safe Drinking Water Act, the Resource
        Conservation and Recovery Act, Superfund and the Clean Air Act. Some of Mr.
        Gatton’s major accomplishments include: development of U.S. Sino Memorandum of
        Cooperation between U.S. and China Association of Mayors, development of
        a
        national brownfield redevelopment initiative, development of several multifamily
        low- and moderate-income housing developments, business development strategies
        for various private firms, and assistance in development of economic development
        projects for numerous cities. Mr. Gatton holds a B.A. from Cornell College,
        and
        a Master’s degree from Harvard University.
 
 17
 **Weirui
        Wan,** Director
        of Bodisen - Mr. Weirui Wan joined Bodisen’s Board of Directors on May 1, 2004
        as an independent board member. Mr. Wan has over 40 years of experience in
        management and leadership positions in the agricultural sector in China.
        He
        started his career in 1967 as an agricultural scientist at the Chinese Academy
        of Water and Soil Preservation, China’s leading government agency on soil and
        agricultural studies. In 1984, Mr. Wan was appointed the position of Deputy
        Director of the Chinese Academy of Water and Soil Preservation. In 1997,
        Mr. Wan
        moved to the city of Yang Ling and was appointed Deputy Governor of the Yang
        Ling Agricultural High-Tech Industries Demonstration Zone and was in charge
        of
        building the zone into the agricultural hub of China. Mr. Wan retired as
        Deputy
        Governor in 2001 and is currently on the Advisory Board of Yang Ling
        Agricultural High-Tech Industries Demonstration Zone. Mr. Wan graduated from
        Beijing University of Agriculture in 1967 with a Bachelor’s degree in
        Agriculture.
 
 **Wang
          Chunsheng,** Chief
          Operating Officer of Bodisen, Executive Vice President and Chief Operating
          Officer of BBST - Mr.
          Wang Chunsheng, joined Bodisen in September 2001 as Chief Operations 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
          agronomist certification.
 
 **Yiliang
          Lai,** Chief
          Financial Officer of Bodisen and BBST - On
          November 1, 2005, the Company promoted Yiliang Lai to the position of Chief
          Financial Officer. Mr Lai joined the Company as a financial controller
          in March
          2005. Mr Lai has extensive experience in accounting and auditing matters.
          He
          started his career as an accountant at China Shipping in 1986 and in 1999
          he
          joined the CPA firm ShenZhen CaiXin as an auditor. In 2001, Mr Lai joined
          Shaanxi Kaida Limited as head of accounting and in 2002 he joined Xi’an
          Hongsheng Biotech as Chief Financial Officer. Mr Lai is a Certified Public
          Accountant in China as well as a Certified Auditor.
 
 **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.
 
 Directors
        may receive compensation for their services and reimbursement for their expenses
        as shall be determined from time to time by the Board.
 
 **Compliance
        with Section 16(a) of the Securities Exchange Act of 1934**
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires the Company's directors
        and executive officers, and persons who own more then 10 percent of the
        Company's Common Stock, to file with the SEC the initial reports of ownership
        and reports of changes in ownership of common stock. Officers, directors
        and
        greater than 10 percent stockholders are required by SEC regulation to furnish
        the Company with copies of all Section 16(a) forms they file.
 
 18
 Specific
        due dates for such reports have been established by the Commission and the
        Company is required to disclose any failure to file reports by such dates.
        In
        light of the fact that the Company only became obligated for the filing of
        reports in compliance with Section 16(a) of the Securities Exchange Act of
        1934
        in the middle of the fiscal year, do to an inadvertent oversight, there was
        a
        failure of all officers, directors and greater than 10 percent stockholders
        of
        the Company to comply with Section 16(a) filing requirements. However, this
        oversight is currently being addressed to 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.
 
 ITEM
        10.
        EXECUTIVE COMPENSATION
 
 The
        following table sets forth all compensation paid in respect of our Chief
        Executive Officer and those individuals who received compensation in excess
        of
        $100,000 per year (collectively, the "Named Executive Officers") for our
        last
        three completed fiscal years.
  SUMMARY
          COMPENSATION TABLE
  **Long
                    Term Compensation****Annual
                    Compensation**
                
                **Awards**
                **Payouts**Name
                    And
                  Principal
                  Position
                
                Year
                Salary
                  ($)
                Bonus
                  ($)
                Other
                  Annual
                  Compensation
                  ($)
                
                Restricted
                  Stock
                  Compensation
                  ($)
                Securities
                  Under-
                  Lying
                  Options/
                  SARs
                    (#)
                LTIP
                  Payouts
                  ($)
                All Other
                  Compensation
                  ($)Wang
                    Qiong, Chief Executive Officer and Chairman
                
                2005
                  2004
                  2003
                31,450
                  23,220
                  4,400
                -0-
                  -0-
                  -0-
                -0-
                  -0-
                  -0-
                
                N/A
                  N/A
                  N/A
                N/A
                  N/A
                  N/A
                N/A
                  N/A
                  N/A
                N/A
                  N/A
                  N/ADerek
                    Wasson, Former Chief Executive Officer
                
                2005
                  2004
                  2003
                -0-
                  -0-
                  -0-
                -0-
                  -0-
                  -0-
                -0-
                  -0-
                  32,694
                    (1)
                
                N/A
                  N/A
                  N/A
                N/A
                  N/A
                  N/A
                N/A
                  N/A
                  N/A
                N/A
                  N/A
                  N/A
 (1)
                  Represents
                      consulting fees paid.
 **Equity
        Compensation Plan Information**
 
 There
        has
        been no common stock authorized for issuance with respect to any equity
        compensation plan as of the fiscal year ended December 31, 2005.
  **Employment
        Agreements**
  There
        are
        currently no employment agreements between the Company and any of its named
        executive officers.
 
 **Option
        Grants During 2005 Fiscal Year**
 
 The
        following table provides information related to options granted to the named
        executive officers during the 2005 fiscal year. The Company does not have
        any
        outstanding stock appreciation rights.
  19
  Name
                No.
                    of
                  Securities
                  Underlying
                  Options
                  Granted
                  (#)
                %
                    of Total
                  Options
                  Granted
                    to
                  Employees
                  in
                    Fiscal
                  Year
                Exercise
                  Price
                  (
                    $/Sh)
                Expiration
                  DateDavid
                    Gatton
                13,000
                50%
                $6.72
                October
                    4, 2010Patrick
                    McManus
                13,000
                50%
                $6.72
                October
                    4, 2010
 
 **Aggregated
          Option Exercises During 2005 Fiscal Year and Fiscal Year-End Option
          Values**
 
 The
          following table provides information related to employee options exercised
          by
          the named executive officers during the 2005 fiscal year and number and
          value of
          such options held at fiscal year-end.
 
 Shares
                    Acquired
                Value
                
                Number
                    of Securities Underlying Unexercised Options at Fiscal Year-
                    End
                    (#)
                
                Value
                    of Unexercised In-the-Money Options at Fiscal Year- End ($)
                    (1)Name
                on
                    Exercise (#)
                Realized
                
                Exercisable
                Unexercisable
                
                Exercisable
                UnexercisableDavid
                    Gatton
                N/A
                N/A
                
                63,875
                4,125
                
                550,235
                35,405Patrick
                    McManus
                N/A
                N/A
                
                63,875
                4,125
                
                550,235
                35,405
 (1)
                  Based
                      on the closing price of $14.00, at December 30, 2005.
 ITEM
        11.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
        STOCKHOLDER MATTERS
 
 The
        following table sets forth certain information, as of March 24, 2006 with
        respect to the beneficial ownership of the outstanding common stock by (i)
        any
        holder of more than five (5%) percent; (ii) each of our executive officers
        and
        directors; and (iii) our 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.
 
 Name
                  of Beneficial Owner (1)
              Number
                  of SharesBeneficially Owned
              Percentage
                  of SharesBeneficially Owned (2)Wang
                  Qiong
              3,748,780
              20.6%Bo
                  Chen
              3,584,096
              19.7%Patrick
                  McManus
              68,000
              *David
                  Gatton
              68,000
              *Weirui
                  Wan
              0
              *Wang
                  Chunsheng
              0
              *Yiliang
                  Lai.
              0
              *All
                  officers and directors as a group (7 persons)
              7,462,626
              40.8%
  20
  *
              Less
                  than 1%.
  (1)
              Except
                  as otherwise indicated, the address of each beneficial owner is
                  c/o
                  Bodisen Biotech, Inc., North Part of Xinquia Road, Yang Ling AG,
                  High-Tech
                  Industries Demonstration Zone, Yang Ling, China
                  712100
 (2)
              Applicable
                  percentage ownership is based on 18,176,917 shares of common stock
                  outstanding as of March 24, 2006, together with securities exercisable
                  or
                  convertible into shares of common stock within 60 days of March
                  24, 2006
                  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 March 24, 2006 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.
 
 No
        Director, executive officer, affiliate or any owner of record or beneficial
        owner of more than 5% of any class of voting securities of the Company is
        a
        party adverse to the Company or has a material interest adverse to the
        Company.
 
 **Securities
        Authorized for Issuance Under Equity Compensation Plans**
  The
        following table shows information with respect to each equity compensation
        plan
        under which our common stock is authorized for issuance as of the fiscal
        year
        ended December 31, 2005.
 EQUITY
          COMPENSATION PLAN INFORMATION
 
 **Plan
                    category**
                
                **Number
                    of securities**
                  **to
                    be issued upon**
                  **exercise
                    of**
                  **outstanding
                    options,**
                  **warrants
                    and rights**
                
                **Weighted
                    average**
                  **exercise
                    price of**
                  **outstanding
                    options,**
                  **warrants
                    and rights**
                
                **Number
                    of securities**
                  **remaining
                    available for future issuance under equity compensation plans
                    (excluding
                    securities reflected in column (a)****(a)**
                
                **(b)**
                
                **(c)****Equity
                    compensation plans approved by security holders**
                
                136,000
                
                $5.39
                
                864,000**Equity
                    compensation plans not approved by security
                    holders**
                
                -0-
                
                -0-
                
                -0-**Total**
                
                136,000
                
                $5.39
                
                864,000
 ITEM
        12.
        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 None
 
 21
 ITEM
        13.
        EXHIBITS
 
 **ExhibitNumber**
              **Description
                  of Exhibit**3.1
              Certificate
                  of Incorporation (incorporated by reference to Company’s Form SB-2 filed
                  September 3, 2002).3.2
              Amendment
                  to Certificate of Incorporation (incorporated by reference to Company’s
                  Form 10-KSB filed March 30, 2004).3.3
              By-Laws
                  (incorporated by reference to Company’s Form SB-2 filed September 3,
                  2002).10.1
              Loan
                  Agreement, dated as of September 28, 2003, between the Company
                  and
                  Xianyang City Commercial Bank. (incorporated by reference to Company’s
                  Form 10-KSB filed March 30, 2004).10.2
              Bodisen
                  Biotech, Inc. 2004 Stock Option Plan (incorporated by reference
                  to
                  Company’s Form 10-KSB filed March 31, 2005).10.3
              Form
                  of Bodisen Biotech, Inc. Nonstatutory Stock Option Agreement (incorporated
                  by reference to Company’s Form 10-KSB filed March 31,
                  2005).21.1
              Schedule
                  of Subsidiaries (incorporated by reference to Company’s Form 10-KSB filed
                  March 31, 2005).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 (Chief Executive
                  Officer)32.2
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Financial
                  Officer)
 
 ITEM
        14.
        PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Audit
        Fees. The aggregate fees billed by our auditors, for professional services
        rendered for the audit of our annual financial statements for the years ended
        December 31, 2005 and 2004, and for the reviews of the financial statements
        included in our Quarterly Reports on Form 10-QSB during that fiscal year
        were
        $0, and $40,500, respectively.
 
 Audit
        Related Fees. We incurred fees to auditors of $15,000 and $0, respectively,
        for
        audit related fees during the fiscal years ended December 31, 2005 and
        2004.
 
 Tax
        Fees.
        We incurred no fees to auditors for tax compliance, tax advice and tax
        compliance services during the fiscal years ended December 31, 2005 and
        2004.
 
 The
        Audit
        Committee has considered whether the provision of non-audit services is
        compatible with maintaining the principal accountant's
        independence.
 
 22
 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/ Wang
                  QiongWang
                  QiongChief
                  Executive Officer(Principal Executive
                  Officer)
 By:
                /s/ Yiliang LaiYiliang
                  LaiChief
                  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/ Wang QiongWang
                    Qiong
                
                Chairman
                    and Chief Executive Officer
                
                August
                    2,
                    2006/s/ Yiliang Lai
                  
                  Yiliang
                    Lai
                
                Chief
                    Financial Officer
                
                August
                      2,
                      2006/s/ Bo
                    Chen
                  
                  Bo
                    Chen
                
                President
                    and Director
                
                August
                      2,
                      2006/s/
                    Patrick McManus
                  Patrick
                    McManus
                
                Director
                
                August
                      2,
                      2006/s/
David
                    Gatton
                  David
                    Gatton
                
                Director
                
                August
                      2,
                      2006/s/
                    Weirui Wan
                  Weirui
                    Wan
                
                Director
                
                August
                      2,
                      2006
  23